In Washington, what is the minimum annualized earnings threshold for a Southern Steer franchisee's employee for a noncompetition covenant to be enforceable?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
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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 and Multi-Unit Development or elsewhere that conflict with these limitations are void and unenforceable in Wa
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, in the state of Washington, a noncompetition covenant is unenforceable against a Southern Steer franchisee's employee if the employee's annualized earnings from the party seeking enforcement do not exceed $100,000 per year. This amount will be adjusted annually for inflation. This means that Southern Steer franchisees in Washington can only enforce non-compete agreements against employees who earn above this threshold.
For independent contractors of a Southern Steer franchisee in Washington, a noncompetition covenant is void and unenforceable if the independent contractor's earnings from the enforcing party do not exceed $250,000 per year, also adjusted annually for inflation. This higher threshold for independent contractors reflects the different legal and economic relationship they have with the business compared to employees.
Southern Steer franchisees in Washington should be aware of these limitations when drafting and enforcing non-competition agreements. Any provisions in the franchise agreement or other documents that conflict with these earnings thresholds are void and unenforceable in Washington. This ensures compliance with Washington state law and protects the rights of employees and independent contractors.