74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
 
SA to SB 248
 
LC 267/SB 248-2
 
                      SENATE AMENDMENTS TO
                         SENATE BILL 248
 
                    By COMMITTEE ON COMMERCE
 
                              May 9
 
  On page 1 of the printed bill, delete lines 22 through 30.
  On page 2, delete lines 1 through 36 and insert:
  '  { +  SECTION 2. + } 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. - }
  '  { +  (a) Employer informs the employee prior to the
acceptance of the employment offer by the employee that a
noncompetition agreement is required as a condition of
employment; or
  ' (b) Noncompetition agreement is entered into upon a
subsequent bona fide advancement of the employee by 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) + } 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 for any reason other than
just cause.  This subsection does not apply to a covenant not to
solicit or transact business with the customers of the employer.
  ' (7) If an employee subject to a noncompetition agreement is
laid off due to an economic downturn affecting the employer, and
the employee is not rehired by the employer within 90 days of the
date of being laid off in a position of the same level as the
position from which the employee was laid off, the noncompetition
agreement is void.
  ' (8) Notwithstanding subsections (1)(b), (4), (5), (6) and (7)
of this section, a noncompetition agreement is enforceable for
the full term of the agreement if the employer provides the
employee full compensation at the level at which the employee was
being compensated as of the date of being laid off for the full
term of the agreement.
  ' (9) Notwithstanding subsections (1), (6), (7) and (8) of this
section, a noncompetition agreement between an employer and the
chief executive officer, chief financial officer or members of
the board of directors of the company is valid and may be
enforced in a court in this state. + }
  '  { - (6) - }   { + (10) + } 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) 'Just cause' means a cause reasonably related to
the ability of the employee to perform required work and
includes, but is not limited to, any willful violation of
reasonable workplace rules, regulations or written policies.
  ' (d) 'Laid off' means to permanently terminate 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) - }   { + (e) + } '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 3. + }  { + The amendments to ORS 653.295 by
section 2 of this 2007 Act apply to noncompetition agreements
entered into on or after the effective date of this 2007 Act. + }
' .
  In line 37, delete '3' and insert '4'.
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