...
Summary of differences between federal and state regulations
The state of Oregon has a body of law which addresses the use of non-compete agreements. Oregon restricts the use of non-compete agreements to those which are signed at the commencement of employment and to protect trade secrets.
Whether or not a non-compete agreement is a legal and binding contract depends on the scope of the restrictions the agreement includes, precedents set in court decisions, and a variety of other factors.
Typically courts do not want to deprive employees of earning a living in their chosen fields, but they also want to protect companies. So, a non-compete agreement might be enforceable, but only if it is reasonable in scope and necessary to protect the company's interests.
State
Contact
Oregon Bureau of Labor and Industries
Regulations
ORS §653.295 Non-competition agreements; bonus restriction agreements; applicability of restrictions.
(1) A non-competition agreement entered into between an employer and employee is void and shall not be enforced by any court in this state unless the agreement is entered into upon the:
- Initial employment of the employee with the employer; or
- Subsequent bona fide advancement of the employee with the employer.
(2) Subsection (1) of this section applies only to noncompetition agreements made in the context of an employment relationship or contract and not otherwise.
(3)(a) Subsection (1)(a) of this section applies only to noncompetition agreements entered into after July 22, 1977.
(3)(b) Subsection (1)(b), subsections (4) and (5) and subsection (6)(a) of this section apply to employment relationships and bonus restriction agreements in effect or entered into after October 15, 1983.
(4) Subsection (1) of this section does not apply to bonus restriction agreements, which are lawful agreements that may be enforced by the courts in this state.
(5) Nothing in this section restricts the right of any person to protect trade secrets or other proprietary information by injunction or any other lawful means under other applicable laws.
(6) As used in this section:
(6)(a) “Bonus restriction agreement” means an agreement, written or oral, express or implied, between an employer and employee under which:
(A) Competition by the employee with the employer is limited or restrained after termination of employment, but the restraint is limited to a period of time, a geographic area and specified activities, all of which are reasonable in relation to the services described in subparagraph (B) of this paragraph;
(B) The services performed by the employee pursuant to the agreement include substantial involvement in management of the employer’s business, personal contact with customers, knowledge of customer requirements related to the employer’s business or knowledge of trade secrets or other proprietary information of the employer; and
(C) The penalty imposed on the employee for competition against the employer is limited to forfeiture of profit sharing or other bonus compensation that has not yet been paid to the employee.
(6)(b) “Employee” and “employer” have the meaning provided for those terms in ORS 652.310; and
(6)(c) “Noncompetition agreement” means an agreement, written or oral, express or implied, between an employer and employee under which the employee agrees that the employee, either alone or as an employee of another person, shall not compete with the employer in providing products, processes or services, that are similar to the employer’s products, processes or services for a period of time or within a specified geographic area after termination of employment. [1977 c.646 §2; 1983 c.828 §1; 1985 c.565 §85]
https://www.oregonlegislature.gov/bills_laws/ors/ors653.html
Non-Competition Agreements And Protection Of Trade Secrets ORS 653.295
Oregon employers may choose to enter into a "non-compete" agreement with key employees or those employees with access to sensitive or propriety information.
In determining whether a non-competition agreement is valid, courts assess the following questions:
- Does the agreement protect a legitimate interest of the employer?
- Is the agreement too restrictive in terms of its duration? Is the agreement limited to the amount of time necessary to reasonably protect the employer?
- Is the agreement too restrictive in terms of the geographic boundaries specified? Is the agreement limited to the geographic areas necessary to reasonably protect the employer?
- Is the agreement supported by good consideration? In other words, was the agreement entered into upon the initial employment of the employee or upon advancement of the employee with the employer?
Non-compete agreements are prohibited in some states (e.g. California), and employers should consult with an employment attorney prior to implementing any agreement that imposes limits an employee's future livelihood.
Employers may protect trade secrets or other proprietary information by injunction or any other lawful means.
Oregon law also permits "bonus restriction agreements" designed to limit or restrain competition by an employee after termination of employment. If an employee violates such an agreement, the employer may require the employee to forfeit profit sharing or other bonus compensation not yet paid. These agreements are permitted when an employee has substantial involvement in management, personal contact with customers, or knowledge of trade secrets. Bonus restriction agreements must be reasonably limited to "a period of time, a geographic area and specified activities."
https://www.oregonlegislature.gov/bills_laws/ors/ors653.html