At the start of employment, many companies want new employees to sign a non-compete agreement, also known as a covenant not to compete. A non-compete agreement is, simply put, a contract that
protects an employer by prohibiting certain competition in business by employees or former employees. If an employee signs a non-compete agreement, they may not be able to perform certain types of work or pursue certain positions within the geographical area following the end of their employment. Furthermore, non-compete agreements may restrict an employee’s ability to solicit the former employer’s clients, or to share any trade secrets the employee learned at the company.
Limitations of non-compete agreements
Though non-compete agreements are important in certain employment settings to protect a company, there are certain requirements and limitations that are meant to protect the employee, as well.
Specifically, the terms of a non-compete agreement cannot unreasonably limit an employee’s future work opportunities in time or geographical area. For example, if a person leaves a research facility, an agreement may not state that the employee may not work in any other research facility in the entire state of Oregon for ten years. A ten year, state-wide ban is likely not necessary to protect the employer from unfair competition, and it is not reasonable to expect an employee to completely change careers, or leave their home state just to find work.
When should a non-compete agreement be signed?
The timing of a non-compete agreement varies from state to state. For example, a court in Alabama recently held that a non-compete must be signed after a person is actually employed by the company. In contrast, Oregon law requires that a non-compete agreement be signed at least two weeks prior to the first day of employment if signing the contract is a necessary condition of employment. However, a non-complete agreement may be signed if the employee is then advanced to a new position within the company.
Additionally, an employer must have a protectable interest in order to require a non-compete agreement. For example, an employee must have access to trade secrets, confidential information, or client contact information in order to restrict their subsequent employment. Broadcasting employees also have their own requirements under Oregon Revised Statute 653.295(1)(c).If all of the requirements in the law are not met, a court may hold the non-compete agreement to be void and unenforceable. Many former employees seek to nullify non-compete agreements after ending their employment because the agreements place unreasonable restrictions on their business opportunities or because the requirements were not met.
Though employers should be able to protect their own interests by having employees sign non-compete agreements, employees should not be subject to unfair or unreasonable limitations. If you have any questions or concerns about non-compete agreements in Oregon, call HKM Employment Attorneys today for help.
