On May 13, the Oregon Legislature enacted HB 2992, which amends the state’s non-compete law. Under the amendment, an employer may not enforce a non-compete agreement unless it first provides the employee with a signed, written copy of the agreement within 30 days after the employee’s termination of employment. This amendment applies to all agreements entered into after January 1, 2020. Moving forward, employers should deliver a letter to every departing employee who is subject to a non-compete reminding them of their obligations and enclosing the signed agreement.
Other than this new procedural requirement, the remainder of Oregon’s non-compete law (ORS 653.295) remains intact. To summarize, Oregon employers may only enforce non-compete agreements against white collar exempt employees who 1) earn more than the median income of an urban family of four, and 2) have access to trade secrets or competitively sensitive confidential information. Also, employers must notify the prospective employee in a written offer of employment that a non-compete agreement is required at least two weeks prior to the first day of employment, or enter into the agreement upon a bona fide promotion. Non-compete agreements may not exceed 18 months from the date of termination.
Oregon’s non-compete law applies only to agreements made in the context of an employment relationship and not otherwise, such as in the sale of a business. The law also does not apply to bonus restriction or agreements prohibiting the solicitation or transaction of business with customers, or solicitation of employees.
States have recently passed similar restrictions on non-compete agreements, including Washington, which enacted a stiff law in May. Like Oregon, Washington law will require early disclosure to new employees, limit duration to 18 months post-employment, and exclude non-solicit agreements, confidentiality agreements, and inventions and trade secrets covenants.
What Should Businesses Do Now?
If you have questions about non-competes or other employment agreements, Lane Powell’s Lawyers for Employers™ are available to help.
Before proceeding, please note: If you are not a current client of Lane Powell PC, please do not include any information in this email that you or someone else considers to be confidential or secret in nature. Prior to the establishment of a lawyer-client relationship, unsolicited emails from non-clients containing confidential or secret information cannot be protected from disclosure.