Oregon recently enacted legislation changing some existing law provisions on non-compete agreements between employees and employers. The changes to the law do not cover various other types of restrictive agreements, such as nondisclosure, but only affect the validity of non-competition clauses.
In Oregon, agreements limiting competition were already subject to various restrictions. The new law expands and clarifies some of these restrictions.
Updated minimum salary
The law changed the minimum salary amount an employee must make for a non-compete agreement to be binding. In 2021, an employee must earn at least $100,533 annually for the non-competition contract. The law adjusts the amount each year in the future for inflation.
Changed voidable to void
The new statute makes several provisions automatically void. The previous version required employees to tell employers that the employee was considering a provision void. Under the updated law, employees do not have the burden of notifying the employer.
Revised provision for non-qualifying employees
The new legislation revised provisions that allow employers to enforce non-compete agreements with employees who do not meet minimum salary thresholds and other requirements. Essentially, the revision requires employers to provide a written agreement to compensate the non-qualifying employee at the minimum salary amounts for the period of the non-competition clause.
Shortened allowable restrictive covenant
The previous law allowed employers to enforce non-compete agreements for 18 months from the date of the termination of employment. The amended version shortens this period to 12 months.
Employers need to be aware of the changes to the non-compete law and update their agreements accordingly.