Navigating Non-Compete, Non-Solicitation, and Confidentiality Agreements

In today's highly competitive job market, employers often seek to protect their interests by requiring employees to sign non-compete, non-solicitation, and confidentiality agreements. These legal contracts can significantly impact your career and future employment prospects. In this comprehensive guide, we'll explore what non-competition and non-solicitation agreements are, how employers can enforce them, a few key nuances in Oregon law, the role of confidentiality agreements in safeguarding trade secrets and inventions, and why it's crucial to consult with an attorney when navigating these complex agreements.

Understanding Non-Competition Agreements 

What is a Non-Competition Agreement?

A non-competition agreement, also known as a non-compete clause, is a contractual arrangement between an employer and an employee that restricts the employee from engaging in competitive activities with the employer after their employment ends. These agreements typically define the time frame, geographical scope, and prohibited activities.

Non-competition agreements are often used to protect the employer's business interests, such as preventing employees from working for direct competitors or starting their competing businesses.

Nuances in Oregon Law

Navigating non-competition agreements in Oregon involves understanding the specific restrictions imposed by Oregon's noncompete statute, ORS 653.295. Here are some critical nuances to consider:

  1. Salary Limitation: Under the 2021 amendments to ORS 653.295, Oregon now requires a minimum salary threshold for employees ($100,533, subject to inflation adjustments) for non-competition agreements to be enforceable.

  2. Term Limitation: Also pursuant to the 2021 amendments, Oregon law specifies that non-competition agreements lasting longer than 12 months post-employment are not enforceable.

  3. Notice Requirement: Oregon law mandates that within 30 days after an employee's termination, the employer must provide the employee with a copy of the signed, written non-competition agreement terms. This ensures transparency and accessibility of the agreement terms.

  4. Consideration Period: When starting their employment, employees must be given a minimum period to consider a non-competition agreement. Oregon law requires the employer to inform the employee, in a written employment offer at least two weeks before the first day of employment, that a noncompetition agreement is required as a condition of employment. This gives employees time to evaluate the terms before committing.

  5. Requirements of Reasonableness: Even if a non-competition agreement is found to be enforceable, it must still meet common law requirements of reasonableness. These requirements include considerations of time, place, good consideration, and protecting the employer's legitimate interests.

  6. Balancing Interests: Oregon courts have consistently held that contracts in partial restraint of trade must offer "fair protection" to the employer's interests without unduly harming the employee or the public. To be enforceable, the agreement must strike a balance between protecting the employer's legitimate interests, such as client retention and safeguarding intellectual property, and not imposing undue hardship on the departing employee or the public.

Understanding these nuances is crucial when navigating non-competition agreements in Oregon. Employers and employees alike should be aware of the legal framework in place and the recent amendments to ORS 653.295 to ensure compliance and protect their rights.

Understanding Non-Solicitation Agreements

What is a Non-Solicitation Agreement?

A non-solicitation agreement restricts employees from soliciting or attempting to entice the employer's clients, customers, or other employees away from the company. These agreements can be broader, targeting key relationships and intellectual property protection.

Non-solicitation agreements are highly sought after by employers who want to safeguard their client base and prevent employees from poaching valuable business relationships.

How Employers Enforce Non-Compete and Non-Solicitation Agreements

Employers can enforce non-competition and non-solicitation agreements through various legal means, including:

  1. Legal Action: Employers may file lawsuits against former employees who breach these agreements. In such cases, the court may issue injunctions to prevent employees from engaging in prohibited activities.

  2. Damages: Employers may seek financial damages caused by the breach of these agreements. Damages can include lost profits, legal fees, and other economic losses.

  3. Specific Performance: In some cases, employers may seek specific performance, which requires the employee to adhere to the terms of the agreement, effectively preventing them from competing or soliciting clients.

 The Role of Confidentiality Agreements 

What is a Confidentiality Agreement?

Confidentiality agreements, often referred to as nondisclosure agreements (NDAs), are legal contracts that protect an employer's trade secrets, proprietary information, and inventions developed by employees during their employment.

Why Confidentiality Agreements Matter

Confidentiality agreements serve several critical functions:

  1. Protection of Trade Secrets: These agreements safeguard an employer's trade secrets, which can include formulas, processes, customer lists, and other valuable information. 

  2. Invention Ownership: Confidentiality agreements often specify that any inventions developed by an employee during their employment belong to the employer. This ensures that the employer retains control over intellectual property.

  3. Preventing Disclosure: Employees are legally bound not to disclose or use the employer's confidential information for personal gain or to benefit competitors.

Consult with an Attorney When Changing Jobs

Given the complexity of non-competition, non-solicitation, and confidentiality agreements, consulting with an experienced employment attorney is crucial when considering a job change. Here's why:

  1. Legal Review: An attorney can review your existing agreements to assess their validity, enforceability, and potential consequences.

  2. Negotiation: Legal counsel can negotiate with your new employer or the former employer to modify or release agreements, mitigating potential restrictions. 

  3. Protection of Rights: An attorney can protect your rights and interests, ensuring that you're not unfairly hindered in pursuing new opportunities.

  4. Legal Strategies: In the event of a dispute, an attorney can help you navigate legal strategies to defend against enforcement actions.

Non-competition, non-solicitation, and confidentiality agreements are complex legal instruments that require careful consideration when transitioning between jobs. Understanding Oregon law and the reasonableness requirements is vital. Confidentiality agreements play a crucial role in safeguarding trade secrets and inventions developed during employment. Given the ever-evolving legal landscape, consulting with an experienced employment attorney is a prudent step to protect your rights and navigate these agreements successfully. Your attorney will work to ensure that you can pursue new opportunities while respecting the rights and interests of your former employer.