Terms of Employment: Idaho
Federal law and guidance on this subject should be reviewed together with this section.
Author: Scott Randolph, Holland & Hart LLP
- Idaho state laws prohibit certain types of discrimination and retaliation in employment decisions. See Idaho Antidiscrimination Laws.
- In Idaho, employment relationships are presumed to be at-will. See The At-Will Employment Relationship.
- Idaho recognizes various exceptions to the at-will presumption. See Exceptions to the At-Will Employment Relationship.
- In Idaho, restrictive covenants must be designed to protect legitimate business interests and to extend no further than is reasonably necessary to protect those interests. See Restrictive Covenants in Employment Contracts.
Idaho Antidiscrimination Laws
Idaho has implemented antidiscrimination statutes that provide employment protection, which is in addition to federal law. Idaho has recognized a civil right to obtain and hold employment free from discrimination by all employers based on race, creed, color, sex, or national origin. +Idaho Code Ann. § 18-7301. See Employee Management > EEO - Discrimination: Idaho.
The Idaho Human Rights Act (IHRA) applies to employers with five or more employees. Its stated purpose is to "provide for execution within the state of the policies embodied in the federal Civil Rights Act of 1964, as amended, and the Age Discrimination in Employment Act of 1967, as amended, and Titles I and III of the Americans with Disabilities Act." +Idaho Code Ann. § 67-5901. It defines discrimination as refusing to hire, discharging, or otherwise discriminating in the terms or conditions of employment on the basis of age, race, color, religion, sex, disability, or national origin. +Idaho Code Ann. § 67-5902, +Idaho Code Ann. § 67-5909.
Employees may file discrimination complaints with the Idaho Commission on Human Rights within one year of the unlawful practice or act. The Commission may reject the complaint as unfounded, attempt to resolve it by informal means, or file suit on behalf of employees. +Idaho Code Ann. § 67-5907. If dissatisfied, employees may file an original action in state court within 90 days. Available remedies or damages include injunctive relief such as reinstatement, actual damages such as lost pay for up to two years, and punitive damages up to $1,000 for each willful violation. +Idaho Code § 67-5908. Employers have no right of administrative appeal from decisions of the Commission. +Idaho Admin. Code § 45.01.01.003.
The protections of the IHRA are limited to employees, and are inapplicable to independent contractors. Ostrander v. Farm Bureau Mutual Insurance Company, +851 P.2d 946 (Idaho 1993).
Idaho law also forbids discrimination by employers against health care professionals in circumstances in which the professional declines to provide a health care service because they object on personal, moral, religious, or ethical grounds. The objection must be in writing. +Idaho Code Ann. § 18-611.
State government employers are required to give hiring preference to veterans who served in the armed forces for more than 180 days or whose release from duty was for a disability incurred or aggravated in the line of duty. Such veterans must be discharged under honorable conditions and must be Idaho residents when application for employment is made. Veterans and their unremarried widows or widowers are to have five points added to their earned rating. Disabled veterans, their spouses if the veterans are physically unable to work, and their unremarried widows or widowers are to have 10 points added. The requirements are not applicable where federal funds are contributed if in conflict with federal laws under which the work is done. +Idaho Code Ann. § 65-501, et seq. See also Employee Management > Affirmative Action: Idaho.
The At-Will Employment Relationship
In Idaho, unless an employee is hired pursuant to a contract that specifies the duration of the employment or limits the reasons for which an employee may be discharged, the employment is at the will of either party. Either party may terminate the relationship at any time for any reason without incurring liability. Thus, in the absence of an agreement limiting either party's right to terminate the employment relationship, either party may terminate it at any time or for any reason. This rule reflects the judiciary's reluctance to bind employers and employees to an unsatisfactory and potentially costly situation, although it is recognized that either party is likely to be damaged by an unforewarned termination of the employment relationship. Mitchell v. Zilog, Inc., +874 P.2d 520 (Idaho 1994). See Recruiting and Hiring > Employment At-Will: Idaho.
