Voids noncompetition agreements, nondisclosure agreements nondisparagement agreements and nonsolicitation agreements between certain business entities and medical professionals, with specified exceptions, and prohibits the business entities from retaliating against the medical professional for violating the void agreements.

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83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
House Bill 3227
Sponsored by Representative NATHANSON, Senator PROZANSKI, Representative BOWMAN; Representatives
GAMBA, GOMBERG, MARSH, Senator REYNOLDS (Presession filed.)
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure as introduced. The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: The Act would stop companies that give medical care from telling their workers that
they cannot work for someone else, say that the company is bad or speak out about the company’s
bad acts. Stops companies from punishing those who speak out. The Act takes effect 91 days after
sine die. (Flesch Readability Score: 70.1).
Voids noncompetition agreements, nondisclosure agreements nondisparagement agreements and
nonsolicitation agreements between certain business entities and medical professionals, with speci-
fied exceptions, and prohibits the business entities from retaliating against the medical professional
for violating the void agreements. Punishes retaliations as an unlawful employment practice.
Takes effect on the 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to restrictive covenants in employment contracts for medical professionals; and prescribing
an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1.
Sections 2, 3 and 4 are added to and made a part of ORS chapter 677.
SECTION 2. (1) As used in this section and sections 3 and 4 of this 2025 Act:
(a) “Disciplinary action” means discrimination, dismissal, demotion, transfer, reassign-
ment, supervisory reprimand, warning of possible dismissal, or withholding of work, even if
the action does not affect or will not affect a licensee’s compensation.
(b)(A) “Management services organization” means an entity that under a written agree-
ment and in return for compensation provides to or on behalf of a licensee business man-
agement services including, but not limited to, payroll, human resources, employment
screening, employee relations and other similar or related services that do not constitute the
practice of medicine.
(B) “Management services organization” does not include a hospital, as defined in ORS
442.015, or a hospital-affiliated entity that provides outpatient health services and that is
owned, operated or controlled by, or is under common ownership, operation or control with,
a hospital. For the purposes of this subparagraph, “control” has the meaning given that term
in ORS 732.548.
(c) “Medical purpose” means, as appropriate:
(A) The purpose of practicing medicine;
(B) The purpose of allowing physicians, physician associates and nurse practitioners to
jointly render professional health care services; or
(C) The purpose of practicing naturopathic medicine.
(d) “Noncompetition agreement” means a written agreement between a licensee and an-
other person under which the licensee agrees that the licensee, either alone or as an em-
NOTE: Matter in boldfaced type in an amended section is new; matter [ italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 1375
HB 3227
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ployee, associate or affiliate of a third person, will not compete with the other person in
providing products, processes or services that are similar to the other person’s products,
processes or services for a period of time or within a specified geographic area after termi-
nation of employment or termination of a contract under which the licensee supplied goods
to or performed services for the other person.
(e) “Nondisclosure agreement” means a written agreement under the terms of which a
licensee must refrain from disclosing partially, fully, directly or indirectly to any person,
other than another party to the written agreement or to a person specified in the agreement
as a third-party beneficiary of the agreement:
(A) A policy or practice that a party to the agreement required the licensee to use, in
patient care, other than individually identifiable health information that the licensee may not
disclose under the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191,
as in effect on the effective date of this 2025 Act;
(B) A policy, practice or other information about or associated with the licensee’s em-
ployment, conditions of employment or rate or amount of pay or other compensation; or
(C) Any other information the licensee possesses or to which the licensee has access by
reason of the licensee’s employment by, or provision of services for or on behalf of, a party
to the agreement, other than information that is subject to protection under applicable law
as a trade secret of, or as otherwise proprietary to, another party to the agreement or to a
person specified in the agreement as a third-party beneficiary of the agreement.
(f) “Nondisparagement agreement” means a written agreement under which a licensee
must refrain from making to a third party a statement about another party to the agree-
ment or about another person specified in the agreement as a third-party beneficiary of the
agreement, the effect of which causes or threatens to cause harm to the other party’s or
person’s reputation, business relations or other economic interests.
(g) “Professional medical entity” means:
(A) A professional corporation described in ORS 58.375;
(B) A professional corporation described in ORS 58.376;
(C) A professional corporation organized for the purpose of practicing naturopathic
medicine;
(D) A foreign professional corporation with authority to transact business in this state
that is organized for the purpose of practicing naturopathic medicine; and
(E) A limited liability company or a limited liability partnership organized for a medical
purpose.
