Duff on Hospitality Law

(Authors' note: Since the publishing of this post, the legislation outlined below was signed into law by Governor Jay Inslee on May 8, 2019)

On April 17, the Washington Legislature approved sweeping new restrictions on employers’ non-competition agreements with their employees and independent contractors.

The bill, now headed to the Governor’s desk for his expected signature, means that after January 1, 2020, non-competition agreements (see definition and limitations below) will only be enforceable against higher-paid employees and contractors, and generally can last no longer than 18 months.

The law also carries a sting: If a court or arbitrator finds that a covenant violates these new rules, the entity which seeks enforcement of such a provision may be liable for actual or statutory damages and attorneys’ fees and costs.

Despite lawsuits and persistent legal uncertainties, the “sharing economy” is booming, and the companies at its forefront continue to grow. Some of these businesses are a natural complement to the hotel industry, while others directly compete with it. Whatever may become of these companies as they are reined in by regulation, one thing is certain: the rise or fall of the “sharing economy” will define the landscape of the hospitality sector in the decades ahead.

Ridesharing giant Uber raised $2.1 billion in its most recent round of funding, buoyed by a valuation of more than $65 billion – a remarkable ascendance for the five-year-old company. Its success has attracted a wave of new entrants seeking to gain a foothold in this burgeoning market. But the road to a share of the sharing economy is fraught with legal peril.