In the employment context, "restrictive covenants" are a general category of contractual agreements that limit an employee's future activities. Common restrictive covenants include but are not limited to: (1) noncompetition agreements, (2) nonsolicitation agreements, (3) nondisclosure agreements (NDAs), (4) proprietary information and invention agreements, and (5) confidentiality agreements.
Restrictive covenants are sometimes set forth in their own free-standing contractual documents. In other cases, covenants are part of broader employment contracts that address a variety of other subjects related to the employment relationship. Some restrictive covenants are implied by law and will apply regardless of whether a written contract exists. For example, an employee's duty of loyalty to a current employer arises under Oregon common law and exists even where there is no written contract. Similarly, statutes covering trade secrets protect employers from misappropriation.
Negotiation, interpretation, and enforcement of restrictive covenants tend to be legally and factually complex matters. Restrictive covenants often implicate new and prospective employment relationships or other business opportunities that may arise after employment ends. Therefore, these covenants require a detailed and proactive risk analysis that factors in multiple competing interests. Since remedies for violating a restrictive covenant often include equitable relief (e.g., temporary restraining orders, preliminary injunctions, etc.), parties need to be prepared for extremely short deadlines should litigation ensue. Additionally, many restrictive covenants contain clauses regarding choice of law/venue, arbitration, and payment of attorneys' fees and costs that determine, as a practical matter, how the agreements must be addressed and prosecuted.
An overview of the Oregon Uniform Trade Secret Act.
A summary of legal issues pertaining to noncompetition agreement in Oregon.