Are employee non-compete agreements enforceable in Oregon?
Sometimes, but only if the employer satisfies a strict statutory checklist. Under ORS 653.295, a non-compete is void and unenforceable unless the employer gave advance written notice or secured the covenant on a bona fide advancement, the employee is an exempt salaried worker who clears an annual income threshold, the employer has a protectable interest, and the employer delivers a signed copy within 30 days of termination — subject to the garden-leave and on-air-broadcasting paths discussed below .
Oregon is not a ban state like California, but it is one of the most heavily regulated non-compete jurisdictions in the country. The governing statute is ORS 653.295, and it starts from a default of unenforceability that the employer must overcome by meeting every statutory condition.
Because the statute treats a non-conforming covenant as void rather than merely voidable, a single missed requirement — late notice, an income below the threshold, or no signed post-termination copy — defeats the entire non-compete. The sections below walk through each requirement and the practical drafting consequences.
Sources for this answer
Primary law
A.1 ORS 653.295ORS 653.295(1) makes an Oregon employee non-compete void and unenforceable by default, with the first requirement being two weeks' advance written notice or a subsequent bona fide advancement.
A noncompetition agreement entered into between an employer and employee is void and unenforceable unless: (a)(A) The employer informs the employee in a written employment offer received by the employee at least two weeks before the first day of the employee's employment that a noncompetition agreement is required as a condition of employment; or (B) The noncompetition agreement is entered into upon a subsequent bona fide advancement of the employee by the employer
See ORS 653.295(1).
What must a valid Oregon non-compete satisfy?
Four more conditions beyond the notice rule. The employee must be a salaried exempt worker, the employer must have a statutory protectable interest, the employer must deliver a signed copy of the terms within 30 days after termination, and the employee's annual gross salary and commissions must exceed an inflation-indexed threshold .
The notice or bona-fide-advancement requirement in subsection (1)(a) is only the entry point. Subsections (1)(b) through (1)(e) add the substantive qualifications, all of which must be satisfied at the same time.
The 30-day post-termination copy requirement in subsection (1)(d) is easy to overlook because it falls due after the employment relationship ends. The state labor agency lists it as a standalone condition of validity alongside the notice, salary, and exempt-status requirements .
Calendar the 30-day post-termination copy obligation as part of every Oregon offboarding. The signed-copy delivery is an independent statutory condition, so missing it can void an otherwise compliant covenant.
Sources for this answer
Primary law
B.1 ORS 653.295ORS 653.295(1)(b)-(e) sets the exempt-status, protectable-interest, 30-day signed-copy, and salary-threshold conditions for a valid Oregon non-compete.
(1) A noncompetition agreement entered into between an employer and employee is void and unenforceable unless:...(b) The employee is a person described in ORS 653.020 (3); (c) The employer has a protectable interest as described in subsection (2) of this section; (d) Within 30 days after the date of the termination of the employee's employment, the employer provides a signed, written copy of the terms of the noncompetition agreement to the employee; and (e) The total amount of the employee's annual gross salary and commissions, calculated on an annual basis, at the time of the employee's termination exceeds $100,533, adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor immediately preceding the calendar year of the employee's termination.
See ORS 653.295(1)(b)-(e).
Primary law
B.2 Oregon BOLI, Noncompetition AgreementsThe Oregon Bureau of Labor and Industries lists exempt salaried status, an employer interest to protect, and delivery of a signed copy within 30 days after termination as conditions for a valid non-competition agreement.
In addition, a noncompetition agreement is also void unless: The employee meets the criteria for a salaried exempt employee whose annual income at termination exceeds a minimum amount adjusted each year for inflation. (See below for details). The employer has an interest to protect, such as trade secrets; sensitive, confidential business or professional information; product development plans; launch plans; marketing strategy or sales plans; and finally, The employer must also provide a signed, written copy of the terms of the noncompetition agreement to the employee within 30 days after the employee's termination.
See Oregon BOLI, Noncompetition Agreements.
Which Oregon employees earn enough to be bound by a non-compete?
Only exempt salaried employees whose annual gross salary and commissions exceed an inflation-indexed dollar threshold. The baseline set when the 2021 amendments took effect was $100,533, adjusted each year for inflation; the labor agency publishes the figure annually, and for 2026 the amount the employee's pay must exceed is $119,541.
