Non Competition in Oregon

Portland Non-Compete Agreement Lawyer
Beaverton Arbitration Agreements Attorney

Overview

A new law affects the ability of employers in Oregon to enforce non-competition and arbitration agreements with their employees. The new law applies to agreements with employees entered into after January 1, 2008.

Arbitration Agreements

Until recently, an employer could present to an employee a contract to agree to arbitrate future claims or disputes at any time before or during employment. Many employers use such agreements because they can save time and money and keep employee claims away from juries who are often not sympathetic with employers.

Under the new law, presenting an arbitration agreement during employment is too late. They must be presented to a job applicant within a written employment offer at least two weeks prior to the first day of employment.

Noncompete Agreements

Two-Week Pre-Work Introduction
Like the new arbitration provision requirement, employers who wish to bind their employees must present the non-competition agreement as part of a written job offer not less than two weeks before the first day of the employee’s employment. Obviously this is a flawed law, but it will be some time before the courts can begin to carve out exceptions (if they’re ever inclined to do so).

Sophistication Standard
Sensing a growing and widespread use of non-compete agreements in all sectors of the job market, the legislature pulled back the reigns in an attempt to limit their use to highly skilled employees who not merely have access to confidential information but also the means to exploit it. Under the new law, an otherwise valid non-compete will be struck down if the employee’s gross salary and commissions at the time of his or her termination does not exceed the median income for a four-person family in Oregon (just under $62,000 in 2008).

To make sure employers are using non-competes only when necessary, the Legislature also wrote that the employer must demonstrate that it has a “protectable interest.” This exists when, among other reasons, the employee has access to certain information. Data that would qualify would be any trade secrets and business or professional information that would not qualify as a trade secret which is competitively sensitive and confidential (including product development plans, product launch plans, marketing strategy or sales plans).

Recommendations

The new law is not retroactive; an otherwise validly executed arbitration or non-competition agreement may still, for now, be relied upon if it was valid at the time entered into.

We believe most new hires should receive offer letters. The new Oregon law mandates employers use offer letters if an employment candidate will be expected to be bound by the terms of arbitration or competitive restrictions.

From time to time, consider what confidential information your company should protect, have IP policies in place, and use standardized language for employment offer letters.