In a free market, the company with the most to offer an employee gets the best employees. That's fair. Idaho just made it one of the hardest places to attract new talent. Why? Non-compete agreements.

A non-compete agreement limits what someone can do after they leave a job. Traditionally used only for executives, some companies have branched out and used them for everything from fast food cashier to salesperson to CEO. States vary with how enforceable non-competes are and how much they can limit a person's future opportunities. In California, they are pretty much unenforceable, which has been great for Silicon Valley.

Idaho, which has a strong tech industry, made enforcing non-competes easier, which means bad news for employees. Why? If your company has you trapped by a non-compete, they can underpay you or treat your poorly with the smug knowledge that you're stuck. After all, a below market paycheck is better than no paycheck while you sit and wait for your non-compete to expire.

For the most part, states have been moving toward making it easier for people to switch teams, but Idaho went the other direction with legislation that was friendlier to employers. The resulting law was particularly strict because it put the onus on employees to prove that they would not harm their former employers by taking the new jobs.

Proponents note that the statute applies only to "key employees" who tend to have more responsibility and better pay. But employment lawyers say Idaho companies tie down all levels of workers, not just top executives, with tough employment contracts. And indeed, the new law has roots in a years long fight waged by a woman who never finished high school but built a career selling tech-training services, only to be sued when she left for a better-paying job.

There should be times employees are sued for taking information to another business. If you take the secret Coke formula and hand it over to Bob's Soda Business, then, yeah, that's a problem, but that's different than a non-compete. A non-compete says if you once worked for a company that made soda you can't move to another soda company. Which means that if your startup, Bob's Soda Business, wants to get off the ground, you can't hire anyone with experience in the soft drink industry.

If you think that noncompetes are the only way to make your business successful, what you're really saying is that your pay, benefits, and culture are worse than all the other options out there. Is that the message you want to send? Of course not. What you want is to be the place possible. Take a page from Jody Sedrick, the chief executive of Idaho based Zenware. When two employees quit to move to TSheets, he thought about suing under Idaho's employer focused laws. Instead, he looked at his internal compensation and gave 12 people raises, according to the New York Times.

That move is great for businesses and great for employees. Unfortunately, not all CEOs are as employee friendly as Sedrick. And, if you're looking at starting a business in Idaho, you know that the law allows your already established competitors to have a great deal of control over the talent in the area. Personally, I'd stay clear.

(Thanks to reader A. Elizabeth West, who brought this to my attention.)

Published on: Jul 17, 2017
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