Non-compete agreements, also known as covenants not to compete, are contracts between an employer and an employee in which the employee agrees not to work for a competitor for a certain period of time after the termination of their employment. These agreements are commonly used in industries where an employee’s knowledge and skills are considered valuable, such as technology, healthcare, and finance.
In Oregon, the enforceability of non-compete agreements is governed by state law. While non-compete agreements are generally enforceable in Oregon, there are certain restrictions that must be followed in order for them to be considered valid.
First and foremost, non-compete agreements must be reasonable in scope. This means that the restrictions placed on the employee must not be too broad or too long and must not prevent the employee from making a living. In Oregon, the length of a non-compete agreement is limited to 18 months (ORS 653.295), and the geographic scope of the agreement must be limited to the areas where the employee actually worked or had a material impact.
Additionally, non-compete agreements must be necessary to protect the employer’s legitimate business interests. This can include protecting trade secrets, confidential information, or customer relationships. However, the restrictions placed on the employee must be narrowly tailored to protect these interests and cannot be used to prevent fair competition.
It is also important to note that non-compete agreements are only enforceable if they are entered into voluntarily by the employee two weeks before they begin work for the employer. In Oregon, an employer cannot force an employee to sign a non-compete agreement as a condition of employment and if they seek to create a non-compete after the employee is already employed, they must offer some financial consideration for the employee to sign. Furthermore, an employer cannot enforce a non-compete agreement against an employee who is terminated without cause.
In conclusion, non-compete agreements can be a valuable tool for employers in Oregon to protect their business interests. However, it is important to ensure that the agreements are reasonable in scope and necessary to protect the employer’s interests and that they are entered into voluntarily by the employee. Employers should seek legal advice to ensure that their non-compete agreements are enforceable under Oregon law.