The statute fixes the mechanism and the labor agency fixes the number. ORS 653.295(1)(e) ties the threshold to the Consumer Price Index for the West Region and measures the employee's compensation at the time of termination.
Because the dollar figure resets every January, the relevant year is the year of termination, not the year the agreement was signed. The Bureau of Labor and Industries publishes the running table.
Test the income threshold against the year of termination, not the year of hire. An employee who cleared the threshold at signing but fell below it by the termination year may be outside the statute, voiding the covenant.
Sources for this answer
Primary law
C.1 ORS 653.295ORS 653.295(1)(e) requires that the employee's annual gross salary and commissions at termination exceed an inflation-indexed baseline of $100,533.
The total amount of the employee's annual gross salary and commissions, calculated on an annual basis, at the time of the employee's termination exceeds $100,533, adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor immediately preceding the calendar year of the employee's termination.
See ORS 653.295(1)(e).
Primary law
C.2 Oregon BOLI, Noncompetition AgreementsThe Oregon Bureau of Labor and Industries explains that a valid covenant requires the employee's annual gross salary and commissions at termination to exceed a minimum amount the agency adjusts each year for inflation.
For the provisions of a noncompetition agreement to be valid, the statute generally requires that the total amount of the employee's annual gross salary and commissions at the time of the employee's termination must exceed a minimum amount.
See Oregon BOLI, Noncompetition Agreements.
Can an Oregon employer enforce a non-compete against a worker below the salary threshold by paying during the restraint?
Yes, through a garden-leave option. ORS 653.295(7) lets an employer enforce a non-compete for up to 12 months even against an employee who does not meet the exempt-status or salary requirements, if the employer agrees in writing to pay, during the restricted period, the greater of half the employee's base salary and commissions or half the inflation-indexed threshold .
This pay-to-enforce path is the statute's safety valve. The employer trades compensation for enforceability and must commit to the payment in writing.
The labor agency describes the same option in plainer terms, framing it as enforcement available when the employer agrees to pay the greater of the two amounts for the term of the agreement .
If you plan to rely on the garden-leave option, put the payment promise in the agreement itself. The statute conditions this path on a written agreement to pay the greater of the two amounts for the restricted period.
Sources for this answer
Primary law
D.1 ORS 653.295ORS 653.295(7) allows enforcement against an otherwise unqualified employee for up to 12 months if the employer agrees in writing to pay the greater of 50 percent of base salary and commissions or 50 percent of the inflation-indexed threshold during the restriction.
Notwithstanding subsection (1)(b) and (e) of this section, a noncompetition agreement is enforceable for the full term of the agreement, for up to 12 months, if the employer agrees in writing to provide the employee, for the time the employee is restricted from working, the greater of: (a) Compensation equal to at least 50 percent of the employee's annual gross base salary and commissions at the time of the employee's termination; or (b) Fifty percent of $100,533, adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor immediately preceding the calendar year of the employee's termination.
See ORS 653.295(7).
Primary law
D.2 Oregon BOLI, Noncompetition AgreementsThe Oregon Bureau of Labor and Industries describes the garden-leave option as enforcement available when the employer agrees in writing to pay the greater of 50 percent of base salary plus commissions or 50 percent of the minimum salary.
when the employer agrees in writing to pay either 50% of the employee's annual base salary plus commissions at termination or 50% of minimum salary listed above, whichever is greater, for the term of the agreement.
See Oregon BOLI, Noncompetition Agreements.
How long can an Oregon non-compete last?
No more than 12 months from termination. ORS 653.295(3) caps the term at 12 months after the employee's termination, and any portion of the term beyond 12 months is void and cannot be enforced .
The 12-month cap is firm and self-executing. The 2021 amendments shortened the maximum term from 18 months to 12 months, and the statute voids only the excess rather than the whole covenant on this particular point.
The reference point matters: the clock runs from the date of termination, not from the date of breach or the date a lawsuit is filed. That fixed-from-termination measure is central to the tolling question discussed below.
Sources for this answer
Primary law
E.1 ORS 653.295ORS 653.295(3) caps an Oregon non-compete at 12 months from termination and voids any portion of the term beyond 12 months.
The term of a noncompetition agreement may not exceed 12 months from the date of the employee's termination. The remainder of a term of a noncompetition agreement in excess of 12 months is void and may not be enforced by a court of this state.
See ORS 653.295(3).
When must an Oregon non-compete be signed to be valid?
