Employee Non-Compete Agreement and Enforceability Memo — Oregon

OREGON Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

Part A — Enforceability Memo

TO: [CLIENT / HIRING MANAGER]
FROM: [COUNSEL NAME], [LAW FIRM]
RE: Enforceability of Proposed Non-Compete Agreement with [EMPLOYEE NAME] — Oregon Law (ORS 653.295)
DATE: [__/__/____]

1. Executive Summary

Oregon enforces non-compete agreements only under the narrow statutory framework in ORS 653.295. Effective January 1, 2022, an agreement that fails to satisfy every statutory prerequisite is void as a matter of law — the employee no longer needs to take any affirmative step to invalidate it. The four critical gates are: (i) two-week pre-hire notice OR a bona fide advancement; (ii) FLSA exempt salaried status; (iii) annual gross salary + commissions at termination exceeding the inflation-adjusted threshold (for [YEAR], $[________________]); and (iv) a 12-month maximum post-termination duration. The employer must also deliver a signed copy within 30 days of termination.

For non-qualifying employees, Oregon offers a "garden leave" workaround: pay 50% of base salary (or 50% of the statutory minimum, whichever is greater) during the restricted period.

2. ORS 653.295 Checklist — Each Box Must Be Checked

3. "Bona Fide Advancement" — Nike, Inc. v. McCarthy

Where the NCA is signed mid-employment without two-week pre-hire notice, the employer must show a bona fide advancement: the job content and responsibilities of the employee materially increased, AND the status of the employee within the company improved. A pay raise alone is generally insufficient; the role itself must materially change.

4. Garden-Leave Alternative for Non-Qualifying Employees

If the employee does not satisfy the exempt-and-salary criteria, the employer may still enforce a non-compete by agreeing in writing to pay, during the restricted period, the greater of:

• 50% of the employee's annual base salary plus commissions at termination, or
• 50% of the statutory minimum threshold (e.g., 50% × $116,427 = $58,213.50 in 2025).

5. Recommended Drafting Parameters (OR)

6. Recommendation

[Based on the checklist above, the proposed NCA with [EMPLOYEE NAME] is / is not enforceable under ORS 653.295. Recommended modifications: ________________________________.]

Part B — Non-Compete Agreement (Oregon — ORS 653.295 Compliant)

EMPLOYEE NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY AGREEMENT

This Agreement is entered into between [EMPLOYER NAME] ("Company") and [EMPLOYEE NAME] ("Employee") on [__/__/____] (the "Effective Date").

Recitals — ORS 653.295 Statutory Findings

A. Pre-Hire Notice or Advancement. ☐ Company provided written notice to Employee that this Agreement would be required as a condition of employment, delivered on [__/__/____], which is at least two (2) weeks before Employee's first day of employment ([__/__/____]); OR ☐ This Agreement is entered into contemporaneously with a bona fide advancement of Employee from [PRIOR POSITION] to [NEW POSITION], materially increasing Employee's job content, responsibilities, and status within Company.

B. Exempt Status. Employee is, and will continue to be during employment, a salaried-exempt employee under the Fair Labor Standards Act (FLSA), performing predominantly intellectual, managerial, or creative tasks, exercising discretion and independent judgment, and paid on a salary basis.

C. Compensation. Employee's annual gross salary and anticipated commissions exceed the minimum amount specified in ORS 653.295(2)(a) for the calendar year of execution and are expected to exceed the applicable minimum amount at the time of any termination of employment. As of the Effective Date, the applicable minimum is $[________] for calendar year [____].

D. Protectable Interest. Company has a legitimate protectable interest in: ☐ trade secrets; ☐ sensitive, confidential business or professional information; ☐ product development plans; ☐ launch plans; ☐ marketing strategy; ☐ sales plans; ☐ other: [________________________________].

1. Non-Competition

During the twelve (12) months immediately following the termination of Employee's employment for any reason (the "Restricted Period"), Employee shall not, directly or indirectly, within the Restricted Territory, engage in any business that competes with the Business in a capacity substantially similar to the capacity in which Employee served Company.

"Restricted Territory" means [________________________________].

2. Customer Non-Solicitation

During the Restricted Period, Employee shall not solicit or accept business from any customer of Company with whom Employee had material business contact during the 12 months preceding termination, with respect to products or services competitive with the Business. This Section is subject to ORS 653.295 and is conformed to the 12-month statutory cap.

3. Employee Non-Solicitation (No-Raid)

For a period of [twelve (12) to twenty-four (24)] months following termination, Employee shall not solicit or recruit any employee or independent contractor of Company. The parties acknowledge that this Section is not subject to ORS 653.295.

