A recent non-compete related law in Oregon caught my attention. Specifically, Oregon law (HB 2992), provides that noncompete agreements entered into after January 1, 2020, will only be enforceable against Oregon employees if the employer provides the departing employee with a signed copy of the agreement within 30 days after the employee’s date of termination.
For more information about this Oregon law, see attorney Lindsey Reynolds’ coverage, New Requirement for Noncompetition Agreements in Oregon.
A Law that Should not be Necessary but is Needed
This amendment to Oregon’s noncompete statute caught my attention because it is both a law that should not be needed but is. Let me explain:
First, giving a departing employee a copy of his or her non-compete or other post-employment restrictions should be every employer’s practice. This “reminder” should be provided at or shortly after the employee’s exit interview and documented in writing. But for numerous practical and strategic reasons, companies should already do this without legal compulsion.
Second, this law is needed, because in reality companies do not consistently provide this notice.
Third, individuals often forget (intentionally or otherwise) that they signed a non-compete agreement or lose the copy of the agreement by the time they depart. This is understandable; an individual joins a new employer and signs various documents and acknowledgments at the beginning of the employment relationship. But then years later, that individual departs for another opportunity. By this time, their copy of the agreement is often misplaced or forgotten.
Fourth, Oregon has several other statutory requirements that employers must follow to have an enforceable non-compete agreement. But this addition seems to add a harsh result that doesn’t fit the crime; Why should a signed and otherwise enforceable, permissible agreement that was (presumably) provided to the employee at one point now be rendered unenforceable simply because it is not provided to one party after their employment ends? It would seem a more appropriate penalty for failing to follow this notice requirement would be to exclude any damages during the time the individual was not provided notice.
Oregon’s recent efforts to tinker with its non-compete laws is part of the trend we discussed in an earlier post. See Employees Are Winners in Push-Back Against Non-compete Restrictions. In that article, we discussed various State initiatives to add hurdles or outright restrict the enforcement of non-compete agreements.
In regard to Michigan, there have been no amendments to its non-compete statute, which allows for such restrictions if certain threshold requirements are met. Thus, any impediment to enforcing a non-compete restriction remain in the hands of Judges to parse out whether an employer met its burden for establishing an enforceable non-compete agreement.
Use this link to contact Michigan attorney Jason Shinn, if you have questions about this article, Michigan non-compete law, or litigation enforcing or defending against non-compete claims. Since 2001 he has represented companies and individuals in drafting, negotiating, and litigating non-compete disputes.