Idaho Business Law Employees And Non-Compete, Non-Disclosure And Non-Solicitation Agreements

By Lane V. Erickson, Idaho Business Attorney

We’ve all heard horror stories about hiring and training an employee, giving them confidential information or teaching them how to be successful in the business, and then having that employee leave the business and either immediately begin competing against the business or begin stealing clients away from the business. There are also stories about employees who gain confidential or proprietary information about a product, or a process used in the business and then immediately leave and begin using that information in a way that is detrimental to the business.

When it comes to your business, and your employees, there are many things you can do to make sure that your business stays protected at all times. The purpose of this article is to talk about some of those things that you can actually do with your employees to protect your business.

At the Racine law office, we have assisted clients in both the creation and the enforcement of employee contracts for more than 70 years. Our business attorneys have the skill, experience, and expertise to help each client with their business needs, including creating and dealing with employee contracts that will protect our client’s business. Our team of business law attorneys include partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley. Each of the lawyers on our team have the ability to help you in creating and enforcing employee contracts.

In this article we’re going to discuss the three very specific types of agreements that you should consider having with each of your employees. These include first a non-competition agreement. Second, we discuss using a non-disclosure agreement. Finally, we also discussed the non-solicitation agreement and how it can protect your business as well.

The first employee agreement we will discuss is the non-competition agreement. Idaho law, and the law in most states, recognizes that a business has legitimate interests that should be protected. This is especially true when that business employs someone who develops a relationship with clients, or who learns protected information about the business. To protect these legitimate business interests, Idaho allows employers to require their employees to sign a non-competition agreement.

A non-competition agreement is exactly what it sounds like. It is a contract where the employee agrees that when their employment ends, regardless of how it ends, they will not compete against the business. These types of agreements are usually limited in the geographical areas and the time frame in which they will be enforced. In other words, to protect that business’ legitimate interests, it is not necessary to require the non-competition to include the whole world. Rather, it usually only includes the areas where the business is actually doing business.

Likewise, the non-competition cannot last forever. Rather, the time period where the non-competition will exist has to be reasonable. Idaho has statutes that specifically state it is presumed that 18 months or less is a reasonable amount of time for a non-competition agreement to be enforceable. It is unlikely that a court in Idaho would enforce a time period that lasts much longer than this.

A non-disclosure agreement is similar, but it also has some different characteristics as well. These types of agreements are supported by specific statutes that prohibit an employee from disclosing any proprietary information that is protected by the Idaho Trade Secrets Act. In other words, if an employee learns about a product, a process, or some other proprietary information that a business owns, they are strictly prohibited in disclosing that information to any other person, including competing businesses

Non-disclosure agreements are not limited so much in time or geographical area like non-disclosure agreements are. In other words, an employee is prohibited from disclosing any type of proprietary or trade secret information at any time, to any person, in any location. A non-disclosure agreement will last much longer in time than a non-compete agreement because there is no defined time limit on how long the proprietary information will remain proprietary.

Similarly, a non-solicitation agreement can also be enforced for a much longer period of time. This type of agreement simply prohibits the employee from contacting or soliciting clients that belong to the business where they were previously employed. However, the court will not dictate to the client who and where they can do business. An example will help illustrate this.

Let’s suppose that you operate a tire business. You employed a person as a salesman to help your business succeed. The salesman was successful in helping you gain new clients and customers over 3 years. Now suppose that the salesmen decides to work for a competitor because there is no non-competition agreement that exists. If they had signed a non-solicitation agreement, the salesman would not be able to contact the current clients of your business and try to entice them to come over to the new business.

However, if you have a client that learns that the salesman works for a competitor, and on their own they decide that they are going to go over with him to the new business, you cannot stop that from happening. The client is always free to choose to go where they want.

If you own or operate a business and you have concerns or questions about what you can do to protect it, we can help. We have created numerous non-competition, non-disclosure and non-solicitation agreements that are used by our clients in their business. We are confident that we can help you too!

Our team of Idaho business lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.