Oregon Non-Compete Agreements: Income Thresholds and Notice Requirements for Employers

Drafting a valid non-compete agreement in Oregon requires strict adherence to state laws. If you operate a business in Portland, Eugene, or Bend, failing to follow these local rules can make your employment contracts completely void and unenforceable. Employees have strong protections under state statutes, meaning employers must be meticulous when creating restrictive covenants to protect their trade secrets.

We highly recommend browsing our directory to find a local Oregon employment lawyer who can help you draft these agreements correctly. A qualified attorney understands the nuances of local employment laws and can ensure your contracts are both fair and enforceable.

Step-by-Step Process for Drafting Non-Competes in Oregon

Whether you are managing a startup in Portland or a clinic in Salem, the process of implementing a valid non-compete generally follows these essential steps. Oregon law is notoriously strict, and missing even one detail can render the agreement useless.

Step 1: Evaluating the Income Threshold

Under Or. Rev. Stat. § 653.295, an employee must meet a specific minimum income threshold for a non-compete to be enforceable. The statute requires the employee to be exempt from minimum wage and overtime laws, and their annual gross salary and commissions at termination must exceed a statutory baseline of $100,533 adjusted annually for inflation (exceeding $116,000). If the employee earns less, the agreement is void and unenforceable unless the employer agrees to pay the employee during the restricted period.

Step 2: Providing the Two-Week Written Notice

Oregon strictly mandates a two-week pre-employment written notice rule. You must inform the prospective employee in a written job offer at least two weeks before their first day of work that a non-compete agreement is required as a condition of employment. Failure to provide this timely notice automatically invalidates the non-compete clause.

Step 3: Limiting the Duration

An Oregon non-compete cannot last forever. State law restricts the duration of these agreements to a maximum of 12 months after the termination of employment. Any contract attempting to enforce a non-compete for longer than 12 months is generally considered unenforceable by local courts, such as the Multnomah County Circuit Court, Portland or the Lane County Circuit Court, Eugene.

Step 4: Providing Consideration for Existing Employees

If you want to introduce a non-compete to an employee who already works for you, simply keeping their job is not enough consideration. You must provide a bona fide advancement, such as a promotion or a significant raise, accompanied by a new job title and increased responsibilities, to make the new agreement valid under Or. Rev. Stat. § 653.295, as affirmed in Nike, Inc. v. McCarthy, 379 F.3d 576 (US Court of Appeals 2004).

Drafting for Specific Micro-Niches in Oregon

Different industries face unique challenges when drafting non-competes. A generic template is rarely sufficient to protect your business interests effectively across various professional fields.

Tech Sector Employees

Tech companies in Silicon Forest often deal with highly sensitive intellectual property. When drafting agreements for software engineers or IT managers, it is crucial to narrowly define the restricted geographic area and scope of work. Tech non-competes must specify that the restriction applies only to direct competitors within a reasonable market area to survive judicial scrutiny.

Medical and Healthcare Professionals

Oregon places additional restrictions on healthcare providers. Under Or. Rev. Stat. § 653.295, it is very difficult to enforce non-competes against physicians and nurses because doing so could negatively impact public health and patient choice. Instead of non-competes, clinics often rely on non-solicitation agreements or require a buyout provision if a doctor leaves to start a competing practice nearby.

Commission-Based Sales Executives

For sales executives, the income calculation must factor in base salary and expected commissions to meet the statutory threshold. The agreement should focus on protecting existing client relationships rather than simply preventing the salesperson from working in the industry. Properly drafted non-solicitation clauses are often more effective and easier to enforce for sales teams.

How Much Does it Cost in Oregon?

Drafting and enforcing a non-compete agreement involves various expenses. While standard employment contracts may seem simple, custom restrictive covenants require professional legal assistance.

• Attorney Drafting Fees: Experienced employment lawyers typically charge between $300 and $600 per hour. Drafting a customized non-compete may cost anywhere from $1,000 to $3,500 depending on the complexity of the role.
• Court Filing Fees: If you need to enforce a breached agreement by filing a lawsuit for an injunction, the initial filing fee for a civil complaint in an Oregon Circuit Court is approximately $281.
• Service of Process: Serving the former employee with a civil summons under ORCP 7 usually costs between $50 and $100.

How Long Does the Process Take?

Drafting the agreement usually takes an attorney 1 to 2 weeks. However, the critical timeline is the mandatory two-week waiting period before the employee starts working. If enforcement becomes necessary, obtaining a temporary restraining order can take a few days, but a full civil lawsuit for breach of contract can take 8 to 14 months to resolve in state courts.

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