The Washington Supreme Court recently ruled that employees’ duty of loyalty and any exceptions to worker mobility should be narrowly construed, so employers cannot restrict low wage workers from working a second job (even for a competitor) unless those restrictions are reasonable in light of the facts. As we previously reported, Washington employers’ ability to enforce noncompete agreements, and to prevent employees from working second jobs, was significantly limited in 2020. Moonlighting provisions or policies that restrict an employee’s ability to work for another employer are unenforceable if the employee earns less than twice Washington’s minimum wage, unless the outside work raises safety issues, interferes with regular scheduling expectations, interferes with the employee’s general duty to be loyal, or creates a conflict of interest (see the relevant Washington statute at RCW 49.62.070).
Washington Supreme Court Revives Case Challenging Employer’s Noncompete Agreement
In this case, the employees worked for a company that converts and customizes vans into mobile homes. The employer required all employees to sign an agreement that prohibited them from “directly or indirectly engag[ing] in any business that competes” with the company during their employment including engaging in or being employed by any “competitive business.” While working for the company, the employees turned down “side work” out of fear for their jobs, and eventually filed a class action lawsuit on behalf of themselves and the other employees. We previously reported that the Washington Court of Appeals ruled in the company’s favor. Now the employees’ case has gained new life, because the Washington Supreme Court had a different perspective. Focusing on the duty of loyalty exception, the state supreme court found that restricting employees from providing all kinds of assistance to competitors would contradict the legislature’s intent to protect low wage employees. The Washington Supreme Court sent the case back to the trial court to determine whether the company’s noncompete agreement was reasonable (David v. Freedom Vans LLC, Wash, Jan. 2025).
Tips: The court doesn’t provide clarity on what a duty of loyalty actually means, except that “barring employees from providing any kind of assistance to competitors” goes too far. This decision serves as a reminder that the law requires courts to narrowly construe any allowance of moonlighting restrictions in favor of an employee who makes less than twice the state minimum wage. Talk to your Vigilant Law Group employment attorney for assistance in drafting moonlighting policies and see our Legal Guide, Noncompetition Agreements, for guidance.
