Each year, millions of employees leave their jobs for a better one. But if you live in Idaho, this hallmark of the workforce might not be attainable, as the state now has one of the most strict non-compete laws preventing employees from leaving their current employer for a competitor.
Idaho’s law, which went into effect last year, makes it easier for companies to enforce non-compete agreements that restrict key employees and independent contractors from leaving for competitors.
This, the New York Times reports, has created an atmosphere in which Idaho’s growing tech industry now struggles to bring in employees. Here are 4 things you should know about the state’s new law.
1. The Law
The Times reports that many states have eased their stance on non-compete clauses. In fact, California no longer recognizes the provisions, at all.
But Idaho is different. Last summer, the state enacted a law [PDF] that strengthened non-compete clauses in favor employers.
Under the law, if a court finds that a key employee or key independent contractor breaches a non-compete agreement, the presumption is that the worker’s departure would cause irreparable harm to their employer.
In order to get out of the non-compete, employees must show that their departure won’t adversely affect their current employer’s business interests.
2. The Backers And Detractors
Many companies backed the law as it was make its way thought the state’s legislative system.
Employers backing the law argued that because the law only applies to “key employees,” meaning those with more responsibility and better pay; the law isn’t hurting those looking to start fresh in the tech industry.
Instead, they claim, the law works to help employers protect their assets in a competitive marketplace.
On the other side of the argument is state Rep. Ilana Rubel, who fought against the law, claiming that fostering an environment with non-competes is “toxic to good business ecosystems.”
Ruben tells the Times that she’s currently drafting legislation what would repeal the law.
Additionally, small businesses have argued that non-competes will hurt their ability to hire qualified workers and get their products or services off the ground.
Jeff Reynolds, a local entrepreneur advising young companies at a co-working space called Trailhead, tells the Times that start-ups have a difficult time succeeding as it is, without the hinderance of a non-compete hanging over potential employees’ heads.
3. A Lack Of Employees
Boise, which has become a growing tech hub in the middle of America, counts several startups amongst its workforce. But these companies are having a difficult time in attracting qualified employees already residing in the state.
TSheets, a time-management software company founded in 2006, is on pace to increase its modest workforce by 100 people this year. But could prove to be more challenging now, founder Matt Rissell tells the Times.
Previously, the company was able to recruit new employees locally, but with Idaho’s new law employees who leave for TSheets would have to prove they aren’t hurting their current employer.
Now, he tells the Times his biggest challenge is finding employees.
4. Making Peace
Zenware, a company that lost two employees to TSheets two years ago, hired a lawyer to determine if it as possible to prevent the employees from leaving.
But instead of following through with the legal action, the Times reports, the company decided to double down on its own retention efforts, giving remaining employees a raise.
Jody Sedrick, Zenware’s chief executive, tells the times that why he was hurt and disappointed by the employees leaving, he’s come to terms with it and now has a different outlook on non-compete clauses.
He now believes that there’s enough room in the Boise tech ecosystem for all the companies to operate, but they have to create a good marketplace as a whole.
“Rather than going on the defensive, because that’s what a non-compete is, just go on the offensive and create a great environment so that people want to stay with you,” he told the Times. “That makes you a better company in the end.”