Less Freedom for Employers to Contract: The Oregon Legislature Toughens Laws on Noncompete Agreements

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Breaking Developments In Labor and Employment Law

On August 6, Governor Ted Kulongoski signed Senate Bill 248 into law, making more onerous the requirements for a valid noncompetition agreement between employers and their employees. Oregon law now makes noncompete agreements voidable unless all of the following four requirements are met:

1. The employer informs the employee that a signed non-compete agreement is a required condition of employment. This notification must be given to the employee in a written

employment offer at least two weeks before the employee’s first day of work.

2. The employee is an individual engaged in administrative, executive, or professional work who: (a) performs predominately intellectual, managerial or creative tasks; (b) exercises discretion and independent judgment; and (c) is paid on a salary basis.

3. The employer has a “protectable interest.” A protectable interest means either (a) has access to trade secrets; (b) has access to competitively sensitive confidential business or professional information (i.e., product development plans, product lunch plans, marketing strategy or sales plans); (c) on-air talent.

4. The total amount of employee’s gross salary and commissions on an annual basis at the time of termination exceeds the median family income for a family of four as determined by the United States Census Bureau.

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