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Oregon Gov. Kate Brown signed HB 2992 on May 14, a bill that, starting January 1, 2020, adds another hurdle for Oregon employers seeking to maintain an enforceable noncompetition agreement. The bill requires that “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.” This bill passed unanimously in both the Oregon House and the Senate.
As written, it is unclear whether it is satisfactory to provide a copy of the agreement to the former employee on the date their employment ended, or if the agreement must be provided (at the earliest) the day after the date of their termination. Regardless, it’s clear that an employer does not satisfy this requirement if they provide the employee with the agreement prior to the employee’s last day.
Under HB 2992, employers must, starting January 1, 2020, comply with the following to have an enforceable noncompetition agreement under Oregon law:
- The employer tells the employee in a written job offer at least two weeks before the employee starts work that the noncompete is required, or the noncompete is entered into upon a bona fide advancement;
- The employee is exempt from Oregon minimum wage and overtime laws;
- The employer has a “protectable interest” (access to trade secrets or competitively sensitive confidential information);
- The employee makes more than the median family income for a family of four as calculated by the Census Bureau;
- The agreement is not effective for longer than 18 months from the date of the employee’s termination; and
- The employer provides the former employee with a signed, written copy of the noncompetition agreement within 30 days after the date of employment termination.
Employers should look at existing noncompete agreements and develop a strategy for existing and new employees moving forward to ensure compliance with the law. They should also put into place a system that ensures noncompetition agreements are sent to the former employee within 30 days after their employment ends.
It is important to remember that the aforementioned obligations are only associated with noncompetition agreements. It is possible that some companies may be better off with customer non-solicitation or non-transaction agreements where the employee is restricted from soliciting or doing business with customers with whom they had material contact during their employment.
These agreements are not subject to the same restrictions as noncompetition agreements and present less of an administrative burden on companies.
Stephen M. Scott is an associate with labor and employment law firm Fisher Phillips in Portland. He may be reached at smscott@fisherphillips.com.
