Oregon companies often have one or more employees who are regarded as especially important to the company’s success. Perhaps the person is a successful salesperson or a designer. In any event, the employer does not want such an employee to leave the company and then immediately begin working for a competitor.
The device most often used to prevent such an outcome is a legal contract called a non-compete agreement.
Non-compete agreements are regulated by statute in Oregon. The statute prescribes the maximum term of non-compete agreements as well as the types of restrictions that are permissible. It also requires that the agreement cannot be unreasonable in its terms.
All non-compete agreements executed by the parties after January 1, 2016 cannot exceed 18 months from the date of the employee’s termination. Employers must inform prospective employees in writing that they will be required to sign a non-compete agreement as a condition of their employment.
A non-compete can also required as a condition of receiving a bonus or a promotion. The advancement must be bona fide, that is, it must involve increased responsibility and duties, change in title and higher pay.
A non-compete agreement can be declared voidable and unenforceable by the courts if the employee is within certain exempt categories. To be enforceable, the employee who is the subject of the agreement must be engaged in administrative, executive or professional work and perform predominantly intellectual, management or creative work, exercises independent judgment and earns a salary that is paid periodically.
In or der to enforce the agreement, the employer must possess a protectable interest that is the subject of the agreement. In other words, the employee must have been given access to trade secrets, confidential business information, or must have been employed as on-air talent in the broadcasting business.
The employee against whom enforcement is sought must have had an annual salary in excess of the salary for a four-person family as determined by the U.S. Census Bureau.
The law of noncompete agreements in Oregon has a number of exceptions and qualifications that may not apply to every situation. Anyone subject to a non-compete who is thinking about changing jobs may wish to consult an experienced employment law attorney for an evaluation of the terms of the contract and its enforceability.