Over the past several years, Oregon's legislature has whittled away at non-competition agreements with the focus on increasing employee mobility and autonomy. Non-competition agreements were once again a target for the legislature in 2021.
On May 21, 2021, Governor Brown signed SB 169 modifying the requirements for enforceable non-competes within the state. These modifications become effective January 1, 2022.
While employers may still enter into non-competes with eligible employees, SB 169 creates new challenges for Oregon employers and adds complexity for multi-state employers to the piecemeal landscape of non-compete law across the country.
First, SB 169 creates a gross salary floor of $100,533 for employees who may enter into a non-competition agreement. In other words, to enter into such an agreement, an employee's annual gross salary and commission at the time of their termination must exceed this amount, which will be adjusted annually for inflation. A purported non-compete agreement with an employee whose annual compensation is below this threshold at the time of their termination is void.
Second, SB 169 shortens the term of a valid non-compete agreement to 12 months, down from 18 months. Third, agreements that are not in compliance with SB 169's provisions will be void, instead of voidable. Finally, SB 169 codifies the requirement that all non-competition agreements be in writing (as opposed to oral or otherwise implied).
SB 169's requirements apply only to agreements entered into on or after January 1, 2022, so employers do not need to worry about overhauling currently-existing non-competes. However, now is a good time to begin preparing for these upcoming changes.
When considering whether to enter into a non-competition agreement with a new or existing employee, employers should consider the following: