This article details Oregon's employment-related noncompete statute, ORS 653.295 , and related cases with links to original source material.
PLEASE NOTE: The Oregon Legislature amended ORS 653.295 inSenate Bill 169 that goes into effect for all agreements entered into on or after January 1, 2022 . This article does not address the details of this new bill, which I was involved in drafting and passing through the legislature.
Overall, SB 169 is almost entirely favorable to employees! 🎉 Namely, it makes non-compliant agreements "void" instead of "voidable." (a fact that defense lawyer articles in Oregon have glossed over in their summaries to date). Employers that attempt to enforce void noncompete agreements may be subject to civil liability in certain cases.
The remainder of this article discusses ORS 653.295 prior to SB 169.
I. Overview
Oregon law regulates employee noncompetes, including an annual pay requirement equal to the median income of a family of four ($100,533 as of 2/15/21 -- the current figure may vary). Employees with "voidable" noncompetes may be permitted to void noncomplying agreements to protect certain legal rights.
It is important to understand that noncompete agreements overlap with other separate contractual, statutory, and common law obligations such as nondisclosure agreements (NDAs) and nonsolicitation agreements.
PLEASE NOTE: The Oregon Legislature amended ORS 653.295 in
Overall, SB 169 is almost entirely favorable to employees! 🎉 Namely, it makes non-compliant agreements "void" instead of "voidable." (a fact that defense lawyer articles in Oregon have glossed over in their summaries to date). Employers that attempt to enforce void noncompete agreements may be subject to civil liability in certain cases.
The remainder of this article discusses ORS 653.295 prior to SB 169.
Oregon law regulates employee noncompetes, including an annual pay requirement equal to the median income of a family of four ($100,533 as of 2/15/21 -- the current figure may vary). Employees with "voidable" noncompetes may be permitted to void noncomplying agreements to protect certain legal rights.
It is important to understand that noncompete agreements overlap with other separate contractual, statutory, and common law obligations such as nondisclosure agreements (NDAs) and nonsolicitation agreements.
A. Void vs. Voidable
The "void
Oregon lawmakers added "voidable" into the statute in 2007. See

B. Coverage Limited to "Noncompetition Agreements"
C. Length of Noncompetition Agreements
Oregon limits the length of non-competes. Non-competes entered into after January 1, 2016 may not exceed 18 months from the employee's termination. The remainder of any term in excess of that period may not be enforced by courts of the state.
The prerequisites for an enforceable non-compete under
(1) Notice
Employers must inform employees in a written employment offer received by the employee at least two weeks before the first day of the employee's employment that a noncompetition agreement is required as a condition of employment.
Alternatively, an employer may impose a noncompete upon a subsequent bona fide advancement of the employee.
(2) Exempt Status
Non-competes are voidable and unenforceable by Oregon courts unless the employee is:
An individual engaged in administrative, executive or professional work who:(a) Performs predominantly intellectual, managerial or creative tasks;
(b) Exercises discretion and independent judgment; and
(c) Earns a salary and is paid on a salary basis.
(3) Protectable Interest
An employer must have a protectable interest. This means the employee must have access to trade secrets, competitively sensitive confidential business or professional information, or is employed as on-air talent by an employer in the broadcasting business.
In practice, employers frequently attempt to establish a protectable interest through an employee's access to business information in various locations and contexts. Modern employees often have broad access to employer information due to increased technology in workplaces. However, if employers provide sweeping systems access to all employees, it raises a question of whether the information to which employees have access is truly "sensitive" or "confidential." (e.g., how confidential is information if an employer provides indiscriminate access and, in some cases, even prevents employees from disconnecting from it?). Employers, employees, and courts will continue to grapple with issues related to protectable interests.
Employers also frequently point to relationships as a protectable interest. The Oregon Court of Appeals has held that relationships may be a protectable interest where "the nature of the contact is such that there is a substantial risk that the employee may be able to divert all or part of the customer’s business.”
Recent cases have demonstrated the limited breadth of an employer's protected interest. For example, the Oregon Court of Appeals in
[I]f [Oregon law] provided an exception for agreements that prohibited soliciting or transacting business with parties with little or no ongoing relationship with the employer, then that exception would allow for agreements that inhibit competition to much the same degree as blanket agreements not to compete
(4) Income Requirement
Employees must, at the time of their termination, earn an annual gross salary and commissions in excess of the median family income for a four-person family as determined by the United States Census Bureau for the most recent year available at the time of the employee's termination.
Unfortunately, this number is not as easy to find as one might expect. According to the U.S. Census Bureau, the current (as of this article's "last updated" date above) median income of a family of four in Oregon appears to be $97,311. This number is available by visiting

The "Geos" tab at the top allows you to specify "Oregon" which, as of February 2021, provides a figure of $100,533:

