Employee Non-Compete Agreement and Enforceability Memo — Idaho

IDAHO Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

Part A — Enforceability Memo

TO: [Hiring Manager / General Counsel]
FROM: [Drafting Attorney]
RE: Enforceability of Proposed Non-Compete — Idaho Employee
DATE: [__/__/____]

1. Threshold — Is the Employee a "Key Employee" or "Key Independent Contractor"?

Idaho Code § 44-2702(1) defines "key employees" and "key independent contractors" by reference to the employer's investment and the worker's resulting inside knowledge, influence, credibility, relationships, or public persona, coupled with the ability to harm or threaten the employer's legitimate business interests. The rebuttable presumption for the highest-paid 5% appears in § 44-2704(5), not § 44-2702.

If the employee is NOT in the top 5%, the employer bears the burden to prove key status using the following factors:

2. Statutory Presumptions of Reasonableness (§ 44-2704)

3. Blue-Pencil / Reformation (§ 44-2703)

Idaho Code § 44-2703 expressly authorizes courts to "limit or modify" unreasonable non-compete provisions to render them enforceable. However, in Brand Makers Promotional Products, LLC v. Archibald, the Idaho court declined to insert missing terms (e.g., when the contract was silent on geography), holding the statute does not require courts to write absent terms into the agreement. Practical drafting takeaway: include reasonable terms in the first instance — do not rely on judicial reformation to fill gaps.

4. Industry Carve-Outs

5. Consideration

6. Remedies

• Injunctive relief: May be requested, but § 44-2704 creates no presumption of irreparable harm; subsection (4) addresses scope reasonableness.
• Bond: Idaho R. Civ. P. 65(c); bond amount in court's discretion.
• Liquidated damages: Enforceable if reasonable; void if penalty.
• Attorneys' fees: Recoverable if contractually provided; Idaho Code § 12-120 may apply in commercial disputes ≤ $35,000.

7. Recent Developments

• Current § 44-2704: Contains presumptions for duration, geography, scope, and top-5% key status; it does not contain an irreparable-harm presumption.
• FTC Non-Compete Rule (2024): Vacated nationally by Ryan LLC v. FTC, N.D. Tex. (Aug. 20, 2024). Idaho APLBI controls.
• Amendment history: The official current section identifies amendments in 2016 and 2018.

Part B — Non-Compete Agreement

THIS EMPLOYEE NON-COMPETE AGREEMENT (this "Agreement") is entered into as of [__/__/____] (the "Effective Date"),

by and between:

EMPLOYER:
Name: [________________________________]
Address: [________________________________]
City/County, Idaho [ZIP]: [________________________________]
(the "Company")

and

EMPLOYEE:
Name: [________________________________]
Address: [________________________________]
City/County, Idaho [ZIP]: [________________________________]
(the "Employee")

RECITALS

WHEREAS, the Company is engaged in the business of [________________________________] in Idaho and elsewhere (the "Business");

WHEREAS, Employee will hold the position of [________________________________], with [☐ access to trade secrets and confidential information] [☐ customer-relationship-development responsibility] [☐ specialized training paid for by Company] [☐ unique skills/credentials], qualifying Employee as a "key employee" within the meaning of Idaho Code § 44-2702;

WHEREAS, this Agreement is drafted to comply with Idaho Code Title 44, Chapter 27 (the "APLBI"), including the statutory presumptions of reasonableness in Idaho Code § 44-2704;

NOW, THEREFORE, the Parties agree:

1. KEY EMPLOYEE ACKNOWLEDGMENT

1.1 Employee acknowledges that Employee is a "key employee" under Idaho Code § 44-2702 because:

(check all that apply)
☐ Employee is or will be among the highest-paid five percent (5%) of the Company's employees or independent contractors (statutory presumption under Idaho Code § 44-2704(5));

☐ Employee will have access to trade secrets and confidential information of the Company;

☐ Employee will develop and maintain customer relationships on behalf of the Company;

☐ Employee will receive specialized training funded by the Company at a cost of approximately $[____];

☐ Employee possesses unique skills, credentials, or know-how material to the Company's Business.

