Does the $100,000 earnings threshold for non-competition covenants for Fat Shack employees in Washington get adjusted for inflation?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
URE AND NONCOMPETITION AGREEMENT
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- 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, exceed $250,000 per year (an amount that will be adjusted annually for inflation). As a result, any provisions contained in the franchise agreement or elsewhere that conflict with these limitations are
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the $100,000 earnings threshold for non-competition agreements in Washington State is adjusted annually for inflation. This adjustment is based on Washington state law (RCW 49.62.020), which stipulates that a noncompetition covenant is unenforceable against an employee if their annualized earnings do not exceed $100,000, with this amount subject to annual inflation adjustments. This provision applies to employees of Fat Shack franchisees in Washington.
For a prospective Fat Shack franchisee in Washington, this means that any non-competition agreements they require their employees to sign are only enforceable if the employee earns more than the annually adjusted threshold. If an employee's earnings are below this threshold, the non-competition agreement is void. This also applies to independent contractors, but the earnings threshold is $250,000 per year, also adjusted annually for inflation, as per RCW 49.62.030.
This aspect is crucial for Fat Shack franchisees in Washington to consider when hiring and managing staff, as it directly impacts the enforceability of non-competition agreements. It ensures that lower-earning employees are not unduly restricted in their future employment opportunities. Franchisees should stay informed about the annually adjusted earnings thresholds to ensure compliance with Washington state law. Furthermore, the FDD states that any conflicting provisions in the franchise agreement are void and unenforceable in Washington.