At the start of employment with two weeks' advance notice, or upon a later bona fide advancement. The Ninth Circuit applied that timing rule in Nike, Inc. v. McCarthy, holding that a non-compete signed in connection with a genuine promotion met the statutory requirements to be enforceable.
Continued employment alone is not a valid trigger. The covenant must be tied either to the original hire (with the two-week notice) or to a subsequent bona fide advancement.
In Nike v. McCarthy, the court analyzed whether a non-compete an executive signed in connection with a promotion to regional footwear sales manager qualified under the bona-fide-advancement path, and concluded it did.
Do not roll out a mid-employment non-compete on continued employment alone. Tie it to a real promotion or other bona fide advancement, because the statutory timing requirement is what Nike v. McCarthy tested before enforcing the covenant.
Sources for this answer
Primary law
F.1 ORS 653.295ORS 653.295(1)(a) requires either two weeks' advance written notice before the first day of employment or a subsequent bona fide advancement.
A noncompetition agreement entered into between an employer and employee is void and unenforceable unless: (a)(A) The employer informs the employee in a written employment offer received by the employee at least two weeks before the first day of the employee's employment that a noncompetition agreement is required as a condition of employment; or (B) The noncompetition agreement is entered into upon a subsequent bona fide advancement of the employee by the employer
See ORS 653.295(1)(a).
Case law · 2004-08-09
F.2 Nike, Inc. v. McCarthyNike v. McCarthy held that a non-compete signed in connection with a bona fide advancement met the ORS 653.295 timing requirements and was enforceable.
Construing the Oregon statute and reviewing the circumstances surrounding McCarthy's promotion and the execution of the noncompete agreement, we hold that the agreement meets the statutory requirements to be enforceable.
See Nike, Inc. v. McCarthy, 379 F.3d 576 (9th Cir. 2004).
What counts as a protectable interest under Oregon's non-compete statute?
Access to trade secrets or to competitively sensitive confidential information. ORS 653.295(2) defines the protectable interest as access to trade secrets or to confidential business or professional information that would not qualify as a trade secret, and the Ninth Circuit in Nike, Inc. v. McCarthy treated highly confidential strategic information as a legitimate interest supporting enforcement.
The statute supplies three qualifying categories. The first two — access to trade secrets and access to competitively sensitive confidential information — are the ones most employers rely on, and the second is broader than trade-secret law.
A narrow third category covers certain on-air broadcasting talent, and it comes with its own promotional-spend and pay conditions rather than the ordinary salary threshold .
Nike v. McCarthy illustrates the second category. The court found a legitimate interest where a departing executive had acquired highly confidential information that a competitor could exploit, even without framing that information as a strict trade secret.
Document the specific confidential information the employee can access before asking a court to enforce. Oregon's protectable-interest test is concrete, and Nike v. McCarthy turned on the particular strategic information at risk, not a generic competitive concern.
Sources for this answer
Primary law
G.1 ORS 653.295ORS 653.295(2) defines a protectable interest as access to trade secrets or to competitively sensitive confidential business or professional information that would not qualify as a trade secret.
For purposes of subsection (1)(c) of this section, an employer has a protectable interest when the employee: (a) Has access to trade secrets, as defined in ORS 646.461; (b) Has access to competitively sensitive confidential business or professional information that otherwise would not qualify as a trade secret, including product development plans, product launch plans, marketing strategy or sales plans
See ORS 653.295(2).
Primary law
G.3 ORS 653.295ORS 653.295(2)(c) supplies a third protectable-interest category for certain on-air broadcasting talent, conditioned on promotional spending and pay during the restriction rather than the ordinary salary threshold.
For purposes of subsection (1)(c) of this section, an employer has a protectable interest when the employee:...(c) Is employed as an on-air talent by an employer in the business of broadcasting and the employer: (A) In the year preceding the termination of the employee's employment, expended resources equal to or exceeding 10 percent of the employee's annual salary to develop, improve, train or publicly promote the employee, provided that the resources expended by the employer were expended on media that the employer does not own or control
See ORS 653.295(2)(c).
Case law · 2004-08-09
G.2 Nike, Inc. v. McCarthyNike v. McCarthy found a legitimate interest supporting enforcement where a departing executive had access to highly confidential strategic information a competitor could exploit.
We also hold that Nike has a legitimate interest in enforcing the agreement, because there is a substantial risk that McCarthy — in shaping Reebok's product allocation, sales and pricing strategies — could enable Reebok to divert a significant amount of Nike's footwear sales given the highly confidential information McCarthy acquired at Nike.
