Oregon Employer Guide to Restrictive Covenants and Non-Compete Statutory Compliance

Protecting your company's market share, client relationships, and confidential information from departing employees is a primary concern for any Oregon business owner. However, Oregon is notoriously hostile toward non-compete agreements. The state legislature has enacted aggressive statutes designed to protect employee mobility. If you attempt to enforce an outdated, boilerplate non-compete agreement pulled from the internet, you will likely find it entirely unenforceable in an Oregon court.

Implementing valid restrictive covenants requires flawless administrative compliance from your HR department. Because the laws surrounding non-competes, non-solicitation clauses, and non-disclosure agreements change frequently, searching our directory for a specialized Oregon corporate lawyer is essential to keep your employment contracts legally sound and fully enforceable.

Strict Income Thresholds and the Notice Rule

The enforceability of a non-competition agreement in Oregon is governed almost entirely by Or. Rev. Stat. § 653.295. To be valid, a non-compete must meet severe procedural and substantive hurdles. First, the employer must inform the employee in a written employment offer at least two weeks (14 days) before the employee's first day of work that a non-compete is a condition of employment. (Note: Many HR professionals refer to this general compliance window as the pre-employment notice rule).

Furthermore, the employee must be classified as an 'exempt' administrative, executive, or professional employee. Even if they are exempt, their total gross annual salary and commissions at the time of termination must exceed the statutory threshold, which starts at a baseline of $100,533 and is adjusted annually for inflation by the Oregon Bureau of Labor and Industries (BOLI)-set at $119,541 for 2026 (increased from $116,427 in 2025). If the employee does not meet this income threshold at the time of their termination, the non-compete is void and unenforceable ab initio under Or. Rev. Stat. § 653.295.

C-Suite Executives

For CEOs, CFOs, and other highly compensated executives working in Portland or Lake Oswego, meeting the income threshold is rarely an issue. However, these agreements must still be reasonable in geographic scope and time limit. Under Oregon law, a non-compete agreement generally cannot exceed 12 months from the date of separation. Attempting to lock an executive out of the industry for three years will result in a judge at the Multnomah County Circuit Court, Portland striking down the agreement entirely.

Outside Sales Reps

Sales representatives present a unique challenge. While they may have access to highly valuable client lists, their income often fluctuates based on commissions. If a sales rep in Eugene has a bad year and their total gross income falls below the required statutory threshold at the time they resign, the non-compete becomes void and unenforceable ab initio, regardless of what they earned in previous years. To protect client relationships safely, employers should rely heavily on 'non-solicitation' agreements rather than strict non-competes, as non-solicitation agreements are subject to less rigorous statutory hurdles.

Tech Developers in the Silicon Forest

Tech companies often try to prevent software engineers from taking their skills to competitors. However, if a developer is hired, signs a standard Form W-4, FED, Internal Revenue Service, Employee's Withholding Certificate, and works for two years before the employer suddenly asks them to sign a non-compete, that agreement is void unless it is tied to a 'bona fide advancement' (a significant promotion and raise). You cannot force an existing employee to sign a non-compete just to keep their current job.

Medical Professionals and Exemptions

The healthcare industry has entirely different rules. Under Or. Rev. Stat. § 653.297, a non-competition agreement with a physician (a doctor of medicine or osteopathy) is generally void and unenforceable. Medical clinics in Salem and Bend cannot prevent a doctor from opening a competing practice down the street, because the state prioritizes a patient's right to choose their healthcare provider over a clinic's business interests.

What Happens if an Agreement is Void?

If your HR department failed to provide the required pre-employment notice, or if the employee's income falls short, the agreement is void and unenforceable ab initio under Or. Rev. Stat. § 653.295. This means the employee does not need to take affirmative legal steps to invalidate it. If the employee takes a position with a competitor and you attempt to file a complaint and motion for a temporary restraining order under ORCP 79 to enforce the covenant, the judge will quickly dismiss your case.

However, Oregon provides a controversial 'garden leave' exception under Or. Rev. Stat. § 653.295(7). Even if the employee does not meet the income threshold, the employer can enforce the non-compete if they agree in writing to pay the former employee at least 50% of their gross base salary (or 50% of the statutory threshold adjusted for inflation, whichever is greater) for the entire duration of the non-compete period. Essentially, you can pay them to sit on the sidelines.

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