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Legal Updates & Alerts

New Law Adds Conditions to Arbitration Agreements Imposed by Employers

July 11, 2007
When the Oregon legislature passed new laws on noncompetition and arbitration agreements last month, most employers focused upon the new requirements for enforceability of noncompetition agreements, which we highlighted in a June issue. The legislature also added important new restrictions regarding arbitration agreements. The Governor is expected to sign those changes into law within the next month.

The new law states that arbitration agreements entered into between employers and employees are void unless:
    The employer informs the employee in a written employment offer received by the employee at least two weeks before the first day of employment that an arbitration agreement is a condition of employment, or The arbitration agreement is entered into upon a subsequent bona fide advancement of the employee by the employer.
The effective date of the new law is January 1, 2008. Although noncompetition and arbitration agreements entered into before January 1 are subject to the current law rather than the new amendments, employers should take time between now and January 1 to review and understand their new obligations.

The full text of the final version of the new bill can be found at: http://www.leg.state.or.us/07reg/measures/sb0200.dir/sb0248.en.html

There are bound to be immediate practical effects on employers as to both noncompetition and arbitration agreements. As we move toward the effective date of January 1, please stay tuned to Tonkon Tips. We will update you on some practical steps employers can take to transition smoothly to the new requirements.