Oregon Non-Compete Agreement Template

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Updated June 29, 2022

An Oregon non-compete agreement is used to help safeguard an employer’s protectable interests from being used against them by a former employee. The agreement prohibits an employee from engaging in the same business for a specific geographical area and timeframe.

Legally Enforceable?

Yes, but with the following limitations (effective January 1, 2022):

  • Cannot last longer than 12 months;
  • Cannot be less than $100,533 in 2021 adjusted for inflation in accordance with the Consumer Price Index for All Urban Consumers, West Region and must be adjusted the next calendar year;
  • Must be provided to the employee at least 2 weeks prior to employment;
  • Must provide a copy of the non-compete within 30 days following the employee’s termination;
  • The employer has a protectable interest; and
  • An individual described in ORS 653.020(3) who is engaged in administrative, executive or professional work who:
    • Performs predominantly intellectual, managerial, or creative tasks;
    • Exercises discretion and independent judgment; and
    • Earns a salary and is paid on a salary basis.<

Source: Or. Rev. Stat. § 653.295(1)

Protectable Interest

An employer has a protectable interest with an employee if they hold the following:

  • Trade secrets. Has access to trade secrets (as defined in ORS 646.461)
  • Confidential information. Has access to sensitive confidential business or professional information that otherwise would not qualify as a trade secret, including product development plans, product launch plans, marketing strategy or sales plans; or
  • Broadcast employee. Is employed as an on-air talent by an employer in the business of broadcasting and the employer:
    • In the year preceding the termination of the employee’s employment, expended resources equal to or exceeding 10 percent of the employee’s annual salary to develop, improve, train or publicly promote the employee, provided that the resources expended by the employer were expended on media that the employer does not own or control; and
    • Provides the employee, for the time the employee is restricted from working, the greater of compensation equal to at least:
      • Fifty percent of the employee’s annual gross base salary and commissions at the time of the employee’s termination; or
      • Fifty percent of $100,533, adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor immediately preceding the calendar year of the employee’s termination.
  • 12-month term. Cannot exceed 12 months from the date of the employee’s termination.

Source: Or. Rev. Stat. § 653.295(2)

Employment

If a non-compete is ancillary to an employment contract, it must follow 3 essential rules:

  1. Time and place. It must be partial or restricted in its operation in respect either to time or place;
  2. Consideration. It must come on good consideration; and
  3. Reasonable. It must be reasonable, that is, it should afford only a fair protection to the interests of the party in whose favor it is made, and must not be so large in its operation as to interfere with the interests of the public.

Source: Volt Services Group v. Adecco Employment Services, Inc. (2001)

At the Time of Employment

A non-compete must be presented and signed at the time of employment. An Oregon court ruled that 16 days was too long after employment began to sign an agreement.

Source: Konecranes, Inc. v. Scott Sinclair (2004)

Continued Employment

An employee must be presented with “bona vide advancement” to support sufficient consideration for continued employment. (ORS 653.295(1)(B))

Bona vide advancement is construed as follows:

  • An enhancement in job duties and responsibilities;
  • A change in job title; and a
  • A change in pay or benefits.

A change in pay will not alone suffice as bona vide advancement.

Source: Nike Inc. v. McCarthy (2004)

Termination for NOT Signing

An employer is permitted to terminate an employee, during the course of employment, if they refuse to sign an employment contract.

Source: Dymock v. Norwest Safety Protective Equipment for Oregon Industry, Inc. (2001)

Attorneys (prohibited)

An attorney cannot enter into a non-compete, or any restrictive covenant, that restricts their right to practice law after termination of employment.

Source: Rule 5.6 (Restrictions on Right to Practice)

Blue Penciling

An Oregon court can modify a broad or unreasonable non-compete. Even going as far as providing a reasonable limit of no time or territorial restrictions are mentioned in the agreement.

Source: Lavey v. Edwards (1973)

“Noncompetition Agreement” Definition

“Noncompetition agreement” means a written agreement between an employer and employee under which the employee agrees that the employee, either alone or as an employee of another person, will 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.

Source: Or. Rev. Stat. § 653.295(8)(d)