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UPDATE ON EMPLOYEE NONCOMPETITION RESTRICTIONS
We have been working recently with many of our clients in drafting or revising noncompetition, nonsolicitation and/or confidentiality agreements for their employees. This Enews is a quick reminder of recent changes in Oregon's law, and to provide an overview of steps that must be taken to ensure the enforceability of these types of restrictions.
As addressed in several earlier Dunn Carney e-mail alerts, the law in Oregon relating to employee "noncompetition" restrictions changed dramatically as of January 1, 2008. In order for such a broad restriction to be enforceable, it must be included in a written offer received by the employee at least two weeks before starting work. In addition, the employee subject to such a restriction must be an "exempt" employee, must earn at least $62,000 a year, and must have access to trade secrets or confidential information.
As a result of these changes, existing employees in Oregon cannot be subject to a new noncompetition restriction, unless it is entered into upon a bona fide advancement or promotion and these other requirements are met.
Significantly, this new law does not apply to purely "nonsolicitation" restrictions, where an employee is restricted from soliciting or transacting business with customers of the employer after leaving. These restrictions can be imposed upon any new employee, without any requirement that it be in an offer letter, or that the employee is exempt or making a particular amount of money. More importantly, nonsolicitation restrictions can be required of any existing employee, at any time.
Also note that there is no Oregon law that limits an agreement not to use or disclose proprietary or confidential information, or trade secrets. Again, this can be required of an employee at any time.
Also remember that the enforceability of these types of restrictions vary widely from state-to-state. Employers should be very careful in structuring employment agreements to specifically take into account the law of the state where the employee will be working. A “one size fits all” concept does not work for these types of restrictions and may make it more difficult overall to enforce these types of contracts if such an umbrella agreement is used.
Should there be any questions or concerns about these issues, or should you need assistance to ensure compliance with applicable law, please contact Jack Cooper, 503-306-5323 or
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Employment and Labor Law Team
Leader:Tamsen Leachman
Bob Allen
Laura Althouse
Tim Bernasek
Jack Cooper
Dan Drazan
Elizabeth Knight
Kelly Martin
Sam Smith
Renee Stineman
FEBRUARY 2009 v2
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