Cannabis Non-Compete Agreement? Send it Up in Smoke.

noncompete marijuana cannabis
Noncompetes aren’t always enforceable.

Marijuana has been legal in Oregon for about three years now. Employees with specialized skills are starting to jump ship and head to competitors. What do you do, as an employer, if a candidate for employment shows you a non-competition agreement they signed with their former employer? Typically, the former employer will go after the employee to enforce the non-competition agreement, but the former employer may seek an injunction against your business to prohibit you from hiring the candidate.  Is there a way around this? Perhaps.

First, you should consider whether the non-competition agreement is enforceable. As we’ve previously discussed, non-competition agreements in Oregon are highly disfavored. Non-competition agreements in Oregon are only enforceable if the employee was making at least the median income of a family of four at the time of termination and the employee was given the non-competition agreement at least two weeks prior to the commencement of employment, or if the non-competition agreement was entered into as a part of a bona-fide advancement with the employer. If these factors are not met, the agreements are not enforceable.

However, this does not automatically invalidate the agreement. The Oregon Court of Appeals ruled in Bernard v. S.B., Inc. that the employee must take affirmative steps to invalidate or void the obligation of the non-competition agreement. Meaning, they need to send a written notice to the former employer that they intend to void the agreement. Have an attorney review the agreement to determine if its enforceable in the first place, if it’s not, it may be easy for the potential employee to void the agreement and make it safe for you to hire the individual.

Second, some employees may have entered into non-competition agreements in other states. Those agreements may be entirely enforceable under choice of law provisions in the agreements. What then? It’s time for negotiation skills. Some companies may not want to deal with the hassle of attempting to enforce a non-competition agreement and may agree to sign a waiver releasing the former employee from their obligations under the agreement. Others may truly want to enforce the non-competition agreement and refuse to release the employee from the agreement. At that point, you may want an attorney on your side to review the non-competition agreement and see if there is a way to avoid violating it. Perhaps the agreement only prohibits the employee from working with edibles, but you plan on utilizing the employee’s skills to clone plants, for example. Further, an attorney may be able to work with the former employer to convince them to waive the non-competition agreement.

Non-competition agreements can be a good tool to protect your investment in your employees and to protect trade secrets. Alternatively, they can be a pain when you are attempting to hire. Whatever side you’re on, it’s always best to have an attorney on your side to review the agreement and ensure your company is protected to the fullest extent.

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Author: Megan Vaniman
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