By: Robert Harris
I was reviewing a non-competition agreement for a client recently, and it occurred to me that a lot of businesses hadn't yet caught up with the new Oregon law that went into effect January 1st, 2008. Now a non-compete will be void and may not be enforced by Oregon courts unless certain steps are taken.
- The employer must inform the employee in a written job offer, at least two weeks before the fist day of employment, that a non-compete agreement is a condition of employment or if the agreement is entered into upon a bona fide advancement of the employee.
- The employee must be engaged in administrative, executive or professional work. They need to be performing intellectual, managerial, or creative tasks, as well as exercising discretion and independent judgment. The employee must also earn a salary or be exempt from Oregon's minimum wage and overtime laws.
- The employer has a "protectable interest" (employee must have access to trade secrets, sensitive, confidential or professional information).
- The annual gross salary and commission, at the time of termination, must exceed the median family income for a family of four.
- Finally, the term of the non-compete agreement must not exceed two years from the date of the employee's termination. The rule also contains a "savings provision" that may allow non-exempt employees to have an enforceable non-compete.
One of the biggest changes is that it is now essential that the notice of a non-compete be included in the original written offer of employment. This announcement must be given at least two weeks prior to the employee start date. If they are not informed before hire, you will have to wait until the employee receives a bona fide advancement before an enforceable agreement can be obtained.
The other big change is that non competes can only be enforced against employees doing administrative, managerial creative or professional work. This change was made because there were instances where for instance a parking lot owner in downtown Portland actually had his parking attendant sign a non-compete. Under former law that was enforceable. Under this new law it wouldn't be.
Employers should audit their practices and adjust accordingly. Particularly pay attention to the two week notice if you want to advance someone and have them sign a non-compete agreement. And more importantly, before offering a non-compete agreement legal council should be consulted.
Robert Harris and Harris Law Firm provide Legal advice to businesses and individuals in the Portland Metro area, with offices in Hillsboro and Portland Oregon.