Corporate Non-Compete Enforcement Under Oregon Law

Corporate non-compete agreements play a pivotal role in protecting businesses from unfair competition by restricting employees from joining rival companies or starting similar businesses within a specified timeframe and geographic location. In Oregon, the enforcement of these agreements is governed by specific state laws that aim to balance the interests of employers and the rights of employees.

Under Oregon law, particularly ORS 653.295, the enforceability of non-compete agreements has undergone significant changes. Since January 1, 2022, several key stipulations regarding the enforceability of non-compete agreements have been established, making it crucial for both employers and employees to understand their rights and limitations.

One primary requirement is that non-compete agreements are only enforceable if the employee earns a salary of at least $100,533 in 2022 (adjusted annually) or is classified as an exempt employee under state or federal law. This threshold is designed to protect lower-wage workers from restrictive agreements that could hinder their career opportunities.

Additionally, Oregon law stipulates that non-compete agreements must be in writing and provided to the employee at least two weeks before the employee's employment begins or, if modified, prior to the effective date of the modification. This requirement aims to ensure that employees have adequate time to consider the implications of signing such agreements.

Regarding duration, Oregon law limits non-compete agreements to a maximum of 18 months. Employers must ensure that their agreements are reasonable in both duration and geographical scope, as overly broad restrictions may render the agreement unenforceable in court.

Enforcement of non-compete clauses is primarily the responsibility of the employer. However, employees have rights under Oregon law to challenge the enforceability of a non-compete agreement. Courts typically analyze the reasonableness of the agreement concerning the interests of the employer, the impact on the employee's ability to work, and the public interest.

Employees who believe a non-compete agreement is overly restrictive or improperly administered may seek legal recourse. If found unenforceable, businesses may not only lose the right to impose the restrictions but also could be liable for attorney fees and damages incurred by the employee.

Employers in Oregon should consider reviewing their non-compete agreements regularly, especially in light of the changes in state law. Clarity and fairness in the drafting process can foster a better employer-employee relationship and reduce the likelihood of legal disputes.

In conclusion, while non-compete agreements can be beneficial for protecting corporate interests, the evolving legal landscape in Oregon requires careful consideration and compliance. Both businesses and employees must remain informed about their rights and obligations under state law to navigate the complexities of non-compete enforcement effectively.