Is a non-compete agreement enforceable in Oregon?

Is a non-compete agreement enforceable in Oregon?

December 12, 2012 - by

Is your non-competition agreement enforceable in Oregon? If you have to ask, then the answer is: No, probably not. Oregon disfavors non-competition agreements, and presumes them invalid except in very narrow circumstances. Small business owners love them, and we see them in a number of circumstances where they just can’t be enforced.

To find out if your non-compete is valid in Oregon, ask yourself the following four questions:

  1. Did you either a) inform your new employee in writing at least two weeks before his or her first day of work that the non-compete is a requirement of employment; or b) have your existing employee sign a non-compete as a condition of bona file advancement (this needs to be something more substantial than just a new title, and if you’re uncertain, ask your lawyer)?
  2. Is the employee engaged in administrative, executive, or professional work; performing predominantly intellectual, managerial or creative tasks; exercising discretion and independent judgment; AND a salaried employee?
  3. Do you have a protectable interest in the employee, by which I mean one of the following:
    • The employee has access to trade secrets within the meaning of ORS 646.461;
    • The employee has access to competitively sensitive confidential business or professional information that otherwise would not qualify as a trade secret, including product development plans, product launch plans, marketing strategy or sales plans; or
    • The employee is an on-air talent in the business of broadcasting and the you have in the year preceding the termination of the employee’s employment, expended resources equal to or exceeding 10 percent of the employee’s annual salary to develop, improve, train or publicly promote the employee, provided that the resources you expended were expended on media that you as the employer do not own or control; and provided the employee, for the time the employee is restricted from working, the greater of compensation equal to at least 50 percent of the employee’s annual gross base salary and commissions at the time of the employee’s termination or 50 percent of the median family income for a four-person family, as determined by the United States Census Bureau for the most recent year available at the time of the employee’s termination.
  4. Is the total amount of the employee’s annual gross salary and commissions, calculated on an annual basis, at the time of the employee’s termination exceeds the median family income for a four-person family, as determined by the United States Census Bureau for the most recent year available at the time of the employee’s termination (this last one does not apply to on-air talent)?

If the answer to any of these questions is no, your non-compete won’t be enforceable in Oregon. This is not to say that other restrictions cannot be placed on a departing employee, including non-solicitation and non-disclosure terms. In fact, Oregon’s last revision of it’s non-compete statute actually had the effect of making non-solicitation clauses of reasonable duration and geographic area more enforceable.

0 comments

Leave a comment

Want to express your opinion?
Leave a reply!