See Nike, Inc. v. McCarthy, 379 F.3d 576 (9th Cir. 2004).
Is a defective Oregon non-compete void or merely voidable, and can a court fix it?
For agreements entered on or after January 1, 2022, a non-conforming employee non-compete is void, not merely voidable, so an employer should not assume a court can reform it into a lawful covenant. The statute expressly severs only the portion of a term beyond 12 months; the older voidable regime described in Bernard v. S.B., Inc. was superseded by the 2021 amendments.
The distinction is consequential. Under the prior law, a defective covenant was voidable, meaning it remained in effect until the employee took affirmative steps to void it. Bernard v. S.B., Inc. applied that older rule.
The 2021 amendments changed the default to void. A covenant that misses a statutory requirement is now unenforceable from the start, without any need for the employee to act. The statute does sever an over-long term, voiding only the portion beyond 12 months, but that targeted severance is not a general license for courts to rewrite an otherwise non-conforming covenant.
Do not count on an Oregon court rescuing a non-conforming employee non-compete by narrowing it. Apart from the statutory severance of an over-long term, a non-conforming covenant is void, and the pre-2022 voidable rule from Bernard v. S.B., Inc. no longer applies.
Sources for this answer
Primary law
H.1 ORS 653.295ORS 653.295(3) severs only the portion of a non-compete term beyond 12 months, voiding the excess rather than authorizing general judicial reformation.
The remainder of a term of a noncompetition agreement in excess of 12 months is void and may not be enforced by a court of this state.
See ORS 653.295(3).
Case law · 2015-05-06
H.2 Bernard v. S.B., Inc.Bernard v. S.B., Inc. applied the pre-2022 rule that a defective non-compete was voidable rather than void and remained in effect until voided.
As explained below, we conclude that plaintiffs evidence established, at most, that the noncompetition agreement was voidable (not void) but remained valid and in effect at the time that defendant invoked it.
See Bernard v. S.B., Inc., 270 Or. App. 710 (2015).
Are non-solicitation covenants treated differently in Oregon?
Yes. ORS 653.295(5) excludes covenants not to solicit the employer's employees or customers from the non-compete checklist, so they are governed by common-law reasonableness instead. In Oregon Psychiatric Partners, LLP v. Henry, the Court of Appeals narrowed customers of the employer to those with an active or ongoing relationship and held the covenant at least partly enforceable as a non-solicitation agreement.
The statute carves non-solicitation and bonus-restriction covenants out of the rules in subsections (1) and (3).
Henry was decided in 2018 and refers to this carve-out by its former number, ORS 653.295(4)(b); the 2021 amendments renumbered the identical text to subsection (5)(b), so the court's construction of the customer exclusion remains good law. The same amendments also left the carve-out's wording unchanged.
In Henry, the employer's covenant did not satisfy the non-compete checklist, but the court treated the customer-restriction component as a non-solicitation agreement within the carve-out and remanded for further proceedings.
The court also narrowed the meaning of the customer carve-out, rejecting a broad reading that would let the exception swallow the rule.
Draft customer non-solicitation clauses around active, ongoing customer relationships, not former or incidental patrons. Oregon Psychiatric Partners v. Henry read the customer carve-out narrowly, so an overbroad customer definition risks losing the protection the carve-out provides.
Sources for this answer
Primary law
I.1 ORS 653.295ORS 653.295(5) excludes bonus-restriction agreements and covenants not to solicit the employer's employees or customers from the non-compete requirements of subsections (1) and (3).
Subsections (1) and (3) of this section do not apply to: (a) Bonus restriction agreements, which are lawful agreements that may be enforced by the courts in this state; or (b) A covenant not to solicit employees of the employer or solicit or transact business with customers of the employer.
See ORS 653.295(5).
Case law · 2018-08-22
I.2 Oregon Psychiatric Partners, LLP v. HenryOregon Psychiatric Partners v. Henry held that a covenant failing the non-compete checklist was at least in part enforceable as a customer non-solicitation agreement under the statutory carve-out.
For the reasons that follow, we agree with plaintiff's alternative argument that the agreement is at least in part enforceable under ORS 653.295(4)(b), and we leave to further proceedings in the trial court the resolution of any factual issues that may remain.
