Noncompetition Agreement Update – Oregon Court of Appeals: Employment Noncompetition Agreement voidable, but not void, under ORS 653.295 if employee not notified of noncompetition term two weeks prior to employment:
That was the holding of Bernard v. S.B., Inc., 270 Or App 710 (2014). The employee in that case contended that a noncompetition agreement was unenforceable because it was not provided to her two weeks prior to the start of employment. The employee worked in logistics dispatch for a trucking company, and “she had access to confidential customer and pricing information.” 270 Or App at 712.
The language of the statute specifically states:
(1) A noncompetition agreement entered into between an employer and employee is voidable and may not be enforced by a court of this state unless:
(a)(A) The employer informs the employee 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; . . .
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Essentially this court of appeals panel held that because no steps had been taken by the employee to void the contract, the contract was valid. This ignores the language “may not be enforced by a court of this state” that is express in the statute. It is a peculiar opinion, but it creates some precedence in Oregon, and for now in Oregon the employee has to take some affirmative act to “void” the noncompetition agreement.
Yes, the Court of Appeals has now injected more uncertainty into the post-employment process. Keep an eye out for further developments in this area.
© 2015, Bradley Schrock.
The information in this post is not legal advice and is informational only.