Conversely, if an implied or express contract or agreement exists concerning the duration of the employment, such employment may not be considered at-will, and instead may become terminable for cause alone. Additionally, if an employer has written employment manuals or personnel policies detailing, for example, discipline and termination procedures, a court may find such written materials create an implied contract of employment.
Exceptions to the At-Will Employment Relationship
Even if the employer and employee do not execute a written employment contract, Idaho recognizes various exceptions to the at-will presumption. Under these circumstances, an employee who has been terminated may file suit challenging the dismissal for the following reasons:
The Idaho Supreme Court has held that the only general exception to the employment at-will doctrine is that an employer may be liable for wrongful discharge when the motivation for discharge contravenes public policy.
The court has identified the following grounds for termination to be unlawful on the basis of public policy:
- Discharging an employee for refusing to commit an unlawful act;
- Discharging an employee for performing an important public obligation; or
- Discharging an employee for exercising certain rights or privileges.
In Idaho, the public policy exception has been utilized to protect the following employee conduct:
- Participating in union activities. Watson v. Idaho Falls Consol. Hosps., Inc., +720 P.2d 632 (Idaho 1986);
- Reporting electrical building code violations. Ray v. Nampa Sch. Dist. No. 131, +814 P.2d 17 (Idaho 1991);
- Complying with a court issued subpoena. Hummer v. Evans, +923 P.2d 981 (Idaho 1996); and
- Reporting the falsification of medical records and the performance of unnecessary operations to bolster a physician's income. Thomas v. Med. Ctr. Physicians, P.A., +61 P.3d 557 (Idaho 2002).
The Idaho Supreme Court also has indicated that the public policy exception would apply if an employee were discharged for refusing to date her supervisor, for filing a worker's compensation claim, or for serving on jury duty.
The determination of what constitutes public policy sufficient to protect an at-will employee from termination is a question of law. State public policy is found in Idaho's constitution and statutes. The public policy expressed therein may serve as a basis for finding an exception to the employment at-will doctrine. Mallonee v. State, +84 P.3d 551, 557 (Idaho 2004).
An implied contract of employment is recognized by Idaho courts under certain circumstances. Typically, an implied contract of employment arises when an employer informs an employee otherwise employed for an indefinite period that the employee will not be terminated from employment without cause or that the employee will be employed for a specific time period. A contract may be implied if, from all the circumstances surrounding the employment relationship, a reasonable person could conclude that both parties intended that the employer's (or the employee's) right to terminate the employment relationship at-will had been limited by the implied-in-fact agreement of the parties. Implied contracts may be created through an employer's statements or written materials, such as employee handbooks or personnel policies. Ray v. Nampa Sch. Dist. No. 131, +814 P.2d 17 (Idaho 1991); Johnson v. Allied Stores Corp., +679 P.2d 640 (Idaho 1984).
Employee Handbooks and Disclaimers
In Idaho, assurances made in employee manuals can support valid and enforceable terms of an employment contract. Unless an employee handbook specifically disclaims any intention on the part of the employer to have it become a part of the employment contract, a court may conclude from a review of the employee handbook that a question of fact is created regarding whether the handbook was intended by the parties to impliedly express a term of the employment agreement. Metcalf v. Intermountain Gas Co., +778 P.2d 744 (Idaho 1989).
The Idaho Supreme Court has held that the following handbook provision adequately disclaims the existence of a contract:
None of the benefits or policies in this handbook are intended by reason of their publication to confer any rights or privileges or entitled the employee to be or remain an employee of the Employer. The contents of this handbook are presented as a matter of information only. While Employer believes wholeheartedly in the plans, policies, and procedures described herein, they are not conditions of employment and are subject to unilateral change by Employer. While we hope that your employment will be long lasting, employees are, of course, free to resign at any time just as Employer is free to terminate employment at any time.
Sorensen v. Comm Tek, Inc., +799 P.2d 70 (Idaho 1990).
