labor lawAdivision of labor law center

A little-known Oregon law that went into effect in 2008 sets limits on the non-compete agreements so popular with employers.

 

Former Oregon Labor Commission Dan Gardner originally sponsored the bill to “turn back the recent expansion of non-compete agreements against” hourly and non-management workers. Commissioner Gardner cited the use of such agreements with parking lot attendants, call center operators and home cleaning service workers as excessive.

 

“There is a dangerous expansion in the use of noncompetition agreements in Oregon and Oregon workers are being unfairly prevented from working in their chosen fields of expertise,” said Gardner. “The passage of Senate Bill 248 means noncompetition agreements will only be enforceable against highly paid managers and professional staff and only if certain conditions are met.”

 

The bill prohibits employers from enforcing any non-compete agreement with an hourly employee, or with a non-exempt salaried employee. The bill was signed and passed into law by Governor Ted Kulongoski and is currently in effect. It is enforced by the Oregon Bureau of Labor and Industry.

 

A non-compete agreement cannot be enforced against any employee whose total gross salary is less than the median income of a family of four in Oregon (currently about $61,000 per year.)

 

No non-compete agreement cannot last longer than two years under the Oregon non-compete law.  

 

This measure resolves a number of thorny issues that the Oregon courts have addressed with varying degrees of effectiveness. According to former Labor Commissioner Gardner, a key element the courts look at is “reasonableness”. That is, is the agreement reasonable in scope? Does it create an unreasonable barrier to the worker, in supporting his or her family?

 

 “Under current law, the application of noncompetition agreements in Oregon is not reasonable,” Gardner said. Senate Bill 248 brings Oregon law must closer to meeting that standard for a greater majority of Oregon workers.”

 

While non-compete agreements have long been accepted for high-level management employees and salespersons, they are increasingly being used in a few industries for hourly workers.

 

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