(5) Post-Termination Notice.
Effective January 20, 2020,
A. Carveouts
First, as noted above, the restrictions in
It also remains unclear exactly how courts address situations such as noncompetes in employee severance agreements where a noncompete is offered as term of a post-employment waiver of claims related to an individual's former employment.
Another carve-out from
There is also an exception for "covenant[s] not to solicit employees of the employer or solicit or transact business with customers of the employer."
Finally, even if an employer does not meet the exempt employee and salary requirements described above,
In most cases, employers seeking to take advantage of this provision will specify in advance (i.e., in the employee's contract) that they will compensate the employee during the restricted period. In cases where an employer does not specify upfront, the timing and other details of an employer and employee's actions can become critical.
Oregon appellate courts have not yet had occasion to interpret the parameters of the current version of
In addition to Oregon's general noncompete statute, noncompetes are also subject to common law requirements for contracts that restrain trade. The relevant test evaluates whether an agreement is: (1) “partial or restricted” in scope and extent, (2) based on good consideration, and (3) reasonable. See
A. Partial or Restricted
Noncompetes that fail to describe prohibited post-employment activities with sufficient particularity and specificity are at risk of failing the first element of the common law test. Likewise, noncompetes that prohibit more than reasonably necessary to protect an employer's interests may be either partially or completely unenforceable. Geographic and time restrictions must be reasonable given the particular circumstances of each case. The test for reasonableness is whether the time and geographic scope of a noncompete is reasonably tailored to protect an employer's legitimate protectable interests. The employer's interests are also balanced against a policy favoring an employee's right to earn a living.
These considerations depend heavily on both the nature of an employer's business and the particular employment relationship. If a noncompete provides no geographical or time limitations, Oregon courts may (but are not necessarily required to) insert reasonable limitations based on the facts and circumstances of the particular case.
B. Consideration
The second element of the common law test is a matter of basic contract law. Restrictive covenants, like any other contractual term, must be supported by consideration - that is, a payment, benefit or reward. If an employer fails to provide consideration in exchange for a noncompete, it may be unenforceable.
In the context of an employment relationship, this element is usually satisfied by an employer allowing the employee to work and earn wages, benefits, and experience from the employer. Many noncompetes contain express recitals confirming that the employer is employing the employee and providing the employee access to the employer's business information in exchange for the employee's promise not to compete. These recitals help remove any ambiguity about valid consideration.
C. Reasonableness Balancing Test
The final element in the common law test for noncompete agreements is a reasonableness balancing test. The reasonableness test involves two prongs. First, the terms of the noncompete may not be broader than necessary to protect the employer's interest. This prong overlaps with the first element for a valid restraint of trade ("partial or restricted" scope). Second, the hardship to an employee and the likely injury to the public cannot outweigh an employer's need for a non-compete.
The first prong requires a close look at an employer's interests. As a threshold matter, an employer must actually have a protectable interest, such as confidential information. For example, knowledge of product launch dates, product allocation strategies, new product development, product orders six months in advance and strategic sales plans have all been deemed protectable interests where such information is not general knowledge in the industry. Business goodwill may also constitute a protectable interest depending on the nature of an employer's business.
The second prong involves an examination of the hardship and potential injury to the employee and the public and a comparison of those potential hardships and injuries with the employer's interests. Recent case law indicates that in many situations, the potential hardship and injury to the employee and public must be grave in order to outweigh an employer's interest. See, e.g.,
1. Is an Agreement Actually a Noncompete?
Determining whether a given agreement is actually a noncompete will depend on the contract's language. For example, consider nonsolicitation agreements. Depending on the particular agreement, some nonsolicitation agreements merely limit an employee from actively pursuing a former employer's customers. Other nonsolication agreements, however, go well beyond just the active pursuit of former customers.
For example, in the case of
Other examples of restrictive contractual agreements that may have competitive implications without actually being a "noncompete" under Oregon law include confidentiality agreements, nondisclosure agreements, proprietary information agreements, and data security policies. However, even where these agreements may limit an employee's ability to compete after employment, one should not assume they will be interpreted and treated as noncompetition agreements.
2. Notice Requirements
Some noncompetes require an employee to (a) notify the former employer of any new employment so the former employer can assess any contractual implications, and (b) to notify any new employer of the noncompete. The practical effects, enforceability of these terms, and appropriate strategies related to these clauses will vary on a case-by-case basis.
3. Prohibited Employer Contact
In many cases, a former employer's noncompete enforcement efforts will include attempts to prohibit the employee from working with a new employer. Former employers who inappropriately contact new employers may face liability for doing so. See e.g.,
4. Attorneys' Fees
Noncompetition agreements and the employment contracts in which they are contained frequently include terms allowing the prevailing party to recover attorney fees. Parties to contracts with such terms must be extremely careful because the costs of paying a successful opponent's attorneys' fees can be substantial.
5. Choice of Law
Contracts will often contain choice of law provisions that attempt to apply the law of a particular state. The application of these clauses will vary depending on the facts of a given case. However, employees and employers should see