It’s time to review your Oregon noncompete agreements

The 2021 Oregon legislative session imposed further limitations on noncompetition agreements. Before the law becomes effective on January 1, 2022, you should review your agreements to ensure they provide the best possible protection.

New limits on noncompetes

Senate Bill (SB) 169, which passed during the 2021 Oregon legislative session, further limits employers’ ability to use noncompete agreements. Effective January 1, the following limits will be in force:

The agreement can be in effect no longer than 12 months (instead of the current 18);

Employees can be subject to a noncompete only if they earn at least $100,533 at the time of termination (the number will be adjusted annually for inflation); and

The agreement must be in writing.

In addition, noncompete agreements violating the statute in the future will be void. Previously, they were “voidable.” The difference is, when the agreement was voidable, an employee had to take some action to cancel it. Now, the agreement is automatically nullified without any action by the worker.

While implementing the changes, it’s a good time to review your noncompete agreements and your practices for using them. In Oregon, a noncompete can be entered into only at hire or upon a “subsequent bona fide advancement,” usually a promotion. At hire, you must disclose the agreement in a written offer to the employee provided at least two weeks before the first day of employment.