Q: I just quit my job with a company I have been with for the last three years to take a job opportunity in Boise in a different but similar business. My boss pointed out when I quit that I had signed a non-compete agreement, and that if I took the job with the business in Boise they would sue me for violating the agreement. I don’t think that’s fair since the old company never did business outside of eastern Idaho. He says he’s planning to expand. Who’s right?
A: Competition is crucial to our country’s economy, and so generally the law favors competition and looks skeptically at attempts to impede or restrict competition.
Idaho law requires that non-compete agreements be reasonable as to duration, geographical area, type of employment or line of business, and they must not impose a greater restraint on the employee than is reasonably necessary to protect the employer’s legitimate business interests. Since 2008 these agreements can only affect a key employee or key independent contractor of the company.
If you were not a key employee the agreement is unenforceable. In order to be a key employee, you would need to have gained a high level of inside knowledge, influence, credibility, notoriety, fame, or reputation as a representative of the employer and thus have the ability to harm or threaten the employer’s legitimate business interests. It is presumed that the highest paid 5 percent of employees are key employees. If you were not one of the highest paid 5 percent of employees, the company would have the burden of proving that you were a key employee as defined in the law.
Even if you were a key employee, the agreement must still be reasonable in geographic scope. The law presumes geographic reasonableness if it is limited to the area where the employer had a significant presence or influence while you worked for the company. If the company did not have a significant presence or influence in western Idaho, the company would need to prove that the restriction is reasonably necessary to protect its legitimate business interests.
Similarly, the agreement must be reasonable in the type of employment or line of business. If your new employer is in a different line of business, or if the type of employment is significantly different, it could be difficult for your former employer to prove that the restriction is reasonable.
The agreement is also unreasonable if it restricts your re-employment more than 18 months after you terminate employment.
I suggest you contact an attorney who handles employment law to review the details of your situation. Depending on your circumstances, you may have a strong case.