Exceptions to 2008 Oregon Non-compete Law

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.