Oregon non-compete law: how ORS 653.295 caps duration at 18 months, imposes an income threshold, requires advance notice, and voids agreements that don't meet every statutory requirement

Oregon restricts non-competes through a detailed statutory framework

Oregon's non-compete statute, ORS 653.295, imposes multiple requirements that must all be satisfied for a non-compete to be enforceable. The statute has been amended several times, most significantly in 2021, and the current version applies to agreements entered into on or after January 1, 2022.

The framework is cumulative: every requirement must be met. An agreement that satisfies the income threshold but fails the notice requirement is void. An agreement with proper notice but excessive duration is void. This all-or-nothing structure means that employers must draft with precision and follow the statutory procedures exactly, because a defect in any single element invalidates the entire agreement.

Oregon's approach is structurally similar to Washington's and Massachusetts's statutory frameworks, placing it firmly in the heavy-restriction category — not a ban like California or Minnesota, but close.

The income threshold

Oregon voids non-competes for employees earning below the state's median family income for a four-person household, as determined annually by the U.S. Census Bureau. For 2025, that threshold was approximately $100,533 annually. The threshold adjusts each year, tracking economic changes automatically.

Any non-compete with an employee earning below this amount is void and unenforceable regardless of its terms, the employee's access to confidential information, or the employer's stated business justification. The threshold is calculated based on the employee's gross annual compensation at the time the agreement is entered into, including salary, commissions, and bonuses.

Oregon's threshold sits between Illinois's $75,000 and Washington's $120,559, protecting a substantial portion of the workforce while preserving enforcement against higher-earning employees who are more likely to possess the trade secrets and client relationships that non-competes are designed to protect.

The 18-month duration cap

ORS 653.295 limits non-compete duration to 18 months from the date of termination. Any restriction beyond 18 months is void. There is no provision for extending the duration under any circumstances — unlike Massachusetts, which allows extension to 24 months for breach of fiduciary duty, Oregon's 18-month cap is absolute.

The cap applies to employment non-competes only. Non-competes ancillary to the sale of a business are not subject to the 18-month limitation and are governed by general contract law principles, consistent with the approach in virtually every state.

Combined with the income threshold, the duration cap means that even a fully enforceable Oregon non-compete restricts a higher-income employee for no more than 18 months — shorter than the two-year periods commonly enforced in Texas, Florida, Ohio, Georgia, and Pennsylvania.

The advance notice requirement

Oregon requires that a non-compete be presented to the employee under one of two timing conditions:

At initial employment. The employer must inform the employee in a written employment offer received at least two weeks before the first day of employment that a non-compete will be required. The two-week notice period gives the employee time to review the terms, consult an attorney, and make an informed decision about accepting the position.

Upon bona fide advancement. If the non-compete is presented after employment begins, it must be tied to a bona fide advancement of the employee — a genuine promotion with increased responsibilities, not a lateral move or a pretext for imposing a new restriction. The advancement must be real and meaningful.

An agreement that doesn't satisfy either timing condition is void. An employer who presents a non-compete during the first day of orientation, without having included it in a written offer at least two weeks prior, has failed the notice requirement. An employer who presents a non-compete to an existing employee without a bona fide advancement has failed the requirement.

This notice provision serves the same policy goal as the disclosure requirements in Colorado and Massachusetts — preventing employers from springing non-competes on employees who have already committed to the job by resigning from a prior position, relocating, or otherwise burning bridges.

The FLSA exemption requirement

Oregon requires that an employee subject to a non-compete be classified as exempt under the Fair Labor Standards Act — meaning the employee must meet the executive, administrative, or professional exemption criteria and be salaried rather than hourly.

Non-exempt employees — those entitled to overtime pay — cannot be bound by non-competes in Oregon regardless of their income level. This categorical protection applies independently of the income threshold: even a non-exempt employee earning above the threshold cannot be restricted.

The exemption requirement aligns with Massachusetts's MNAA, which similarly prohibits non-competes for nonexempt workers. The principle is that workers who are classified as non-exempt generally lack the type of access to trade secrets and strategic decision-making authority that justifies competitive restrictions.

What Oregon considers a valid non-compete

ORS 653.295 defines a "noncompetition agreement" as an agreement that restrains the employee from providing services for a period of time after termination. The definition captures traditional non-compete clauses, forfeiture-for-competition provisions, and any contractual term that has the practical effect of restricting post-employment competitive activity.

The statute explicitly excludes several types of agreements from the definition of noncompetition agreements:

Non-solicitation agreements that restrict the employee from soliciting the employer's clients are not non-compete agreements under the statute, and they are not subject to the income threshold, duration cap, or notice requirements. Non-solicitation agreements are governed by separate common-law principles in Oregon.

