74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 835
 
                         House Bill 2257
 
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
  Presession filed (at the request of Commissioner of the Bureau
  of Labor and Industries Dan Gardner)
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
 
  Makes otherwise valid noncompetition agreement between employer
and employee void and unenforceable if employee is laid off by
employer.
 
                        A BILL FOR AN ACT
Relating to noncompetition agreements; creating new provisions;
  and amending ORS 653.295.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 653.295 is amended to read:
  653.295. (1) A noncompetition agreement entered into between an
employer and employee is void and may not be enforced by
 { - any court in - }   { + a court of + } this state unless the
agreement is entered into upon the:
  (a) Initial employment of the employee with the employer; or
  (b) Subsequent bona fide advancement of the employee with the
employer.
  (2) Subsection (1) of this section applies only to
noncompetition agreements made in the context of an employment
relationship or contract and not otherwise.
  (3)(a) Subsection (1)(a) of this section applies only to
noncompetition agreements entered into after July 22, 1977.
  (b)   { - Subsection (1)(b), subsections (4) and (5) and
subsection (6)(a) - }   { + Subsections (1)(b), (4), (5) and
(7)(a) + } of this section apply to employment relationships and
bonus restriction agreements in effect or entered into after
October 15, 1983.
  (4) Subsection (1) of this section does not apply to bonus
restriction agreements, which are lawful agreements that may be
enforced by the courts in this state.
  (5) Nothing in this section restricts the right of any person
to protect trade secrets or other proprietary information by
injunction or any other lawful means under other applicable laws.
   { +  (6) A noncompetition agreement entered into between an
employer and employee under subsection (1) of this section is
void and may not be enforced by a court of this state if the
employee is laid off by the employer. + }
    { - (6) - }   { + (7) + } As used in this section:
 
 
  (a) 'Bonus restriction agreement' means an agreement, written
or oral, express or implied, between an employer and employee
under which:
  (A) Competition by the employee with the employer is limited or
restrained after termination of employment, but the restraint is
limited to a period of time, a geographic area and specified
activities, all of which are reasonable in relation to the
services described in subparagraph (B) of this paragraph;
  (B) The services performed by the employee pursuant to the
agreement include substantial involvement in management of the
employer's business, personal contact with customers, knowledge
of customer requirements related to the employer's business or
knowledge of trade secrets or other proprietary information of
the employer; and
  (C) The penalty imposed on the employee for competition against
the employer is limited to forfeiture of profit sharing or other
bonus compensation that has not yet been paid to the employee.
  (b) 'Employee' and 'employer' have the meanings given those
terms in ORS 652.310.
   { +  (c) 'Laid off' means the permanent termination of an
employment relationship for reasons that are beyond the
employee's control and that do not reflect discredit upon the
employee.  Reasons for a layoff include, but are not limited to,
the elimination of the employee's position, a lack of available
funding or work, a reduction in the size of the workforce and
changes in the workplace that affect staffing needs. + }
    { - (c) - }   { + (d) + } 'Noncompetition agreement' means an
agreement, written or oral, express or implied, between an
employer and employee under which the employee agrees that the
employee, either alone or as an employee of another person, will
not compete with the employer in providing products, processes or
services that are similar to the employer's products, processes
or services for a period of time or within a specified geographic
area after termination of employment.
  SECTION 2.  { + The amendments to ORS 653.295 by section 1 of
this 2007 Act apply to noncompetition agreements entered into on
or after the effective date of this 2007 Act. + }
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