In Washington, under what annual earnings threshold is a noncompetition covenant void and unenforceable against a Deka Lash franchisee's employee?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
Act, or rights or remedies under the Act such as a right to a jury trial, may not be enforceable.
Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.
Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceable against an employee, including an employee of a franchisee, unless the employee's earnings from the party seeking enforcement, when annualized, exceed $100,000 per year (an amount that will be adjusted annually for inflation). In addition, a noncompetition covenant is void and unenforceable against an independent contractor of a franchisee under RCW 49.62.030 unless the independent contractor's earnings from the party seeking enforcement, when annualized,
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, in the state of Washington, a noncompetition covenant is void and unenforceable against an employee of a Deka Lash franchisee if the employee's annualized earnings from the party seeking enforcement do not exceed $100,000 per year. This amount is subject to annual adjustments for inflation.
This provision is based on Washington state law (RCW 49.62.020), which aims to protect employees from overly restrictive non-compete agreements, especially when their income is below a certain level. The same law also protects independent contractors of a Deka Lash franchisee, with a higher earnings threshold of $250,000 per year for non-competition covenants to be enforceable.
For a prospective Deka Lash franchisee in Washington, this means that any non-compete agreements they attempt to enforce against their employees earning less than the specified amount (initially $100,000, adjusted for inflation) will be legally invalid. This limitation could impact the franchisee's ability to protect their business interests through non-compete agreements with lower-paid staff. Franchisees should consult with a legal professional to ensure their employment agreements comply with Washington law.