New Oregon Law Imposes Additional Requirements on Enforceability of Non-Compete Agreements

Restrictive covenants such as covenants not to compete and non-solicitation agreements are key provisions of many employment agreements and are meant to protect the company’s proprietary information and long-term relationships. Beginning January 1, 2020, business owners in Oregon using non-compete agreements must take into account the notice requirements imposed by a recently passed law or their non-compete agreements will not be enforceable.

Earlier this year, Oregon Governor Kate Brown signed House Bill (HB) 2992, which imposes a new burden on employers who utilize noncompetition agreements with their Oregon employees. Under the new law, an employer must provide the former employee with a signed, written copy of their non-compete agreement within 30-days following their termination. If an employer does not provide a copy of the non-compete agreement to the former employee within this window, the employer forfeits the right to enforce the non-compete agreement.

This new requirement to provide post-termination-notice is one of a number of existing statutory requirements for enforcement of non-compete agreements under Oregon law. These existing statutory requirements include:

  • Requiring employers to inform prospective employees in writing at least two weeks before employment starts that a noncompetition agreement is required as a condition of employment.
  • Requiring employers seeking to have existing employees sign non-compete agreements to provide adequate consideration in the form of a real promotion.
  • Limiting the enforceability of covenants not to compete to those employees who meet three criteria: (i) employees exempt from minimum wage and overtime under Oregon law such as managerial, executive, and salaried employees; (ii) employees who have access to a “protectable interest” of the employer; and (iii) employees whose annual salary (including commissions), at the time of termination, exceed the median income for a family of four, as determined by the U.S. Census Bureau.
  • Limiting the period of a post-employment restriction imposed by a non-compete agreement to 18 months from the date of separation.

It is worth noting that the new law does not apply to all types of restrictive covenants. HB 2992 applies only to “noncompetition agreements,” which the statute defines as agreements “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.” Importantly, the law does not apply to confidentiality agreements or non-solicitation agreements.

Whether you are a business owner who is or is considering asking workers to sign a non-compete or non-solicitation agreement or a worker being asked to sign such an agreement, it is always advisable to seek the assistance of an attorney experienced in non-compete law. The Chicago non-compete agreement attorneys at Lubin Austermuehle are among the best non-compete attorneys in the Chicagoland area with over thirty years of experience defending and prosecuting non-compete agreements and unpaid wages and a wide variety of other business dispute lawsuits arising between physicians in the same medical practice. Lubin Austermuehle a firm of Chicago business dispute attorneys handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat.

Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Elmhurst and Winfield business dispute and restrictive covenant lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely-held businesses and employee breaches of fiduciary duty. We also assist Chicago, Cook, and DuPage County area businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333.  You can also contact us online here.

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