Idaho Senate votes to dump non-compete law that gave state a black eye

The Idaho Senate voted 29-5 on Monday in favor of legislation to reverse a 2016 change in Idaho law that made it easier for employers to sue former employees over non-compete agreements – and also drew Idaho a slew of negative national publicity.

Opponents said the bill would make it difficult for employees to leave a job to start their own business or join another firm, and could hurt business expansion in Idaho. In December, more than 100 Idaho business leaders, ranging from high-tech CEOs to small-business owners to engineers, marketers and manufacturers, signed a letter to Gov. Butch Otter and the Idaho Legislature calling for the repeal of the 2016 law.

Since it took effect July 1, 2016, national publicity about the law ranged from a New York Times headline that proclaimed “Noncompete Pacts, Under Siege, Find Haven in Idaho,” to an Inc.com article headlined: “Have a great startup idea? Don’t move to Idaho.”

Sen. Jim Rice, R-Caldwell, argued Monday in favor of keeping the law on the books, saying lawyers disagree over its impact. Sen. Todd Lakey, R-Nampa, who like Rice is lawyer, said the bill is a compromise that makes sense. “I think it brings it back to the appropriate balance,” he said.

Sen. Jim Guthrie, R-McCammon, said, “This is not drastically changing non-compete laws. It’s just going back to 2016, when non-compete laws were fine. … It has an element of compromise to it, an element of fairness to it.”

All North Idaho senators voted in favor of the bill, which still needs House passage and the governor’s signature to become law.