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Restrictive covenants ancillary to employment agreements are generally divided into three categories: covenants not to compete, covenants not to solicit and covenants prohibiting disclosure or use of confidential information.

Prior to 2008, non-solicitation agreements were construed by Oregon courts as non?competition agreements and therefore subject to the same restraints. In order for a non?competition/non?solicitation agreement signed before 2008 to be enforceable, it had to be signed upon an employee’s initial employment or upon an employee’s bona fide advancement.  As a consequence, many non?competition/non?solicitation agreements that were executed before the law change in 2008 are unenforceable agreements because they do not meet the statutory requirements.

The statute enacted in 2008 makes it even more difficult for employers to bind new employees to non?competition agreements because they are voidable unless they accompany a written offer of employment received by the employee at least two weeks before the first day of employment and the employee earns at least $67,000 annually.

The good news for employers is that non?solicitation agreements under the new statute are now treated differently from non?competition agreements. An employer may require its employees to sign agreements that they will not solicit customers or employees during the employee’s employment and for a two-year period following termination.

In addition, there is no waiting period or minimum salary requirement. New employees can be signed to non?solicitation agreements on the first day of employment, and existing employees can be required to sign non?solicitation agreements at any time during their employment. The new statute also reinforces the right to protect trade secrets and proprietary information.

Because many employers have concerns that their current employees will go to work for a competitor and begin soliciting their former customers or co-workers, requiring those employees to sign new non-solicitation/confidentiality agreements may provide a practical means of limiting such behavior.

The absence of a geographical limitation on the restraint against soliciting customers does not make the covenant void as a matter of law. However, if the employer’s interest in restricting customer solicitations is limited to a particular territory or category of customers or products, then the company should consider limiting the scope of the restriction to a particular geographic territory or category.

Non-competition agreements should be reserved for select hires when the company can afford to make an offer and wait the two-week statutory period before the first day of employment. Special rules apply to the calculation of the two-week period, so do not assume 14 days will be sufficient.

Employees who are subject to non-solicitation and confidentiality restrictions can reduce the risk of being sued by following these guidelines:

• Review any agreements to assure compliance with obligations, and provide copies of agreements to the new employer.
• Upon departure, leave behind all customer lists, employee lists, electronic devices (including flash/USB drives, phones, software, backup devices), and printed copies of all confidential information.
• Do not delete or copy any confidential information stored in print or electronic format.
• Consider making a checklist of all items returned and having superiors acknowledge receipt of those items.
• Continue to perform duties until date of departure and, while still employed, continue to be loyal to the present employer.
• When beginning to work for the new employer, do not divulge or use any confidential information of the former employer on behalf of the new employer, and do not use any company resources (phone, email, travel reimbursements, etc.) in order to make arrangements with the new employer.

Although individuals are not to use, disclose or otherwise misappropriate trade secret and proprietary information of the former employer, the new employer may have its own independently developed customer database to share. Also, public resources – such as websites, trade journals and the like – may be used.

The fact that during previous employment an individual developed skills, talents and knowledge does not by itself give the former employer a sufficient interest to restrain use of those basic skills, talents and abilities. Rather, it is the misappropriation, use or disclosure of confidential information or the systematic contact and solicitation of customers and/or employees that creates a significant exposure for a departing employee.

Also, an individual who accepts a new position may make a general announcement of departure that identifies the position with the new employer. However, issues regarding announcements can arise, particularly if communications go beyond a neutral announcement of new employment and position.

Employers should rewrite agreements and require most – or perhaps all – employees to sign non?solicitation/confidentiality agreements. Departing employees may minimize legal exposure by following their agreements, leaving behind all confidential and trade secret information (regardless of how it is stored), avoiding solicitation of co-workers altogether, and utilizing information and resources of the new employer to perform duties on behalf of the new employer.

Richard Hunt is an attorney with Barran Liebman LLP. He has more than 30 years of experience representing employers and executives in matters relating to non-competition and non?solicitation agreements, confidentiality obligations and trade secrets, as well as litigation between employers and their former employees. Contact him at 503-276-2149 or [email protected].