Language in an employee handbook providing that the policies and procedures expressed in the handbook or any other employer materials, which may be used from time to time, do not create a binding employment contract or any other agreement between the employee and the employer also has been found sufficient to disclaim contractual liability. See Hurst v. IHC Health Services, Inc., +817 F. Supp. 2d 1202 (D. Idaho 2011).
Due to the complexities and consequences involved in drafting effective disclaimer provisions, employers are encouraged to seek the advice of knowledgeable and experienced local counsel.
Statutory Exceptions to the At-Will Presumption
The Idaho Protection of Public Employees Act, +Idaho Code § 6-2101 et seq., commonly referred to as the whistleblower statute, seeks to "protect the integrity of government by providing a legal cause of action for public employees who experience adverse action from their employer as a result of reporting waste and violations of a law, rule or regulation." See Mallonee v. State, +84 P.3d 551 (Idaho 2004). See also Employee Management > Employee Discipline: Idaho.
Wage and Hour Violations
+Idaho Code § 44-1509 prohibits employers from discharging an employee in retaliation for reporting or testifying about an employer's violation of state wage and hour laws.
As described above, +Idaho Code §§ 67-5901 et seq., prohibits employers with five or more employees from discharging an employee for any discriminatory reason or in retaliation for reporting or testifying about an employer's discriminatory practices. See Employee Management > EEO - Discrimination: Idaho.
Written Employment Contracts
Generally, a written employment contract sets out the duties of the employee and employer, and the terms and conditions of employment. Employment contracts may include the following:
- Employee's job title or nature of the work;
- Employment start date;
- Amount and timing of pay;
- Place of work;
- Hours of work, including overtime;
- Paid and unpaid leave policies and other employee benefits;
- Whether employment is terminable at-will;
- If employment is temporary, the expected duration of employment;
- If employment is for a fixed term, the date on which employment will end;
- Whether arbitration will be used to resolve employment disputes; and
- Any restrictions on competition the employee must abide by after employment is terminated.
The terms of employment must be clear to the employer and the employees, as well as any potential employees. Finally, the terms of employment must always comply with federal, state, and local employment laws.
Implied Covenant of Good Faith and Fair Dealing
Idaho recognizes a cause of action for breach of the covenant of good faith and fair dealing implied in employment contracts. Any action which violates, nullifies, or significantly impairs any right or benefit that either party has in an employment contract, whether express or implied, may be a violation of the implied covenant of good faith and fair dealing. The covenant of good faith and fair dealing is found in all employment agreements, including employment at-will relationships, and it requires the parties to perform, in good faith, the obligations required by their agreement. The covenant does not create a duty for an employer to terminate an at-will employee only for good cause. The covenant only arises in connection with the terms expressly or impliedly agreed to by the parties, and does not create new duties that are not inherent in the employment agreement. See Van v. Portneuf Medical Center, +212 P.3d 982 (Idaho 2009).
Restrictive Covenants in Employment Contracts
Covenants not to compete, solicit or disclose are restrictive covenants often used in employment contracts and may be enforced depending on their terms. +Idaho Code Ann. §§ 44-2701, et seq. Noncompetition covenants are used in employment contracts to discourage an employee from gaining specialized knowledge or skills working for one employer, then going to work for a competitor or engaging in similar employment utilizing the special knowledge or skills. Nonsolicitation covenants prevent a former employee from soliciting the employer's customers upon leaving employment. Nondisclosure covenants prevent a former employee from disclosing the employer's trade secrets or confidential information to a competitor. To be valid, a restrictive covenant must be of limited duration and apply only within a specific geographic area.
Agreements and Covenants Protecting Legitimate Business Interests, governs covenants not to compete in employment contracts. The law sets out the requirements for an enforceable noncompete. The law provides that noncompete agreements between employers and key employees (or key independent contractors) will be enforceable if the agreement protects a legitimate business interest of the employer, is reasonable as to its duration, geographical area, type of employment, and does not impose a greater restraint than necessary to protect the employer's legitimate business interest. Under this law a valid noncompete agreement can prohibit a key employee from taking a job in a line of business that is in direct competition with the former employer's business. +Idaho code § 44-2701 et seq.