See Oregon Psychiatric Partners, LLP v. Henry, 293 Or. App. 471, 429 P.3d 399 (2018).
Case law · 2018-08-22
I.3 Oregon Psychiatric Partners, LLP v. HenryOregon Psychiatric Partners v. Henry construed customers of the employer to mean people with an active or ongoing relationship, not former or incidental patrons.
Those definitions support defendant's contention that the phrase “customers of the employer” refers to those people with an active or ongoing relationship with the employer and does not include former or merely incidental patrons.
See Oregon Psychiatric Partners, LLP v. Henry, 293 Or. App. 471, 429 P.3d 399 (2018).
Does ORS 653.295 apply to sale-of-business and owner covenants in Oregon?
No. ORS 653.295(4) limits the statutory checklist and 12-month cap to non-competes made in the context of an employment relationship, so a covenant given as part of selling a business or by an owner outside of employment is not governed by the statute. Those covenants are instead evaluated under Oregon common-law reasonableness .
The statute draws an explicit line around the employment relationship.
Because the checklist and the 12-month limit do not reach non-employment covenants, a sale-of-business or owner non-compete is analyzed under the common-law rule of reason — focused on a legitimate protectable interest and reasonable scope in time, geography, and activity — rather than the ORS 653.295 conditions. Sale-of-business restraints have historically been given more latitude than employee covenants.
Match the legal framework to the deal. An employee non-compete must clear the ORS 653.295 checklist, but a covenant tied to a business sale or an owner's interest falls outside the statute and is judged under common-law reasonableness, so do not assume the 12-month statutory cap applies to it .
Sources for this answer
Primary law
J.1 ORS 653.295ORS 653.295(4) limits the statutory non-compete checklist and 12-month cap to covenants made in the context of an employment relationship, leaving sale-of-business and owner covenants outside the statute.
Subsections (1) and (3) of this section apply only to noncompetition agreements made in the context of an employment relationship or contract and not otherwise.
See ORS 653.295(4).
Does an Oregon non-compete toll or extend during breach or litigation?
Oregon authority is silent, and the statute's fixed cap cuts against tolling. ORS 653.295(3) measures the maximum 12-month term from the date of termination and voids any term in excess of 12 months, so a clause that purports to pause and extend the restriction past 12 months from termination risks running into that hard cap. No Oregon statute or case squarely approves or rejects a tolling clause .
Many covenants include a clause stating that the restricted period pauses while the employee is in breach or while litigation is pending, so the employer receives the full period of compliance. Oregon's staged statutes and cases do not contain a holding that approves or rejects that kind of judicial or contractual tolling.
The complication is the way the statute measures the term. The 12-month maximum runs from termination, not from the last day of compliance, and the excess is void by statute.
A tolling clause that extends the effective restraint beyond 12 months after termination is therefore in tension with the statutory cap, even though no Oregon decision has tested such a clause directly. Treat the question as open and draft conservatively.
No Oregon statute or case squarely decides whether a non-compete may be tolled or extended for breach or pending litigation, and the 12-month-from-termination cap voids any excess term. Treat tolling as unsettled and avoid a clause that would push the effective restraint past 12 months after termination .
Sources for this answer
Primary law
K.1 ORS 653.295ORS 653.295(3) measures the 12-month maximum term from termination and voids any excess, which is in tension with a tolling clause that would extend the restraint beyond 12 months after termination.
The term of a noncompetition agreement may not exceed 12 months from the date of the employee's termination. The remainder of a term of a noncompetition agreement in excess of 12 months is void and may not be enforced by a court of this state.
See ORS 653.295(3).
Are physician and other medical non-competes enforceable in Oregon?
Usually not. Under ORS 653.297, added by the 2025 legislation, a non-compete that restricts the practice of medicine or nursing is void and unenforceable between a medical licensee and a person, management services organization, or hospital, unless a narrow exception applies — most notably the licensee holding at least a 1.5 percent ownership interest. The companion provision reaches agreements entered before, on, or after the June 9, 2025 effective date.
This is Oregon's newest and most aggressive restriction, enacted as part of the 2025 corporate-practice-of-medicine package. The default rule voids medical-licensee non-competes outright.
The statute then provides exceptions, including one tied to a meaningful ownership stake in the entity.
The equity stake is not the only exception. The statute also permits a covenant tied to a professional medical entity's documented recruitment investment, capped at three or five years depending on whether the licensee provides direct care in a designated shortage area, and it permits a covenant against a licensee who does not directly provide medical, health care, or clinical care .
