May 27th, 2026
Washington Physician Employment Contract Update: Effective 2027, Washington State Bans Noncompete Agreements By Jim Vogele
This brief post is limited to discussion of one specific development in the law of restrictive covenants in physician employment contracts that will have significant impact on future Washington physician employment contracts; this article also includes brief mention of the current status of restrictive covenants in Montana, Oregon, and California physician employment contracts.
A clear trend toward limiting noncompetes in physician employment contracts
California, as those of you know who practice as California physicians, has for over a century banned noncompete agreements in California physician contracts or any employment contracts.
Washington, effective June 30, 2027, will join California as one of the handful of U.S. jurisdictions where noncompetes will not be enforceable. At this writing in May 2026, there are six other states, including California, that effectively ban noncompetes, including California and Montana.
Montana, effective January 1, 2026, largely banned noncompete provisions in Montana physician employment contracts. Note, however, that there are exceptions from the new Montana noncompete ban applicable to sale and purchase of medical practices and for certain common financial recruiting tools such as signing bonuses, relocation expense reimbursement, and student loan assistance).
And Oregon, effective June 9, 2025, enacted new laws that place significant restrictions on noncompetes in Oregon for medical licensee contracts including Oregon physician contracts, but still falls well short of an outright ban. In addition, as with Washington as mentioned below, Oregon still allows nonsolicitation agreements. California and Montana do not allow nonsolicitation provisions, but of course use of the employer’s trade secrets or confidential information cannot (and should not) be used to solicit customers/patients.
The new Washington law
When it becomes effective in 2027, the new Washington law will effectively ban noncompetes in Washington physician contracts both past and future. The key dates concerning this development in Washington are:
- 1) March 23, 2026 – House Bill 1155 signed into law by Washington Governor
- 2) June 30, 2027 – the law becomes effective
- 3) October 1, 2027 – Washington employers must make a reasonable effort to notify current and former workers that any existing noncompetes are unenforceable
Two key points that you will need to be aware of with regard to your Washington physician employment contracts, even after June 30, 2027, are (a) that there is limited carve-out (exception) to the ban for certain out-of-pocket educational expense, and (b) nonsolicits will still be enforceable, but only for up to 18 months post-termination, which was previously the presumptive limit on noncompetes in Washington physician contracts.
The ENGROSSED SUBSTITUTE HOUSE BILL 1155 actually passed can be found here:
Conclusion: This is Good News for Washington Physicians and other Healthcare Professionals
The banning of noncompetes is beneficial to employed physicians, because prohibiting noncompetes justifiably protects the mobility of physicians to work where they wish and in some cases prohibiting noncompetes will enhance the physician’s ability to negotiate wages. There remain adequate, enforceable laws to protect legitimate business interests of employers in healthcare settings (and elsewhere). These include trade secret laws in all jurisdictions and nonsolicitation provisions which are still allowed in Oregon and Washington.
While the FTC’s attempted national ban on noncompetes did not ever take effect, we have seen a perhaps salutary effect from the effort nonetheless, as many states have moved to limit or ban noncompetes. The interplay between the FTC’s national effort and the response of a number of state’s to accomplish what the FTC could not, is a good primer on how change is often effectuated, with fits and starts, when it comes to the evolution of social and economic policy
As a California physician contract review attorney who has been licensed and working with California employees for over 30 years, I can say that the California economy functions just fine without noncompetes. The GDP of California alone would represent the 5th largest economy in the world if California were a country (larger than India’s economy and just short of Japan’s economy; and California’s GDP in recent years represents nearly 15% of the U.S. GDP). Quite obviously, the absence of enforceable noncompetes applied to employees has not caused the California economy to suffer. Likewise, as an Oregon physician contract review attorney, Washington physician contract review attorney, and Montana physician contract review attorney, I have not seen noncompetes create anything but headaches for physicians in those states.
‘Better off without them’ is my conclusion.