Key employees are defined as those who have gained a high level of inside knowledge, influence, credibility, notoriety, fame, reputation or public persona as a result of an employer's investment of time, money, trust, exposure to the public or technologies, intellectual property, business plans, business processes and methods of operation, customers, vendors, or other business relationships during the course of employment, and due to their position as key employees have the ability to harm or threaten an employer's legitimate business interests. +Idaho Code Ann. § 44-2702(1).
The law makes it a rebuttable presumption (i.e., an assumption unless contested) that an employee or independent contractor who is among the highest paid five percent in the company is a "key employee" or a "key independent contractor." +Idaho Code Ann. § 44-2704(5). To rebut such presumption, an employee must show that he or she has no ability to adversely affect the employer's legitimate business interests. The rebuttable presumption of irreparable harm for departures of key employees has been eliminated. As a result, employers have the burden to show that their business interests were harmed by the employee's competitive actions. +2018 Bill Text ID S.B. 1287.
A legitimate business interest includes an employer's goodwill, 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. +Idaho Code Ann. § 44-2702(2).
Under +Idaho Code § 44-2704, a restrictive covenant is presumed reasonable if:
- It has a post-employment term of 18 months or less;
- It is restricted to the geographic areas in which the key employee provided services or had a significant presence or influence.
- It is limited to the type of employment or line of business conducted by the key employee while working for the employer.
If the post-employment restriction is longer than 18 months, consideration in addition to employment or continued employment, must be given to a key employee or key independent contractor.
The law requires courts to limit or modify the restrictive covenant as necessary to make the agreement reasonable and reflect the intent of the employer and employee at the time they entered into the agreement. +Idaho Code § 44-2703.
Noncompete covenants ancillary to the sale of a business are not subject to as strict of a construction as are those contained in employment contracts. Courts analyzing the reasonableness of such covenants must recognize that the vendee is usually purchasing the goodwill of the business and thus is entitled to reasonable protection from competition by the seller. Bybee v. Isaac, +178 P.3d 616 (Idaho 2008) (finding that a covenant not to compete for five years duration and within a 50 mile radius of the business location was not overbroad as a matter of law.)
Idaho has adopted the Uniform Trade Secrets Act, +Idaho Code §§ 48-801 et seq., which describes a trade secret as:
Information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
- Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
- Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
In order to prevail in a misappropriation action under the Idaho Trade Secrets Act, the plaintiff must show that a trade secret actually existed. In determining whether a product, design, item or idea constitutes a trade secret, Idaho courts consider the following six factors:
- The extent to which the information is known outside [the plaintiff's] business;
- The extent to which it is known by employees and others involved in the business;
- The extent of measures taken by the employer to guard the secrecy of the information;
- The value of the information to the employer and its competitors;
- The amount of effort or money expended by the employer in developing the information; and
- The ease or difficulty with which the information could be properly acquired or duplicated by others.
These factors address the issue of whether the information in question is generally known or readily ascertainable. Wesco Autobody Supply, Inc. v. Ernest, +243 P.3d 1069 (2010).
The Idaho Supreme Court has found that the legislature did not intend the Trade Secrets Act to be read so broadly as to preclude the hiring of an employee from a competitor. The legislature also did not intend that merely hiring a competitor's employee constitutes acquiring a trade secret. In the absence of direct evidence that a former employee misappropriated trade secrets and used them to solicit customers from the former employer to do business with the new employer, there is no violation of the Trade Secrets Act. Nw. Bec-Corp v. Home Living Serv., +41 P.3d 263 (Idaho 2002).
The Idaho Trade Secrets Act sets forth a variety of remedies for trade secret misappropriation. These include entry of injunctive or other relief to protect a trade secret, actual damages, unjust enrichment, punitive damages and an award of reasonable attorney fees and costs to the prevailing party. +Idaho Code §§ 48-801 et seq.
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