Companies spend a considerable amount of time and money on new employees. Advertising, interviewing, hiring and onboarding costs can quickly add up.
Therefore, losing a good employee to a competitor is incredibly frustrating. But what if the employee signed a non-compete clause? What options are available to the employer?
The purpose of non-compete agreements
It’s not unusual for companies to require their employees to sign a non-compete agreement, which limits the individual’s ability to work for a competitor or start a competing business after leaving the company. There are several reasons for non-competes, including:
- Protecting the company’s competitive edge, such as proprietary processes, product design and client relationships
- Preventing unfair competition by ensuring the employee doesn’t exploit their inside knowledge in order to compete with their former employer
- Safeguarding confidential information like customer lists, new product plans and pricing strategies
Idaho permits the use of non-compete agreements; however, employers need to justify their need. For a non-compete agreement to be enforceable, it needs to meet the following criteria:
- With the exception of extraordinary circumstances, the agreement can only last 18 months.
- It is geographically restricted to the area of the employer’s business operations.
- It can only apply to the roles and activities tied to the employer’s actual business interests.
- Its purpose is to protect specific interests and not stifle competition.
- It doesn’t impact the employee’s ability to earn a living
Therefore, a company must tailor its non-compete agreements to strike a balance between protecting itself and aligning with Idaho’s legal standards. The courts won’t enforce any overly broad agreement. Best practices would entail the review of all employment contracts by someone who understands Idaho’s regulations.