4. Confidentiality

Employee shall hold all Confidential Information (defined to include trade secrets under ORS 646.461) in strict confidence and shall not use or disclose it except as required to perform duties for Company. Trade-secret obligations are perpetual. Other confidentiality obligations continue for [____] years post-termination.

5. Return of Property; Post-Termination Delivery

Upon termination, Employee shall return all Company property. Pursuant to ORS 653.295(6), Company shall deliver to Employee a signed, written copy of this Agreement within 30 days after the date of Employee's termination.

6. Garden-Leave Election (Use Only If Employee Does Not Meet Salary/Exempt Threshold)

☐ Garden-Leave Election. If at the time of termination Employee does not satisfy the exempt-and-salary threshold in ORS 653.295(2), Company elects to enforce Sections 1 and 2 by paying Employee, during the Restricted Period, the greater of (a) 50% of Employee's annual base salary plus commissions at termination, or (b) 50% of the statutory minimum amount in effect at termination, in accordance with ORS 653.295(7).

7. Reasonableness; No Reformation Beyond Statute

The parties acknowledge that ORS 653.295 imposes mandatory statutory limits (including the 12-month duration cap) that the parties cannot exceed. Subject to those limits, the parties intend that any provision found unenforceable as to scope be enforced to the maximum extent permitted by Oregon law.

8. Remedies

Breach causes irreparable harm and Company may seek injunctive relief and damages. The prevailing party may recover reasonable attorney fees and costs as permitted by law.

9. Governing Law; Venue

This Agreement is governed by Oregon law. Venue is the state and federal courts in [________________________________] County, Oregon. Any choice-of-law or forum provision selecting another state is void to the extent it would deprive Employee of the protections of ORS 653.295.

10. Severability; Survival; Entire Agreement

Severable. Sections 1–8 survive termination. This is the entire agreement on its subject matter.

11. Employee Acknowledgments

Employee acknowledges: (a) receipt of written notice at least two weeks before first day of employment OR contemporaneous bona fide advancement; (b) opportunity to consult independent counsel; (c) Employee is salaried exempt and meets the salary threshold; (d) the protectable interests are real and substantial.

EMPLOYEE:

COMPANY:

Part C — Pre-Signing Checklist

☐ Two-week pre-hire notice delivered in writing, OR bona fide advancement documented (Nike v. McCarthy).
☐ Notice date documented in offer letter and HR file; calendar copy retained.
☐ FLSA exempt classification verified (duties test + salary-basis test).
☐ Annual gross salary + commissions at termination will exceed the applicable threshold ($113,241 in 2024; $116,427 in 2025; $119,541 in 2026 — verify current year with BOLI).
☐ Duration capped at 12 months post-termination.
☐ Protectable interest specifically identified in Recital D.
☐ Restricted Territory geographically reasonable.
☐ Customer non-solicit conformed to 12-month statutory cap.
☐ Employee non-solicit drafted as separate covenant (outside ORS 653.295).
☐ Confidentiality anchored to ORS 646.461 (Oregon UTSA).
☐ Garden-leave election considered (if employee is borderline on threshold).
☐ Post-termination delivery calendar set: signed copy must reach employee within 30 days of termination.
☐ Onboarding file retains: signed offer letter, dated notice, NCA original, FLSA classification analysis.
☐ Broadcast on-air talent treated under separate ORS 653.295 provisions, if applicable.
☐ Bonus restriction agreements (if any) conformed to 12-month cap and ORS 653.295 framework.

Sources and References

• ORS 653.295: https://www.oregonlegislature.gov/bills_laws/ors/ors653.html
• Oregon BOLI — Noncompetition Agreements: https://www.oregon.gov/boli/employers/pages/noncompetition-agreements.aspx
• SB 169 (2021): https://olis.oregonlegislature.gov/liz/2021R1/Downloads/MeasureDocument/SB0169/Enrolled
• Nike, Inc. v. McCarthy, 379 F.3d 576 (9th Cir. 2004)
• Bernard v. S.B., Inc., 270 Or. App. 710, 350 P.3d 460 (2015)
• Oregon Psychiatric Partners v. Henry, 293 Or. App. 471, 429 P.3d 399 (2018)
• Dymock v. Norwest Safety Protective Equipment for Oregon Industry, Inc., 334 Or. 55, 45 P.3d 114 (2002)
• Oregon Uniform Trade Secrets Act (ORS 646.461–646.475): https://www.oregonlegislature.gov/bills_laws/ors/ors646.html
• Oregon Salaried-Exempt Guidance (BOLI): https://www.oregon.gov/boli/employers/Pages/salaried-exempt-employees.aspx