Non-disclosure agreements that restrict the use or disclosure of confidential information are similarly excluded. Trade secret protections under the Oregon Uniform Trade Secrets Act (ORS 646A.600 et seq.) apply independently of the non-compete statute.

Agreements restricting an employee from soliciting the employer's other employees (non-recruitment provisions) are also excluded.

The practical consequence of these exclusions: employers who cannot satisfy the non-compete statute's requirements often shift to non-solicitation or non-disclosure agreements as alternatives. These alternatives are narrower in scope (they restrict who you contact or what you disclose, not where you work), but they are not subject to the statute's income threshold, duration cap, or notice requirements.

The garden leave alternative

Oregon's statute includes a provision allowing employers to enforce non-competes by providing garden leave compensation. If the employer pays the employee during the restriction period — specifically, if the employer provides compensation equal to at least 50% of the employee's annual gross base salary at the time of termination — the non-compete may be enforceable even if some of the statute's other requirements are not fully met.

The garden leave provision functions as an alternative path to enforcement. An employer who fails the notice requirement but provides garden leave compensation may still have an enforceable agreement, though the case law on this provision is still developing and the interaction between garden leave and the other statutory requirements is not fully settled.

The garden leave compensation must be paid during the entire restriction period, creating the same enforcement-cost dynamic seen in Washington and Massachusetts: the employer must continue paying a former employee who is producing nothing, which creates a financial incentive to release the restriction rather than enforce it.

The reasonableness analysis for qualifying agreements

For agreements that satisfy all statutory requirements — income threshold, FLSA exemption status, advance notice, duration cap — Oregon courts apply a reasonableness analysis to evaluate the scope of the restriction.

The restriction must protect a legitimate business interest. Oregon recognizes trade secrets, confidential business information, and customer relationships as protectable interests. General industry knowledge, skills acquired through experience, and the employer's general interest in preventing competition are not protectable.

Geographic scope must be reasonable relative to the employer's business and the employee's territory. Oregon's economy is concentrated in the Portland metropolitan area and the Willamette Valley, with smaller but significant technology, agriculture, and natural resources sectors in other regions. Courts evaluate geographic restrictions with reference to the specific market the employee served.

Activity scope must be tailored to the competitive functions that threaten the protectable interest. Blanket restrictions on all employment at a competitor are disfavored; restrictions limited to the same role, the same clients, or the same product area are more defensible.

The reformation question

Oregon courts have historically applied a blue-pencil approach to overbroad non-competes, with limited authority to sever unenforceable provisions. The statutory framework's all-or-nothing structure — where failure to satisfy any requirement voids the agreement — limits the relevance of reformation. If the agreement fails a statutory requirement, reformation doesn't help because the defect is structural rather than a matter of scope.

For agreements that satisfy all statutory requirements but overreach on scope, Oregon courts can sever overbroad provisions using the blue-pencil approach. The authority to rewrite or modify terms is more limited than in reformation states like Texas or Florida.

The practical enforcement landscape

Oregon's non-compete litigation is concentrated in Multnomah County Circuit Court (Portland) and the federal District of Oregon. The state's technology sector — centered on Intel, Nike, and the Silicon Forest corridor — generates a significant portion of non-compete disputes, along with healthcare, financial services, and professional services.

The statutory framework has noticeably reduced the volume of non-compete enforcement. The income threshold eliminates enforcement against the majority of workers. The notice and FLSA exemption requirements create procedural defenses that can void agreements before the substantive analysis begins. The 18-month cap limits the restriction's duration even for fully enforceable agreements.

Employers who enforce in Oregon tend to be large companies with high-income employees who had genuine access to trade secrets and who received properly noticed agreements at hiring or upon bona fide advancement. Template agreements drafted for other states routinely fail Oregon's requirements.

What Oregon employees should know

If you earn below the median family income threshold (approximately $100,533 for 2025), your non-compete is void. If you're classified as non-exempt under the FLSA, your non-compete is void regardless of your income.

If you weren't given at least two weeks' notice of the non-compete before your start date, or if the non-compete was presented mid-employment without a bona fide advancement, the agreement may fail the notice requirement and be void.

If the restriction exceeds 18 months, it's void as to the excess period.

Non-solicitation and non-disclosure agreements are separate from non-competes and are not subject to the same statutory requirements. If your agreement contains both a non-compete and a non-solicitation provision, the non-compete may be void while the non-solicitation survives.

If you're negotiating a severance package that includes a non-compete, Oregon's statutory framework gives you substantial leverage. The multiple requirements create genuine enforceability questions, and the garden leave provision means the employer must commit to ongoing payments during any restriction period.

The national overview positions Oregon in the heavy-restriction category alongside Washington, Massachusetts, Illinois, and Colorado — states that permit non-competes but impose enough requirements to make enforcement expensive and procedurally demanding.