Non-Compete Agreements

By Lane V. Erickson, Pocatello Business Attorney

Every Pocatello business owner wants to protect their business. One of the greatest sources of harm that can come to a business is from a previous business owner. Additionally, previous employees or independent contractors that provided labor or services to your business can also cause great harm after they leave. The reason for this is that these people worked in your business which means they know how your business operates. They also know the most important thing about your business, which is who your current clients and customers are.

The good news is, there are some things you can do to protect your Pocatello business especially if owners, employees, or independent contractors leave your business operations. Our premier team of Pocatello business lawyers at the Racine law office have worked with business clients in not only creating and building their business, but also protecting their business and business interests. Our team of Pocatello business attorneys consists of partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley who each have the experience, skill, and knowledge, to provide sound legal advice to each of our business clients.

It's common that a previous business owner, or employee, or independent contractor developed a relationship with your customers or clients. Often, this is how a business creates a relationship with clients and keeps them coming back. Based on this, is there anything that you can actually do to protect your business relationship with your clients, when a previous owner or employee or independent contractor leaves your business operation? In other words, how can you keep these groups of people from taking your clients away? The short answer is, you can use a non-compete agreement.

A non-compete agreement is a contract that is signed by your business owner, employee, or an independent contractor, while they are employed by or working with your business. This contract specifically states that if the individual leaves the business, they cannot compete against your business for a certain period of time within a specific location. In other words, the person agrees that if they leave your business operation, they will not compete against your business in the area that is listed for the time amount that is listed.

When done correctly, a non-compete agreement will protect your business regardless of whether the person left your business operations on their own or even if they were terminated. Most Pocatello businesses that utilize non-compete agreements have the individual sign the agreement when they first begin working with the business. These documents are then placed in a personnel file where they can be kept for later use if the need arises.

If you’ve gone to the trouble to create a non-compete agreement as part of your regular business operations, and it is signed by the owner, employee, or independent contractor you are working with, how do you know if it will be enforceable later in the event the person who signed it leaves and begins to compete against you? This is a great question. The answer is, that a non-compete agreement is in fact a contract. As a result, all the requirements for an enforceable contract apply to a non-compete agreement.

If you want your non-compete agreement to be enforceable, it needs to be specific so that there can be no misunderstandings about what the agreement requires the parties to do or not do. In other words, The agreement needs to identify the parties; it needs to specifically state what the terms and conditions of the non-compete agreement are; it needs to be signed by the parties; and it needs to be properly dated and perhaps even notarized. Once you have met these requirements, then the law will support the non-compete as an enforceable contract. The only other issue that remains is whether Idaho law will also enforce your specific non-compete agreement.

Idaho has specific laws that deal with non-compete agreements. These are in statutes that became effective in Idaho several years ago and can be found at Idaho Code §§ 44-2701 et seq. These statutes codified many decades of case law that was created by Idaho appellate courts dealing with non-compete agreements. The statutes are much simpler and easier to understand and follow then the cases that preceded them.

According to the statutes, a non-compete agreement will be presumed to be enforceable so long as it does not last longer than 18 months, and only covers a geographical area where the owner, employee, or independent contractor actually provided services or had some influence over your businesses customers or clients. If your non-compete agreement reflects the language that is set forth in these statutes, there is a presumption that it will be enforceable. This makes it very difficult for the previous owner, employee, or independent contractor to argue that the non-compete agreement should not be enforceable against them.

An enforceable non-compete agreement allows you to protect your business interests by keeping these groups of people from setting up their own business or working with an existing similar or competing business, and soliciting your clients away from you. While a non-compete agreement does not last forever, it does provide you with immediate protections for a specific period of time.

If you are a business owner, and you have partners, employees, or independent contractors providing services to your business, you should seriously consider using a non-compete agreement. We have helped numerous business clients create and utilize non-compete agreements and if you have questions or concerns, we are confident that we can help you too!

Our team of Pocatello 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 Pocatello business problems.