FAQ's
Employment Matters
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No. In Dymock v. Norwest Safety Protective Equipment for Oregon Industry, Inc., 172 Or.App. 399 (2001), rev allowed 332 Or. 326 (2001) an employee of 17 years claimed he was "wrongfully discharged" after being fired for refusing to sign an agreement that included a "non-solicitation" provision that among other things, prohibited him from soliciting the business of any entity which was a customer of the company at any time during his employment or was a target of the company’s marketing for five years after termination of employment. The court found that this provision constituted a "non-competition agreement" under ORS 653.295. This statute precludes enforcement of non-competition agreements not entered into upon initial employment or subsequent bona fide advancement of the employee. The appellate court interpreted the word "compete" broadly and indicated that the non-solicitation provisions in the agreement materially deterred or impaired the employee from subsequently engaging in the same business as the employer.
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Yes. First, under current law, an employee may elect to defer up to $15,500 tax-free for 2007 and 2008 under a 401(k) plan. However, the applicable dollar limit on elective deferrals under a 401(k) plan is increased for individuals who have reached age 50. In other words, you can contribute up the maximum amount permitted under the normal operation of the 401(k) plan, plus additional amounts under the so-called catch-up provisions.
The additional amount of elective contributions that an individual may make is the lesser of (1) the "applicable dollar amount" ($5,000 for 2006 and later), or (2) the plan participant’s compensation for the year reduced by any other elective deferrals for the year. Catch-up contributions are not subject to any other contribution limits and are not taken into account in applying other contribution limits. An employer is permitted to make matching contributions regarding catch-up contributions; however, any matching contributions are subject to the regular applicable rules.
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ORS 653.295 has been amended to make non-competition agreements entered into between an employer and employee voidable and may not be enforced by a court in Oregon unless the employer complies with the statutory notice, coverage and duration requirements. A non-competition agreement may not exceed two years in length from the date of the employee’s termination, any term over two years in voidable and may not be enforced by an Oregon court. These restrictions apply only to non-competition agreements in the context of an employment relationship, and not to such covenants or agreements entered into in connection with the sale of a business. Further, the above restrictions do not apply to bonus restriction agreements or to non-solicitation agreements prohibiting an employee from soliciting an employer’s employees or customers. A “bonus restriction agreement” is defined as an agreement between an employer and employee where the employee is restricted from competing against the employer after termination of employment (must be limited in time, geographic scope and specified activities) all of which are reasonable in relation to the employee’s services and the services include substantial involvement in management, personal contact with customers, knowledge of customer requirements related to the employer’s business, or knowledge of trade secrets or other proprietary information of the employer, and the penalty imposed for the proscribed competition is limited to forfeiture of profit sharing or other bonus compensation that has not yet been paid to the employee.
To meet the notice to prospective employee requirement, the employer must inform the employee in a written employment offer received at least two weeks before the employee’s first day of employment that a non-competition agreement is required as a condition of employment. However, a current employee may be required to enter into a non-competition agreement if it is entered into upon a subsequent bona fide advancement. In addition, to be a “covered” employee, the employee must be classified as “while collar” exempt as defined by ORS 653.020(3) (thus also exempt from the minimum wage and overtime rules) identifying the recognized “administrative, executive and professional” exemptions and at the time of termination, the total amount of the employee’s annual gross salary and commissions exceeds the median family income for a four-person family as determined by the U.S. Census Bureau for the most recent year available at the time of the employee’s termination ($64,832 at 8-30-07 for Oregon). Finally, the employer must have a “protectable” interest defined as the employee’s access to trade secrets (as defined in ORS 646.461) or competitively sensitive business or professional information that otherwise would not qualify as a trade secret, such as product development plans, product launch plans, marketing strategy or sales plans. There is a limited exception for employment of on-air talent by an employer in the broadcasting business and where the employer pays the employee during the restricted period the greater of at least 50% of the employee’s annual gross salary at the time of termination or the specified amount under the benchmark tied to U.S. Census Bureau information on family income ($64,832 at 8-30-07 for Oregon).
Notwithstanding the above requirements for the employer to have a “protectable interest” based on access to trade secrets and required income level at the time of termination, a non-competition agreement is enforceable for the full term of the agreement up to two years if the employer provides the employee for the period the employee is restricted from working the greater of: (1) compensation equal to at least 50% of the employee’s annual gross base salary and commissions at the time of termination; or (2) the specified amount under the benchmark tied to U.S. Census Bureau information based on family income ($64,832 at 8-30-07 for Oregon).
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