NON-COMPETITION AGREEMENTS AND PROTECTION OF TRADE SECRETS
Employers should consult with legal counsel before entering into non-competition agreements with employees. Employers also need to determine with counsel whether enforcing a non-competition agreement is worth the expense of litigation. Some states like California have banned non-competition agreements altogether. Oregon's statute allows non-competition agreements as long as they are entered into with employees prior to employment or prior to a bona fide advancement. Non-competition agreements are not enforceable unless the following criteria are met pursuant to ORS 653.295:
The employee is exempt from minimum wage and overtime as a “white collar” employee (i.e., he or she fits into either the executive, administrative or professional exemption),
At termination, the employee’s annual salary and commissions exceed the median family income for a family of four as determined by the U.S. Census Bureau,
The employer has what is called a “protectable” interest. This means that the employee will have access to trade secrets or competitively sensitive confidential business or professional information - such as product development plans, product launch plans, marketing strategy or sales plans,
The agreement is entered into at the beginning of employment (or bona fide advancement), and the employer has provided a written notice to the employee - at least two weeks before employment begins - that a non-competition agreement will be required, and
The agreement is not effective for longer than two years from the date of the employee’s termination.
Note: Special rules apply to “on-air talents” in the broadcast industry.
Nothing on this
website is intended as legal advice. Any responses to specific questions
are based on the facts as we understand them, and not intended to apply to any
other situations. This communication is not an agency order. If you
need legal advice, please consult an attorney. We attempt to update the
information on this website as soon as practicable following changes or
developments in the laws and rules affecting Oregon employers, but we make no
warranties or representations, express or implied, about whether the
information provided is current. We urge you to check the applicable
statutes and administrative rules yourself and to consult with legal counsel
prior to taking action that may invoke employee rights or employer responsibilities
or omitting to act when required by law to act.
TECHNICAL ASSISTANCE FOR EMPLOYERS
800 NE OREGON STREET, STE 1045
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