Non-Compete Agreements in Idaho

Are Non-Compete Agreements Legal? #

Many clients ask whether non-compete agreements are legal in Idaho. The short answer is yes. But, as with many things in the law, there are some restrictions. First, let me clarify that in this article we will be looking at non-compete agreements, or “non-competes,” in the context of employment. We will not address non-compete agreements between business partners or organizations.

Why Do We Allow Non-Compete Agreements? #

Before we get into the details of when non-compete agreements are permitted and enforceable, let’s look at why they are permitted. In Idaho, the purpose of allowing non-compete agreements is to protect “legitimate business interests.” Idaho law defines “legitimate business interests” to “include, but not be limited to, an employer’s goodwill, technologies, intellectual property, business plans, business processes and methods of operation, customers, customer lists, customer contacts and referral sources, vendors and vendor contacts, financial and marketing information, and trade secrets as that term is defined by chapter 8, title 48, Idaho Code.” [1]

Who Do Non-Compete Agreements Apply To? #

Idaho law permits non-competes between an employer and a “key employee” or “key independent contractor.”[2] In general, to qualify as “key” the employee or independent contractor must meet the following criteria: [3]

The employer invested
1. time,
2. money,
3. trust,
4. exposure to the public, or
5. exposure to technologies, intellectual property, business plans, business processes and methods of operation, customers, vendors or other business relationships.
Through this investment the employee or independent contractor gained a high level of
1. inside knowledge,
2. influence,
3. credibility,
4. notoriety,
5. fame,
6. reputation, or
7. public persona as a representative or spokesperson of the employer.
As a result, the employee or contractor has the ability to harm or threaten an employer’s legitimate business interests.

An employee or independent contractor is presumed to be “key” if the employee/contractor is among the highest paid five percent (5%) of the employer’s employees or independent contractors.[4]

As you can imagine, this does not apply to every employee. For example, a receptionist at a tech company, who gained very little knowledge of the technology or operations of the company and was not the recognized face of the company, would most likely not be considered a key employee. On the other hand, an engineer who was heavily involved in the development of the company’s main product would most likely be considered a key employee.

What are the Requirements for a Non-Compete Agreement #

To be enforceable, the non-compete agreement must meet the following test:[5]

Is reasonable as to its duration. A duration of eighteen (18) months or less is presumed to be a reasonable duration.
Is reasonable as to geographical area. A geographical area is presumed reasonable if it is restricted to the geographic areas in which the key employee/contractor provided services or had a significant presence or influence.
Is reasonable as to the type of employment or line of business restricted. A restriction is presumed reasonable if it is limited to the type of employment or line of business conducted by the key employee/contractor while working for the employer.
Does not impose a greater restraint than reasonably necessary to protect the employer’s reasonable business interests.

All of these factors are specific to the business and individuals involved.[6] That means that if you are considering requiring or signing a non-compete agreement you must look at your specific circumstances. You can’t rely on what another business does or what a friend or colleague did in their circumstances.

The Future of Non-Compete Agreements #

While they are currently enforceable, non-compete agreements have been under attack for some time, and their future status is up in the air. Most notably, the Federal Trade Commission finalized a rule in 2024 that would ban most non-compete agreements.[7] This rule would supposedly supersede and state law to the contrary. Unsurprisingly, this rule was challenged in federal court. A federal court in Texas held that the FTC cannot enforce the rule, and the court applied the injunction nationwide.[8] Therefore, the rule has not gone into effect.

The FTC under the Biden administration appealed the decision; however, on March 7, 2025, under the Trump administration the FTC requested a stay on the appeal and has not determined whether to continue to defend the rule.[9] The case is stayed until July 12, 2025. This might be good news for employers who wish to use non-competes, if the FTC decides not to pursue the appeal. However, prior to requesting to the stay, the FTC announced a joint task force to examine “unfair or deceptive practices and unfair methods of competition,” including non-compete agreements.[10] This again raises the prospect of the FTC seeking ways of banning non-compete agreements. Further complicating the equation is the fact that the Trump administration is challenging a federal district court’s authority to make decisions that apply nationwide.[11] If the Trump Administration succeeds in limiting the district court’s authority, then the decision restricting the FTC from enforcing the rule would only apply in the Northern District of Texas, leaving the FTC able to enforce in the rest of the country. Unfortunately for employers, these factors leave a big question mark for employers whether non-compete agreements will be enforceable in the future.

[1] Idaho Code § 44-2702(2).

[2] Idaho Code § 44-2701 et seq.

[3] Idaho Code § 44-2702(1).

[4] Idaho Code § 44-2704(5).

[5] Idaho Code §§ 2701, 2704.

[6] See, Blaskiewicz v. Spine Institute of Idaho, P.A., 519 P.3d 1141 (Idaho 2022).

[7] 16 CFR Part 910; https://www.ftc.gov/news-events/features/noncompetes; https://www.whitecase.com/insight-tool/white-case-global-non-compete-resource-center-ncrc

[8] Ryan LLC v. Federal Trade Commission, No. 24-cv-986 (Northern District of Texas); https://www.ftc.gov/news-events/features/noncompetes

[9] Ryan LLC v. Federal Trade Commission, No. 24-cv-986 (Northern District of Texas)

[10] https://www.ftc.gov/system/files/ftc_gov/pdf/memorandum-chairman-ferguson-re-labor-task-force-2025-02-26.pdf

[11]Trump v. CASA, Inc., No. 24A884; https://www.scotusblog.com/2025/05/no-clear-decision-emerges-from-arguments-on-judges-power-to-block-trumps-birthright-citizenship-order/; https://apnews.com/article/immigration-supreme-court-birthright-citizenship-nationwide-injunctions-2c495cddc1436e21a9fa976d295dc292