1.2 Employee acknowledges that the Company may seek available relief for a proven breach, subject to the requirements of applicable law. Idaho Code § 44-2704 does not create a presumption of irreparable harm.

2. INDUSTRY CARVE-OUT NOTES

2.1 Attorney carve-out. This Section 5 (Non-Compete) does NOT apply if Employee is licensed to practice law and the agreement would violate Idaho Rule of Professional Conduct 5.6.

2.2 Foreign-physician carve-out. This Section 5 does NOT apply if Employee is a foreign-trained physician practicing in a designated shortage community under Idaho Code § 39-6109 or § 39-6109A.

3. DEFINITIONS

3.1 "Confidential Information" has the meaning given in the Idaho Trade Secrets Act, Idaho Code § 48-801 et seq., and the federal Defend Trade Secrets Act, 18 U.S.C. § 1836.

3.2 "Customer" means any person or entity that was a customer of the Company at any time during the [____]-month period preceding Employee's termination, or any prospective customer with whom Employee had material contact during the same period.

3.3 "Restricted Territory" means: [________________________________]

Choose one (per § 44-2704 presumption):

☐ Option A — Service Area: the geographic area in which Employee provided services to or had material customer contact with the Company during the final [____] months of employment;

☐ Option B — Counties: the following Idaho counties: [________________________________];

☐ Option C — Radius: a [____]-mile radius from each Company location at which Employee worked.

3.4 "Restricted Period" means [____] months following termination of employment, not to exceed 18 months unless consideration in addition to employment or continued employment is provided under Idaho Code § 44-2704(1).

3.5 "Competing Business" means a person or entity engaged in business substantially similar to or competitive with the Business, but limited to the type of employment or line of business in which Employee actually worked (per § 44-2704 scope presumption).

4. CONSIDERATION

☐ At hire, ≤ 18 months: This Agreement is a condition of, and consideration for, the offer of employment.

☐ At hire or mid-employment, > 18 months: Employee receives additional consideration of $[____] [signing bonus / promotion / equity grant], which the Parties agree is material and supports a duration beyond 18 months.

☐ At separation: Severance of $[____] under a separate Separation Agreement is consideration.

5. NON-COMPETE

During the Restricted Period and within the Restricted Territory, Employee shall not, directly or indirectly:

(a) own, manage, operate, or be employed by a Competing Business in a role substantially similar to Employee's role with the Company; or

(b) provide services to a Competing Business that involve use of the Company's Confidential Information.

This Section is drafted to fall within the presumptions of reasonableness in Idaho Code § 44-2704 (duration ≤ 18 months; geography limited to Employee's service area; scope limited to Employee's actual line of business).

6. NON-SOLICITATION OF CUSTOMERS

During the Restricted Period, Employee shall not solicit or accept business from any Customer for a Competing Business.

7. NON-SOLICITATION OF EMPLOYEES

During the Restricted Period, Employee shall not solicit, recruit, or induce any employee of the Company to terminate their employment.

8. CONFIDENTIAL INFORMATION

Employee shall not use or disclose Confidential Information except as authorized or required by law. DTSA notice (18 U.S.C. § 1833(b)): Trade-secret disclosure in confidence to a government official or attorney solely to report or investigate suspected illegal activity, or in a sealed court filing, is immunized.

9. INJUNCTIVE RELIEF

The Company may seek temporary, preliminary, and permanent injunctive relief upon the showing required by applicable law. Idaho Code § 44-2704(4) concerns the reasonableness of the restricted type of employment or line of business and does not presume irreparable harm.

10. REFORMATION / BLUE-PENCIL

Pursuant to Idaho Code § 44-2703, the Parties expressly authorize a court to limit or modify any provision of this Agreement found unreasonable, to the maximum extent enforceable under Idaho law.

