BIZLAW ARTICLES

Important:The materials appearing below are intended for general information purposes only and may or may not reflect the most current legal developments.  These materials are not legal advice, and persons should consult an attorney for legal advice pertinent to his or her situation.

Oregon Employees and Noncompetes

            Do you have or plan to use noncompete agreements with Oregon employees entered on or after January 1, 2008? If you do, you need to be aware that Oregon law and Washington law on the issue are different. Oregon’s rules are governed by a statute: ORS 653.295. Unless very specific conditions are satisfied, a noncompete entered into with an Oregon employee on or after January 1, 2008 is voidable. Here are the conditions of the Oregon statute, summarized.

1. If the individual will be a new hire, the employer must inform her in a written employment offer received by her at least two weeks before the first day of her employment that a noncompete is required as a condition of employment. If the individual is already employed, the noncompete must be entered into upon a bona fide advancement of the employee by the employer; and

2. The individual is or will be engaged in administrative, executive or professional work who (a) performs predominantly intellectual, managerial or creative tasks; (b) exercises discretion and independent judgment; and (c) earns a salary and is paid on a salary basis; and .

3. The employer has a “protectable interest.” An employer has a protectable interest when the employee (a) has access to trade secrets; or (b) has access to competitively sensitive confidential business or professional information; or (c) is employed as an on-air talent subject to certain specific conditions; and

4. The employee’s annual salary plus commissions at the time of termination of employment exceed the median family income for a four-person family as determined by the U.S. Census Bureau. (This provision is not applicable when the on-air talent exception applies).

            Any part of a noncompete term that is over two-years in duration is voidable.

            The employer can enforce a noncompete that doesn’t satisfy conditions 2 and/or 4 above, but only if the employer compensates the employee during the full term of the noncompete period the greater of (a) compensation equal to at least 50% of the employee’s annual gross base salary and commissions at the time of employee’s termination; or (b) 50% of the median family income for a four-person family as determined by the U.S. Census Bureau.

            Compared to Washington, Oregon’s requirements are more restrictive. However, its requirements can usually be satisfied in cases where noncompetes are most needed.

            This article is not a full discussion of all relevant issues, and it does not equip you to implement a noncompete agreement on your own. It is only intended to make Washington businesses generally aware of the more restrictive Oregon requirements. No attempt should be made to implement such an agreement without engaging qualified legal counsel. Please contact Dirk Bartram at 206 624 4788 or at dbartram@henkebartram.com if you would like further information.

Arbitration Provisions in the State of Washington

            In July 2010, the Washington State Supreme Court ruled that the Washington statutes of limitation do not apply to arbitrations, unless the parties agree contractually to the contrary. The Court reasoned that Washington statutes of limitation that limit the time to bring an “action” or to “sue” do not automatically apply in arbitration proceedings, because arbitration proceedings are not “actions” or “suits.” Broom v. Morgan Stanley DW, Inc., No. 82311-1 (7/22/10) The upshot: absent a provision in the contract to the contrary, the parties to a contract with a Washington arbitration provision might be able to bring a claim in arbitration that would have been time-barred in a Washington court.

           Time will tell whether the Washington legislature will change the outcome of this ruling by statute. Unless and until such a statute is passed, we strongly recommend a review of all arbitration provisions in existing contracts to which you are a party. In addition, if your business intends to use arbitration provisions in a future agreement and wants the statutes of limitation to apply, be sure the agreement expressly states in writing that all statutes of limitation shall apply to claims brought in arbitration. Please feel free to contact us if you have any questions.