The Idaho Legislature passed a bill this week that affects non-compete agreements between employers and their employees and will become effective if signed by the governor.
Non-compete agreements are intended to prohibit individuals from competing with an employer after employment has ended. However, non-compete agreements are not always enforced by our courts. Historically, Idaho courts have refused to enforce non-compete agreements that go too far in restricting individuals from finding gainful employment with a new employer.
The legislation creates new rules for non-compete agreements. Now, certain types of restrictions that are commonly found in non-compete agreements will be presumptively valid. In addition, in many situations, the law will prohibit non-compete agreements that restrict competition for longer than 18 months.
This new law will have a significant impact on individuals and businesses who enter into non-compete agreements. It will also affect businesses that would like to hire someone who has signed a non-compete agreement with a prior employer.
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Nicole C. Snyder is an attorney with Holland & Hart and suggested this blog on the legislation so that the business community would be aware of it. We are asking her to write more for a column on the subject in an upcoming regular print edition of the IBR.
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6 Comments
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What sort of non-compete does Microsoft have? That place is a mill for new businesses. People go there, learn new skills, meet new people, and then leave to start their own venture with those skills and people. The state needs to encourage competition, not prevent it. Sure, trade secrets should be protected, but non-competes? I'll suspend judgement until I learn what sort of protection the new bill grants. Comment By Wyatt
Thursday, March 20, 2008 @ 11:43 AM
My law firm represents employees who are restrained from earning a living by unreasonable non-compete contracts. Your legislature should be applauded for setting an 18 month cap on non-competes but good (high-tech) business want to hire talented and experienced employees and will move out of state if need be. Check out what has happened in Mass. We write on non-compete issues at our blog: http://virginianoncompete.blogspot.com/ Comment By Dan Frith
Thursday, March 20, 2008 @ 1:27 PM
HP doesn't even make their employees sign a non-compete and they have done alright. If you don't trust your employee in the first place don't hire them. Personally I think our legislature should have just left it alone. Nicole thanks for the update that the law was affected but how was it affected? You told us nothing about the actual bill other than the 18 months. Some clarification please. Comment By Tac anderson
Thursday, March 20, 2008 @ 8:42 PM
Upon further examination, this law will probably hinder creativity and overall business expansion. In the massive transparency of the 'New Economy' highly paid employees will scope it out ahead of time & refuse to relocate to Idaho. Also, despite the Idaho verbage, no court has ever held these agreements signed after one's initial hiring date, have ever been valid. Comment By Bill Sellers Idaho Falls
Friday, March 21, 2008 @ 5:35 AM
Granted, larger companies like HP might be doing fine without non-competes, but these agreements matter a lot to small businesses. Small, niche companies have plenty to lose if someone moves on and takes a large chunk of clients while doing it. Example - A small printing company offering unique services hires and trains a sales rep. After the rep has built a sufficient book of business he sees a lot of potential in the unique services, decides he can offer the same, and leaves to start his own competing business -- while taking a large percentage of his customers with him. Even if he doesn't start his own business but takes the ideas to another, competitive printer, the first company is on the short end of the stick. Non-compete agreements are vital for protecting smaller companies in these types of situations. I'm glad to hear that Idaho is taking some action to make them worth more than the paper they're printed on. Comment By Dan B.
Monday, March 24, 2008 @ 2:15 AM
Would this have an effect on Independant Contractors or Distributors for companies like Avon, Herbalife, Mary Kay, etc. or would it only impact those who are on payroll for a specific employer? Comment By Shannon
Friday, April 4, 2008 @ 3:53 PM
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