11. CHOICE OF LAW / VENUE

This Agreement is governed by Idaho law. Exclusive venue lies in the District Court of [______] County, Idaho, or the U.S. District Court for the District of Idaho.

12. ENTIRE AGREEMENT / COUNTERPARTS

Entire agreement. May be executed in counterparts and by electronic signature pursuant to the Idaho Uniform Electronic Transactions Act, Idaho Code § 28-50-101 et seq.

EXECUTION

Part C — Pre-Signing Checklist

☐ Confirmed Employee is a "key employee" or "key independent contractor" under Idaho Code § 44-2702 (with any top-5% presumption analyzed under § 44-2704(5))

☐ Duration ≤ 18 months OR additional consideration provided for longer term (§ 44-2704(1))

☐ Geographic scope limited to areas where Employee provided services or had significant presence/influence (§ 44-2704)

☐ Scope limited to Employee's actual type of employment or line of business (§ 44-2704)

☐ No attorney non-compete unless retirement / sale-of-practice (Idaho RPC 5.6)

☐ No foreign-physician shortage-community non-compete (Idaho Code § 39-6109 / § 39-6109A)

☐ Legitimate business interest documented (trade secrets, customer goodwill, training, unique skills)

☐ Consideration documented (employment offer for ≤ 18 months; additional consideration for longer)

☐ Confidentiality / NDA provision included (Idaho Trade Secrets Act § 48-801 et seq.)

☐ DTSA whistleblower notice included (18 U.S.C. § 1833(b))

☐ Injunctive-relief language does not claim an irreparable-harm presumption under § 44-2704

☐ Reformation/blue-pencil authorization included (§ 44-2703)

☐ Idaho choice of law and Idaho venue

☐ E-signature / counterpart language (Idaho UETA)

☐ Specific terms drafted (geography, scope, duration) — do NOT rely on judicial gap-filling (Brand Makers v. Archibald)

☐ Reviewed by Idaho-licensed attorney before execution

☐ Removed all `` comments before delivery

Sources and References

• Idaho Code § 44-2701: https://legislature.idaho.gov/statutesrules/idstat/Title44/T44CH27/SECT44-2701/
• Idaho Code § 44-2702: https://legislature.idaho.gov/statutesrules/idstat/Title44/T44CH27/SECT44-2702/
• Idaho Code § 44-2703: https://legislature.idaho.gov/statutesrules/idstat/Title44/T44CH27/SECT44-2703/
• Idaho Code § 44-2704: https://legislature.idaho.gov/statutesrules/idstat/Title44/T44CH27/SECT44-2704/
• Idaho Code § 39-6109 (foreign-trained physicians, shortage communities): https://legislature.idaho.gov/statutesrules/idstat/title39/t39ch61/sect39-6109/
• Idaho Code § 39-6109A: https://legislature.idaho.gov/statutesrules/idstat/title39/t39ch61/sect39-6109a/
• Idaho Rule of Professional Conduct 5.6: https://isb.idaho.gov/wp-content/uploads/irpc_old.pdf
• Freiburger v. J-U-B Engineers, Inc., 141 Idaho 415, 111 P.3d 100 (2005)
• Pinnacle Performance, Inc. v. Hessing, 135 Idaho 364, 17 P.3d 308 (Ct. App. 2001)
• Brand Makers Promotional Products, LLC v. Archibald — Parsons Behle commentary: https://parsonsbehle.com/insights/Non-Compete-Agreements-in-Idaho-How-it-Started-and-How-its-going
• Idaho State Bar — Non-Compete CLE materials: https://isb.idaho.gov/wp-content/uploads/EMP-Feb-Materials.pdf
• Idaho Trade Secrets Act, Idaho Code § 48-801 et seq.
• Defend Trade Secrets Act, 18 U.S.C. § 1836; whistleblower immunity, 18 U.S.C. § 1833(b)
• Ryan LLC v. FTC, No. 3:24-CV-00986-E (N.D. Tex. Aug. 20, 2024) (FTC Non-Compete Rule vacated)