20 States with 59 Noncompete Bills: Oregon – Update – One Bill Becomes Law

Oregon is back in the news! New Hampshire’s bills, which were supposed to be next in this series, will have to wait.

About three weeks ago, I told you that Oregon had three pending noncompete bills this year. Well, that’s not true anymore.

As of last Friday (May 21, 2021), Oregon has yet one more amendment to its already regularly amended noncompete statute. Indeed, this makes four amendments in the last six years, literally one every two years (to a statute that is barely more than a decade old):

  • 2015: shortened the maximum length of a noncompete from 2 years to 18 months (effective 2016)
  • 2017: banned noncompetes for home care workers (effective 2018)
  • 2019: the new requirement of  termination (effective 2020)
  • 2021: see below (effective 2022)

Can’t wait to see what 2023 brings!

Before turning to the update, for those keeping count, there have been 66 noncompete bills in 25 states so far this year1 — excluding the two pending federal noncompete billsD.C.’s new law to ban most noncompetes and the new bill to amend it (which we will cover shortly), and any proposed bills that may be circulating, but have not yet been filed. Six bills (one in each of six states2) have died and one (the Oregon bill discussed below) has passed — leaving the current tally at 59 noncompete bills still pending in 20 states: Arkansas, Connecticut, Illinois, Iowa, Louisiana, Massachusetts, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, and West Virginia.

In this series, we are providing details on all pending bills (and any new ones that are filed) — and we will be simultaneously updating our Changing Trade Secrets | Noncompete Laws page. Note that the summaries are (sort-of) color coded for the nature of the bill (ban, modification or establishment of standards, reversal of prior changes) and the groups for whom it creates exceptions or specific limitations (medical, low-wage workers, others).

Today’s Oregon update is that SB.169 (A BILL FOR AN ACT Relating to enforceability of noncompetition agreements; creating new provisions; and amending ORS 653.295) was signed into law on May 21, 2021, with an effective date of January 1, 2022. The new law modifies and reorganizes parts of the pre-existing law. Specifically, the amendment changes noncompetes that do not comply with the act from being “voidable and may not be enforced” to “void and unenforceable,” decreases the maximum duration of the restriction from 18 months to 12 months, and replaces the median-family-income-for-a-four-person-family threshold (and broadcaster threshold) with a straight “$100,533, adjusted annually for inflation.”

The new law applies only to noncompetes entered into on or after January 1, 2022.

Instructively, this change will eliminate (prospectively) an interesting issue with the statute that had protected employers from “gotcha” moments if they didn’t comply with the various evolving, technical requirements of the statute. For example, in Millennium Health, LLC v. Barba, 2021 WL 1254349 (D. Oregon April 5, 2021), the employer (1) failed to provide the two defendant employees the statutorily required two-weeks advance notice of the noncompete and (2) had one of the employees sign a noncompete after employment began, despite the absence of the statutorily required “bona fide advancement” for a noncompete signed at that time. In that case, because the employer notified the employees (through cease and desist letters) of its intent to enforce the noncompetes before the employees sought to void the agreements, the court concluded that the noncompetes were not automatically void (they were only voidable under the statute) and the employees attempted to exercise their right to render the noncompetes void too late. Although the case is presently on appeal, the issue is effectively eliminated by the amendment for all future noncompetes.

Also, the two remaining bills in Oregon are, for all practical purposes, presumably dead. Specifically, HB.2325 (“A BILL FOR AN ACT Relating to noncompetition agreements; creating new provisions; and amending ORS 653.295”) is essentially the House version of the new law, and SB.13 (“A BILL FOR AN ACT Relating to enforceability of noncompetition agreements; creating new provisions; and amending ORS 653.295”) is essentially a complete rewrite of the law, which would seem unlikely given that they just changed the law. Time will tell.

 

Next up: New Hampshire (or maybe New Jersey, as there’s lots going on there, or maybe D.C., as there’s already a bill to amend the just-recently-enacted law)

And, remember, if you want to see a summary of the current noncompete law in any state (and D.C.), please refer to our 50-state noncompete chart, which is updated on a continual basis, as the laws change.

*A huge thank you to Erika Hahn for all of her extraordinary help in tracking and monitoring all of the bills. 

†Thank you Jackie Johnson for pointing out that, in Oregon, absent an “emergency clause,” a bill does not become effective until January 1 of the year following its passage.

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[1] The 25 states are: Arkansas, Connecticut, Georgia, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, Vermont, Virginia, and West Virginia.

[2] The six states are: Georgia, Kentucky, Mississippi, Nevada, Virginia, and Utah. Note that the Georgia bill discussed here has since died.