Idaho bill strengthening noncompete contracts advances

A bill that would make it easier for employers to sue former employees over non-compete contracts passed the Idaho Senate and Human Resources Committee on a 5-4 vote.

Some employers require employees to sign non-compete agreements when they are hired, promising not to take use the employer’s sensitive business information if they take work at a competitor or start their own company.

Bill supporters said the bill protected employers from a former employee using trade secrets and business strategy against them. Opponents said the bill damaged workers’ ability to move to better jobs or start their own companies.

Idaho law already permits employers to sue employees for breach of non-compete agreements. Under current law, employers suing for breach of non-compete agreements must prove they were damaged by the former employee. The bill would transfer the burden to the employee to prove in court that they have “no ability to adversely affect the employer’s legitimate business interests.” The law only applies to key employees or contractors among a company’s top 5 percent of earners.

The bill was spurred by a lawsuit filed by LeapFox Learning, a Meridian computer training company in litigation with a former employee. In testimony before the committee, LeapFox Learning owner Codi Galloway said her former business director left for a competitor and immediately began poaching LeapFox customers and vendors by using her former company’s contact lists and marketing and business strategies. The former employee also gained business by saying LeapFox was folding, Galloway said.

“Customers left us,” she said. “Vendors left us. Contractors left us. Our marketing plans were used against us as our former employee teamed up with our only competitor.”

Committee debate centered on whether an employee can prove they can’t harm a business — or “proving a negative.” Two attorneys said proving a negative is a routine part of litigation. William Mauk of Mauk Miller Law Office in Boise was one of two attorneys testifying against the bill.

“In my field, the law, the idea of proving a negative is one of the most difficult burdens that exists,” Mauk said.

Attorney General’s Office responded to a request for an opinion from Rep. Ilana Rubel, D-Boise. “Proving negatives is a very difficult thing to do in court...” Assistant Chief Deputy Bria Kane wrote. “The burden necessary to overcome this presumption may be extremely difficult, if not impossible.”

Jayson Ronk, Micron’s lead lobbyist, and Alex Labeau, president of Idaho Association of Industry and Commerce, both testified in support of the bill, saying it would protect employers.

Senators voting in favor of the bill were: committee Chairman Jim Patrick, R-Twin Falls, Fred Martin, R-Boise, Jim Guthrie, R-McCammon, Lee Heider, R-Twin Falls, and Jim Rice R-Caldwell.

Voting against the bill were: Sens. Steven Thayn, R-Emmett, Dan Schmidt, D-Moscow, Ward-Engelking, D-Boise, and Todd Lakey, R-Nampa.

Lakey moved to table the bill for revision, saying it was a red flag that the bill was written in response to the Galloway case not yet resolved in the courts. Lakey’s motion failed 4-5, falling down the lines that passed the bill.

Lakey said asking former employees to prove they cannot harm an employer is unreasonable.

“I think it is impossible unless a person is in a coma or dead,” Lakey said.

The bill moves to the Senate floor. It has already passed in the House.

This story was originally published March 17, 2016 at 4:40 PM with the headline "Idaho bill strengthening noncompete contracts advances."