The reach is also retroactive. The 2025 law applies to qualifying medical-licensee agreements regardless of when they were signed.
Do not rely on a pre-2025 physician or nurse non-compete in Oregon. ORS 653.297 voids medical-licensee non-competes absent a narrow exception, and the 2025 law reaches agreements signed before its effective date.
Sources for this answer
Primary law
L.1 ORS 653.297ORS 653.297(2)(a) voids a non-compete restricting the practice of medicine or nursing between a medical licensee and a person, management services organization, or hospital.
a noncompetition agreement that restricts the practice of medicine or the practice of nursing is void and unenforceable between a medical licensee and: (A) A person, as defined in ORS 442.015; (B) A management services organization; or (C) A hospital, as defined in ORS 442.015, or a hospital-affiliated clinic, as defined in ORS 442.612.
See ORS 653.297(2)(a).
Primary law
L.2 ORS 653.297ORS 653.297(2)(b)(A) allows a medical-licensee non-compete where the licensee holds an ownership or membership interest of at least 1.5 percent of the entity.
A noncompetition agreement between a medical licensee and another person that restricts the practice of medicine or the practice of nursing is valid and enforceable to the extent and under the terms provided in ORS 653.295 if: (A) The medical licensee is a shareholder or member of the other person or otherwise owns or controls an ownership or membership interest and the medical licensee's ownership or membership interest in the other person is equivalent to 1.5 percent or more of the entire ownership or membership interest that exists in the other person
See ORS 653.297(2)(b)(A).
Primary law
L.4 ORS 653.297ORS 653.297(2)(b)(C) permits a medical-licensee non-compete where the licensee does not engage directly in providing medical, health care, or clinical care.
The medical licensee does not engage directly in providing medical services, health care services or clinical care.
See ORS 653.297(2)(b)(C).
Primary law
L.3 ORS 653.298A 2025 session-law note applies ORS 653.297 and 653.298 to medical-licensee non-competes entered before, on, or after the June 9, 2025 effective date.
Sections 7 [653.297] and 8 [653.298], chapter 295, Oregon Laws 2025, apply to noncompetition agreements, as defined in section 7, chapter 295, Oregon Laws 2025, that restrict the practice of medicine or the practice of nursing and into which a medical licensee, as defined in section 7, chapter 295, Oregon Laws 2025, enters before, on or after the effective date of chapter 295, Oregon Laws 2025 [June 9, 2025].
See ORS 653.298 (2025 c.295 §9 note).
What is a bonus restriction agreement, and why does it matter?
It is a separate, expressly lawful tool that penalizes competition only by forfeiting unpaid bonus compensation. ORS 653.295 excludes bonus restriction agreements from the non-compete checklist and defines them so that the only penalty for competing is forfeiture of profit sharing or other bonus compensation not yet paid.
Because a bonus restriction agreement does not bar the employee from working, it sits outside the non-compete requirements. The statute confirms these agreements are lawful and enforceable.
The defining feature is the limited penalty. The employee who competes loses only unpaid bonus money, not the ability to take a competing job.
If the only consequence you need is forfeiture of unpaid bonus money, use a bonus restriction agreement rather than a non-compete. The statute keeps that tool outside the non-compete checklist as long as the penalty is limited to unpaid bonus compensation.
Sources for this answer
Primary law
M.1 ORS 653.295ORS 653.295(5)(a) excludes bonus restriction agreements from the non-compete requirements and confirms they are lawful and enforceable.
Subsections (1) and (3) of this section do not apply to: (a) Bonus restriction agreements, which are lawful agreements that may be enforced by the courts in this state; or (b) A covenant not to solicit employees of the employer or solicit or transact business with customers of the employer.
See ORS 653.295(5)(a).
Primary law
M.2 ORS 653.295ORS 653.295(8)(a)(C) defines a bonus restriction agreement so that the penalty for competition is limited to forfeiture of unpaid profit sharing or bonus compensation.
The penalty imposed on the employee for competition against the employer is limited to forfeiture of profit sharing or other bonus compensation that has not yet been paid to the employee.
See ORS 653.295(8)(a)(C).
Can an out-of-state employer use a choice-of-law clause to avoid ORS 653.295, and what is the fee exposure?