(h) “Termination agreement” means a written agreement that outlines the terms under
which an employment relationship is terminated.
(2)(a) Notwithstanding ORS 653.295 (1) and (2), and except as provided in paragraph (b)
of this subsection, a noncompetition agreement between a licensee and another person is
void and unenforceable.
(b) A noncompetition agreement between a licensee and another person is valid and en-
forceable to the extent and under the terms provided in ORS 653.295 in the following cir-
cumstances:
(A)(i) The noncompetition agreement between the licensee and the person was executed
in connection with the sale of a professional medical entity that is under a contract or other
arrangement with a management services organization; and
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(ii) At the point of sale, the licensee controlled an ownership or membership interest in
the professional medical entity that is equivalent to at least 10 percent of the entire owner-
ship or membership interest that exists in the professional medical entity.
(B)(i) The noncompetition agreement is between a licensee and a professional medical
entity in which the licensee controls an ownership or membership interest; and
(ii) The professional medical entity is not subject to a contract or other arrangement
with a management services organization.
(C) The noncompetition agreement is between a licensee who does not practice within the
scope of practice permitted under the licensee’s license and another person.
(3)(a) Except as provided in paragraph (b) of this subsection, a nondisclosure agreement
or nondisparagement agreement between a licensee and a management services organization
is void and unenforceable.
(b) A nondisclosure agreement or nondisparagement agreement is valid and enforceable
to the extent that such agreements are part of a termination agreement that also includes
a provision ensuring that the licensee retains the right to make good faith disclosures or
reports of information that the licensee believes is evidence of a violation of a federal or
state law, rule or regulation.
(c) Paragraph (a) of this subsection does not limit or otherwise affect any cause of action
that:
(A) A party to, or third-party beneficiary of, the agreement may have with respect to a
statement of a licensee that constitutes libel, slander, a tortious interference with contrac-
tual relations or another tort for which the party has a cause of action against the licensee;
and
(B) Does not depend upon or derive from a breach or violation of an agreement described
in paragraph (a) of this subsection.
SECTION 3.
(1) A management services organization may not take disciplinary action
against a licensee as retaliation for, or as a consequence of, the licensee’s violation of a
nondisclosure agreement or nondisparagement agreement or because the licensee in good
faith disclosed or reported information that the licensee believes is evidence of a violation
of a federal or state law, rule or regulation.
(2) A management services organization or professional medical entity that takes disci-
plinary action against a licensee in the circumstances described in subsection (1) of this
section engages in an unlawful employment practice, as defined in ORS 659A.001, that is
subject to enforcement under ORS chapter 659A.
SECTION 4.
(1) As used in this section “nonsolicitation agreement” means a written
agreement between a licensee and another person under the terms of which the licensee,
upon the conclusion of an association with the other person, agrees to refrain from soliciting
or recruiting patients, employees or other licensees to seek services or employment else-
where.
(2)(a) Notwithstanding ORS 653.295 (3) and except as provided in paragraph (b) of this
subsection, a nonsolicitation agreement between a licensee and another person is void and
unenforceable.
(b) A nonsolicitation agreement between a licensee and another person is valid and en-
forceable under the following circumstances:
(A)(i) The nonsolicitation agreement between the licensee and another person was exe-
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cuted in connection with the sale of a professional medical entity that is under a contract
or other arrangement with a management services organization; and
(ii) At the point of sale, the licensee controlled an ownership or membership interest in
the professional medical entity that is equivalent to at least 10 percent of the entire owner-
ship or membership interest that exists in the professional medical entity.
(B)(i) The nonsolicitation agreement is between a licensee and a professional medical
entity in which the licensee controls an ownership or membership interest; and
(ii) The professional medical entity is not subject to a contract or other arrangement
with a management services organization.
(C) The nonsolicitation agreement is between a licensee who does not practice within the
scope of practice permitted under the licensee’s license and another person.
SECTION 5.
(1) Sections 2 and 3 of this 2025 Act apply to contracts that a person enters
into or renews on or after the effective date of this 2025 Act.
(2) Section 4 of this 2025 Act applies to contracts that a person enters into or renews on
or after the operative date specified in section 6 of this 2025 Act.
SECTION 6. Section 4 of this 2025 Act becomes operative on January 1, 2026.
SECTION 7. This 2025 Act takes effect on the 91st day after the date on which the 2025
regular session of the Eighty-third Legislative Assembly adjourns sine die.
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