labor lawAdivision of labor law center

The Oregon non-compete law prohibits noncompetition agreements between employers and hourly workers, in almost all cases.

 

However, under this new law, employers are still permitted to have management and sales employees sign non-compete agreements. The agreements limit the employee’s ability to work for a competitor, at least for a period of time.

 

Such non-compete agreements – even voluntary ones – are illegal when applied to hourly or salaried non-exempt employees under Oregon law.

 

The law set limits on the type of non-compete agreements that employers can enforce, even with management employees. The employee must receive the non-compete agreement in writing at least two weeks before his or her first day of work.

 

The agreements are only enforceable if the employer has a “protectable” interest. Such interests include:

 

1. Trade secrets
2. Product development plans
3. Product launch plans
4. Marketing strategy
5. Sales plans

 

In addition, the law permits enforcement of a non-compete agreement when the employee is on-air talent (such as a talk show host or newscaster) and the employer has spent an amount equal to 10% or more of the employee’s annual salary promotion, training or developing the employee. However, the broadcast company must pay on-air talent 50% of their salary or 50% of the annual median income for a family of four, for the length of the agreement.

 

An employer can enforce a non-compete agreement if the employer is willing to pay the employee at least 50% of the employee’s base salary for the length of the agreement or 50% of the median income for a family of four in Oregon.

 

The law, enforced by the Oregon Bureau of Labor and Industry, still permits employers to have salespersons and others sign an agreement prohibiting a former employee from revealing or contacting customers of the former employer.

 

In an unrelated move, Labor Commissioner Gardner has since resigned to serve as a union lobbyist in Washington, D.C. Gov. Ted Kulongoski selected Democratic Senator Brad Avakian of Bethany to become the state Labor Commissioner

 

According to the Oregonian newspaper, at an afternoon news conference at the Portland State Office Building, the governor praised Gardner’s six-year stewardship of the Bureau of Labor and Industries and said Avakian “has the big shoes” to fill the job.

 

 

Last 10 posts by Jolie

• Court Lowers Bar For Discrimination - November 13th, 2009
• Court: Drinking Binge Is Not FMLA - November 4th, 2009
• Kansas Minimum Wage - August 28th, 2009
• Mississippi Minimum Wage - August 13th, 2009
• Montana Minimum Wage Increase 2009 - July 22nd, 2009
• New York Minimum Wage Increase 2009 - July 10th, 2009
• South Dakota Minimum Wage Increase 2009 - June 29th, 2009
• District of Columbia Minimum Wage Increase - June 24th, 2009
• California Family Leave - May 20th, 2009
• EEOC Caregiver Controversy - May 4th, 2009

1. Posted by: Laurene

   How does this relate to volunteer teams where the people are not being paid, and therefore are not “employees” but are working with project specific development intellectual property?

2. Posted by: Amelia

   Hi Laurene! It probably doesn’t. The Oregon law cited severely limits the employers ability to enforce a non-compete agreement in court — because such agreements limit the employees ability to earn a living. It would be very, very unusual for an employer to require volunteers to sign a non-compete agreement, stating that they will not seek work with one of your competitors for a specified amount of time. Such an agreement would also almost certainly be unenforcable. You could certainly request that volunteers sign a non-dicscloure agreement, specifying that they will not disclose your intellectual property to others. But frankly, if the details of this project are that confidential, you probably should be entrusting them only to paid employees, and not volunteers. HTH, and thanks for reading the blogs!~ Amelia

3. Posted by: Ron

   If a salaried-exempt employee has a non-compete clause, terminates employment to preserve integrity/position within the specific business community due to discovered fraud/misappropriation of funds within the business, would sufficient grounds exist for the employee to break the clause without penalty?

4. Posted by: Amelia

   Hi Ron! That’s an interesting question, and one that does not have a definitive answer at this time. The new Oregon non-compete regulations make no mention of the reason the employee quits. Our advice is that you consult an attorney about your specific circumstances. HTH, and thanks for reading the blogs!~ Caitlin

5. Posted by: Patrick

   I left a company, where I was a salaried sales person, after they restructured my contract (took away all base pay, made it commission only). I had a non-compete, and have found finding a job outside my area of expertise futile. I have had several offers of employment in my field, but have had to decline due to the non-compete. Is there a way around this?

6. Posted by: Amelia

   Hi Patrick! You need to consult an attorney. As mentioned in the article above, many non-compete agreements are unenforcable in Oregon because they limit the employee’s ability to earn a living, and to support his or her family. But we cannot give you advice about an agreement we have never seen. HTH, and thanks for reading the blogs!~ Amelia

7. Posted by: Joe

   Hello, I am considering resigning from my current position as a consultant to go into business consulting for myself. I have signed a non-compete and actually have been offered a consultation job by several of my soon to be former clients. My livelyhood has been in consulting. If I do this, what are the ramifications, and in particular, if my company chooses to enforce it, the above article states that for Oregon they have to pay me 50% of my wages. Is this accurate?

8. Posted by: Amelia

   Hi Joe! It is true that Oregon non-compete agreements are increasingly difficult to enforce, especially for hourly or non-exempt employees. The article you are referencing refers specifically to agreements between hourly workers and Oregon employers. If you are a consultant, you are probably either an exempt salaried worker or an independent contractor. So this article may not apply to you at all.
   Before you do anything rash, we suggest that you have an attorney look over your non-compete agreement. A non-compete agreement is a contract, and it is impossible for us to give an opinion on any contract we have never seen. Besides, we don’t give legal advice at all. HTH, and thanks for reading the blogs!~ Amelia

9. Posted by: Louise

   Hi, seeing that I do not live in Oregon, I need some help interpreting this law. I currently work for a company as an independent contractor and is based commission only paid to my fed id number. i have a non-compete signed with a company that states we agree to have the contract under Oregon law as that is where they are based. can you explain the non-compete law for this type of situation and if they can impose a time limit and geographical location? and if so how long, and what kind of geographical limits. thanks.

10. Posted by: Amelia

    Hi Louise! Any non-compete agreement that you signed is a contract, and it is really, really hard for us — or for anyone — to give you accurate information on a contract that we have not read.
    We will say that a non-compete agreement that affects a commissioned salesperson, a restricted geographical area and a short period of time is going to be more enforcable. But we cannot speak to whether your particular non-compete agreement is enforcable or not. Only an attorney familiar with Oregon law can. HTH, and thanks for reading the blogs!~ Amelia

11. Posted by: ellis

    Hi….. 25 years ago I bought a franchise and over the years it has become increasingly difficult to work with the franchisor. They provide little support and have gone so far as to do business in my territory, which I thought was protected from them. I could go on for hours with all the things they do and don’t do. I have a C corp that owns the franchise but
    in the licensing agreement is a non-compete that applies to me as the licensee. I can’t do the same business for 1 year and within 50 miles of my office. There is a buy out provision but it would be impossibly expensive the way it is structured. My question is does the change in the non-compete laws in Oregon help my situation?
    Thank you,
    Ellis

12. Posted by: Amelia

    Hi ellis! Unfortunately, the new Oregon laws probably do not have any impact whatsoever on your situation, because you are not an employee. You are a business owner who freely entered into a contract. Now you want out of that contract. Our suggestion is that you consult an attorney who specializes in corporation law. Obviously, we cannot comment on a specific contract that we have never read. HTH, and thanks for reading the blogs!~ Amelia