Washington Legal Update: What Employers Need to Know in 2026 and Beyond

Washington continues to be one of the most active states when it comes to employment law changes. Recent legislation introduces significant updates in four key areas: noncompete agreements, wage and hour enforcement, employee notification requirements during federal I-9 audits, and the Washington Fair Chance Act.

Below is a breakdown of what HR professionals and business owners should be aware of and how to prepare.

Washington Moves to Ban Noncompete Agreements

Washington has enacted a sweeping law that will ban nearly all noncompete agreements for both employees and independent contractors, with the change taking effect on June 30, 2027.

Under the new law, any agreement that restricts an individual from engaging in a lawful profession, trade, or business will be void and unenforceable, regardless of when it was signed.

What’s still allowed? Certain limited agreements remain permissible, including:

• Nonsolicitation agreements (with specific time limits)

• Confidentiality and trade secret protections

• Agreements tied to the sale of a business

• Certain franchise-related covenants

• Education repayment agreements (if structured properly)

Employer action items:

• Review existing employment agreements for noncompete language

• Begin transitioning to alternative protections like nondisclosure agreements

• Prepare to notify affected workers that existing noncompetes are unenforceable by October 1, 2027

Failure to comply could result in damages, penalties, and attorney fees.

Increased Wage and Hour Penalties Raise the Stakes

Washington is also strengthening enforcement of wage laws through House Bill 2479, effective June 11, 2026.

The most notable change is the removal of the $20,000 cap on civil penalties for willful wage violations. Employers may now face penalties up to the full amount of unpaid wages owed, plus interest.

Additional changes include:

• Increased minimum penalties for violations

• A structured penalty assessment system based on factors like employer size, severity, and history

• Expanded authority for the Department of Labor & Industries (L&I) to investigate beyond initial complaints

The law also introduces a wage recovery program (starting in 2028) that allows eligible employees to receive partial payment of owed wages during investigations.

Employer action items:

• Audit payroll and wage practices for compliance

• Address issues proactively to avoid heightened penalties

• Pay close attention to repeat violations, which will trigger stricter enforcement

New Employee Notice Requirements for I-9 Audits

The newly enacted Immigrant Worker Protection Act adds another layer of compliance for employers during federal immigration audits. Most provisions take effect on October 1, 2026, pending funding.

Employers must now provide written notice to employees within five business days of receiving a federal notice of an I-9 inspection.

Required actions include:

• Notifying employees (and their representatives) with specific details about the inspection

• Posting notices in the workplace

• Delivering notices through customary communication methods (email, mail, text, etc.)

Employers must also provide follow-up notices after receiving inspection results, including details about deficiencies and next steps for affected employees.

The law also includes anti-retaliation protections and limits employers' ability to impose additional verification requirements beyond federal law.

Employer action items:

• Develop internal protocols for handling I-9 inspections

• Prepare compliant notice templates

• Train HR teams on timelines and communication requirements

• Monitor whether the law is funded by June 30, 2026

Expanded Fair Chance Act Requirements for Criminal Background Checks

Washington is further expanding employee protections under the Fair Chance Act through House Bill 1747, with most changes taking effect July 1, 2026 (and January 1, 2027 for employers with fewer than 15 employees).

The updated law significantly limits how and when employers can use criminal history in employment decisions and introduces new notice and documentation requirements.

Key Changes to Hiring Practices

The amended law strengthens existing restrictions by making it unlawful for employers to:

• Ask about criminal history before extending a conditional job offer

• Take adverse action based on arrest records (with limited exceptions) or juvenile records

• Take adverse action based on an adult conviction record without a documented legitimate business reason

New Notice and Process Requirements

Employers must now follow a more structured process before taking adverse action:

• Pre-adverse action notice:

  Employers must notify the individual of the specific record being considered and allow at least two business days for the individual to respond, correct information, or provide evidence of rehabilitation, education, or work history

• Adverse action notice:

  If a final decision is made, employers must provide a written explanation detailing:

  • The reasoning behind the decision

  • How statutory factors were evaluated

  • Consideration of rehabilitation and other mitigating information

What Qualifies as a “Legitimate Business Reason”?

Employers must document their reasoning and evaluate several factors, including:

• The seriousness of the offense

• The number and type of convictions

• How much time has passed since the conviction

• Evidence of rehabilitation, training, and work history

• The specific duties of the role

• The work environment and how the job is performed

Increased Penalties

The law also increases penalties for violations and applies them per applicant or employee, per violation, raising the financial risk for noncompliance.

Employer Action Items

To prepare, employers should:

• Update job applications to remove prohibited criminal history questions

• Review background check timing and hiring workflows

• Ensure pre-adverse and adverse action notices are compliant

• Train recruiters, hiring managers, and HR teams on the new requirements

• Review policies, postings, and career sites for compliance

• Audit screening and adjudication processes across jurisdictions

Final Thoughts

These updates reflect a broader trend in Washington toward increased employee protections and stricter employer compliance requirements.

For employers, the key takeaway is clear: proactive review and preparation are essential. Whether it’s revising agreements, strengthening wage compliance, updating audit response procedures, or updating processes, taking action now can help mitigate risk later.

If you have questions about how these changes may impact your organization, consider consulting with legal counsel or your HR advisory partner.