Generally no. ORS 15.320 provides that an employment contract for services rendered primarily in Oregon by an Oregon resident is governed by Oregon law, which limits the use of a foreign choice-of-law clause to escape ORS 653.295. And ORS 20.096 makes one-sided contractual attorney-fee clauses reciprocal, so a prevailing employee can recover fees even if the contract named only the employer.
ORS 15.320 provides that, subject to the limitations in ORS 15.305, the law of Oregon applies to several listed categories of contracts. One of those categories is employment performed primarily in the state by an Oregon resident.
The fee statute then changes the litigation calculus. A contractual fee clause that runs in only one direction is made mutual by statute.
Do not assume a Delaware or other out-of-state choice-of-law clause will save a non-compete against an Oregon-resident employee working in Oregon. ORS 15.320 points to Oregon law, and ORS 20.096 can shift fees to a prevailing employee even under an employer-drafted one-way fee clause.
Sources for this answer
Primary law
N.1 ORS 15.320ORS 15.320(3) provides that Oregon law governs a contract of employment for services rendered primarily in Oregon by an Oregon resident.
Notwithstanding any other provision of ORS 15.300 to 15.380, but subject to the limitations on applicability imposed by ORS 15.305, the law of Oregon applies to the following contracts:...(3) A contract of employment for services to be rendered primarily in Oregon by a resident of Oregon.
See ORS 15.320(3).
Primary law
N.2 ORS 20.096ORS 20.096(1) makes a one-sided contractual attorney-fee provision reciprocal, entitling the prevailing party to fees regardless of which party the contract specified.
the party that prevails on the claim shall be entitled to reasonable attorney fees in addition to costs and disbursements, without regard to whether the prevailing party is the party specified in the contract and without regard to whether the prevailing party is a party to the contract.
See ORS 20.096(1).
How do Oregon trade-secret protections and NDAs compare to non-competes?
They remain available and are often the better tool. Oregon has adopted the Uniform Trade Secrets Act, and ORS 653.295 preserves the right to protect trade secrets and proprietary information by other lawful means; but the Workplace Fairness Act limits using nondisclosure and nondisparagement provisions to suppress discrimination or harassment complaints.
Even where a non-compete is unavailable, the employer keeps its trade-secret remedies. Oregon's Uniform Trade Secrets Act defines the protected information.
The non-compete statute itself preserves these alternative protections.
Confidentiality and non-disparagement clauses have their own statutory limit. The Workplace Fairness Act makes it unlawful to use them to prevent an employee from discussing discrimination or harassment.
Use confidentiality and trade-secret tools for secrecy interests, and scope nondisclosure and nondisparagement clauses to avoid the Workplace Fairness Act. ORS 653.295 preserves trade-secret remedies, but ORS 659A.370 bars provisions that prevent an employee from discussing discrimination or harassment.
Sources for this answer
Primary law
O.1 ORS 646.461ORS 646.461(4) defines a trade secret under the Oregon Uniform Trade Secrets Act by reference to independent economic value and reasonable secrecy efforts.
“Trade secret” means information, including a drawing, cost data, customer list, formula, pattern, compilation, program, device, method, technique or process that: (a) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
See ORS 646.461(4).
Primary law
O.2 ORS 653.295ORS 653.295(6) preserves the right to protect trade secrets and proprietary information by injunction or other lawful means even where a non-compete is restricted.
Nothing in this section restricts the right of any person to protect trade secrets or other proprietary information by injunction or any other lawful means under other applicable laws.
See ORS 653.295(6).
Primary law
O.3 ORS 659A.370ORS 659A.370(1) makes it an unlawful employment practice to require a nondisclosure or nondisparagement provision that prevents an employee from disclosing or discussing discrimination or harassment.
it is an unlawful employment practice for an employer to enter into an agreement with a former, current or prospective employee, as a condition of employment, continued employment, promotion, compensation or the receipt of benefits, that contains a nondisclosure provision, a nondisparagement provision or any other provision that has the purpose or effect of preventing the employee from disclosing or discussing conduct: (a)(A) That constitutes discrimination prohibited by ORS 659A.030, including conduct that constitutes sexual assault; or (B) That constitutes discrimination prohibited by ORS 659A.082 or 659A.112; and (b)(A) That occurred between employees or between an employer and an employee in the workplace or at a work-related event that is off the employment premises and coordinated by or through the employer; or (B) That occurred between an employer and an employee off the employment premises.
See ORS 659A.370(1).