Hunt & Associates P.C.

Employee Non-Competition and Non-Solicitation Agreements in Oregon: A Critical Distinction

Oregon law imposes serious restrictions on employee non-competition agreements.  Unless certain severe conditions are satisfied, an employee’s agreement not to compete with their employer after their employment ends will not be enforceable.  However, Oregon law specifically exempts employee non-solicitation agreements from the legal restrictions governing the validity of employee non-competition agreements.  The distinction then between non-competition agreements and non-solicitation agreements is important.

A. Limitations on Noncompetition Agreements.

A non-competition agreement is generally only enforceable under Oregon law (ORS 653.295(1)) if:

1.       The employee is given a written employment offer at least 2 weeks before starting work notifying the employee that their agreement not to compete will be a condition of employment; or,

2.       The noncompetition agreement is entered into upon a bona fide advancement of the employee by the employer; and,

3.       The employee will perform predominately intellectual, managerial or creative tasks;

4.       The employer has a protectable interest such as where the employee has access to the employer’s trade secrets or to sensitive and confidential business information that wouldn’t qualify for trade secret protection or the employee is employed as an on-air broadcasting talent subject to certain specific conditions; and,

5.       The total amount of the employee’s gross salary and commissions on termination exceeds the median family income for a four-person family as determined by the U.S. Census Bureau for the most recent year available.

Moreover, even a valid and enforceable employee noncompetition agreement can’t be for any term longer than 2 years following termination of employment.

B. Employee Agreements Not to Solicit their Employer’s Customers and Employees Aren’t Subject to the Limitations on Noncompetition Agreements.

ORS 653.295(4) specifically exempts employee agreements not to solicit or to transact business with an employer’s customers and to refrain from soliciting other employees to leave the employer’s employment after their employment terminates.   Since the principal purpose of most employee noncompetition agreements is to prevent an employee from taking customers and employees with them when they leave their employer, their agreement not to solicit or to transact business with their employer’s customers or to solicit their employer’s employees after termination of their employment will generally meet the employer’s needs as well as a noncompetition agreement.

©11/04/2010 Lawrence B. Hunt of Hunt & Associates, PC

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4 Responses to Employee Non-Competition and Non-Solicitation Agreements in Oregon: A Critical Distinction

  1. Bryan Hulsey says:

    Would a non-competition agreement signed prior to 01 01 2008 be enforceable for an independent contractor?

    • Lawrence Hunt says:

      Thanks for your question. The short answer is that “it depends.”
      It would depend on the terms of the noncompetiton agreement since even with a nonemployee the terms of any agreement not to compete must be reasonable as to duration, geographic scope, etc. Also, it isn’t apparent as to when in the relationship the agreement was signed.
      There are also potential issues as to whether the “independent contractor” is or is not an “employee” which may affect enforceability.
      These are just some of the variable which could affect the validity and enforceability of an agreement such as you describe.

  2. john lemoine says:

    I just resigned from a sales position after 13 years.
    I was not aware there was a non compete clause in my signing contract. No one discussed this with me and now my ex company says they will enforce it. I am trying to get a copy of the original signed contract with the non-compete clause and length of term.
    No success yet.
    Is the non-compete enforceable?

    • Larry Hunt says:

      I can’t tell you whether or not your noncompetition agreement is enforceable or not and, if so, the extent to which it’s enforceable against you without reading it and knowing more about the circumstances surrounding your signing of that agreement.
      I can tell you that if your former employer refuses to give you a copy of the agreement then they may be jeopardizing their ability to enforce it legally, even if it is otherwise valid.
      Don’t hesitate to give me a call if you’d like to discuss this in greater detail.

      Larry Hunt

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