What Makes a Non-Competition Agreement “Voidable” under ORS 653.295

The Oregon Court of Appeals recently examined when a noncompete will be voidable because employer did not provide two weeks advance notice to a prospective employee that she would be required to sign a noncompete.  ORS 653.295 states: “(1) A noncompetition agreement entered into between an employer and employee is voidable and may not be enforced by a court of this state unless… The employer informs the employee in a written employment offer received by the employee at least two weeks before the first day of the employees employment that a noncompetition agreement is required as a condition of employment…”

The primary issue on appeal was whether an employer’s failure to comply with the two-week notice rule rendered the noncompete void or voidable.  The Court found that use of the word “voidable” in the statute means that an employee must take affirmative steps to void a noncompetition agreement at the time the employer seeks to enforce the noncompete in order for the agreement to be unenforceable because the employer did not give two weeks advance notice.  In the absence of taking such affirmative steps, the noncompetition agreement remains valid and enforceable.

From a practical standpoint, the case establishes that an employer’s failure to provide two weeks advance notice of a noncompete may not be fatal to enforcement.  However, if an employee takes steps to void the noncompetition agreement because of the employer’s failure to comply with the statute, the agreement will be not be enforceable (and the failure to follow the statute will be fatal to enforcement).

http://www.publications.ojd.state.or.us/docs/A154386.pdf

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