What happened?

On February 24, 2025, the Washington Supreme Court issued a decision in David v. Freedom Vans LLC, expanding the state’s prohibition against anti-moonlighting covenants for low-wage workers.

Overview:

The Washington Supreme Court held that barring employees from assisting competitors exceeds a narrow construction of the duty of loyalty. Restrictions on moonlighting must be reasonable, determined on a case-by-case basis. Factors to consider include:

• Need to protect the employer’s business or goodwill.
• Whether the restraint on the employee is reasonably necessary.
• Whether the noncompete agreement violates public policy.

Action Items:

• Employers should review their restrictive covenant agreements and moonlight policies to ensure they do not contain overbroad restrictions.
• Anti-moonlighting provisions must be narrowly tailored to protect the employer’s business and goodwill. Ensure agreements and policies do not include anti-moonlighting provisions for employees earning less than twice the Washington minimum wage.
• Consider case-by-case assessments for any low-wage employee required to sign such provisions.

Additional Information:

Background:

• Anti-Moonlighting Law: Since 2020, Washington has restricted employers from prohibiting low-wage workers from moonlighting. Low-wage workers are defined as those earning less than twice the state’s minimum wage.

• Exceptions: Employers can restrict moonlighting if the outside work:
  
  • Raises a safety issue.
  • Interferes with the employer’s reasonable scheduling expectations.
  • Alters the employee’s obligations under existing law, including the duty of loyalty and laws preventing conflicts of interest.

• Duty of Loyalty: The court emphasized that the duty of loyalty exception must be narrowly construed to protect low-wage workers’ rights to earn supplemental income.

Source References

• David v. Freedom Vans LLC
• Washington Supreme Court Ruled That Non-Compete Agreements May Violate State Law (VensureHR)

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