Non-Compete and Non-Solicitation Agreements in Idaho

In 2024, the Federal Trade Commission (FTC) issued a nationwide rule that banned non-compete agreements. The rule was challenged and was blocked by federal courts later in 2024. In January 2026, the FTC clarified that it would no longer pursue a categorical national ban on non-competes and officially removed the rule from the Code of Federal Regulations. Since the nationwide ban is officially dead, non-compete agreements are governed entirely by state laws. Some states such as California, North Dakota and Minnesota have outright bans on employment non-competes. Other states, such as Colorado, Oregon and Washington (which has enacted a law for a near-total ban that becomes effective 30 June 2027 and that will also be retroactive to existing agreements), ban non-competes for workers earning below a certain state-mandated compensation level. 

In Idaho, restrictive covenants, such as non-competes and non-solicitation, generally are enforceable but are “disfavoured” and must be “narrowly tailored” under Idaho law. See Pinehaven Planning Bd v Brooks, 138 Idaho 826, 831, 70 P3d 664, 669 (2002). A majority of the Idaho case authorities addressing restrictive covenants have dealt with them in the context of employment agreements. Historically, courts have balanced an employer’s legitimate business interests and an individual’s right and ability to pursue gainful employment. Restrictive covenants must be reasonable in scope and cannot be broader than necessary to protect the employer’s legitimate business interests. See also Idaho Code (IC) Section 44-2701. 

Idaho statutes also govern non-compete agreements. See IC Section 44-2704; this statute provides “rebuttable presumptions” that favour the enforceability of non-compete agreements involving “key employees” and “key independent contractors”. A “key employee” is one that is among the highest-paid 5% of the employer’s workforce. To rebut this presumption, the employee must show that they lack the ability to adversely affect the employer’s legitimate business interests, such as customer relationships, confidential information, goodwill or trade secrets. For example, an employee that lacks information or knowledge about the practice, trade secrets or marketing of a business is likely not to be a key employee. In practical terms, courts are more likely to find a manager or an executive as a key employee but not a “regular” employee. 

Further, a non-compete lasting no longer than 18 months after termination is presumed reasonable as to duration. Restrictions longer than 18 months generally require additional consideration beyond mere employment or continued employment. Further, a non-compete is reasonable as to geographic area if it is restricted to areas where the employee provided services or had a significant presence or influence on behalf of the employer. This means that there should be a specific mileage radius boundary from the employer’s business for the new employment, or other geographic limitation. Nationwide prohibitions are not likely to be enforced, even if an employee does business throughout the country. Similarly, a restriction is presumed reasonable if it limits the employee only from engaging in the same type of employment or line of business that the employer performed while working for the employer.

The Idaho Supreme Court has not directly interpreted the rebuttable presumptions in IC Section 44-2704. However, it is clear that courts must analyse the Idaho statutes. See Blaskiewicz v Spine Institute of Idaho, PA, 171 Idaho 201, 519 P3d 1141 (2022). In Blaskiewicz, the lower court had only analysed the case under prior decisions governing non-compete agreements in granting summary judgment to the employee, finding a non-compete agreement unenforceable. The Supreme Court concluded it was “clear error” for the lower court to not address the statutes. The Court in Blaskiewicz concluded that there were genuine issues of material fact as to whether the non-compete agreement was void as a matter of public policy or otherwise enforceable. 

No Idaho appellate court to date has issued an opinion explaining or detailing what evidence is sufficient to rebut the presumptions of enforceability. Therefore, it is a factual enquiry for a court to decide on in evaluating the evidence. What is clear, however, is that a non-compete agreement should meet the rebuttal presumptions if it is to be enforceable. The statutes also allow a court to “blue-pencil” a non-compete agreement; that is, if a restrictive covenant is unreasonable in some respect, a court may modify the covenant to make it reasonable rather than invalidate it. However, courts will not rewrite an agreement by adding essential terms. In practice, courts are not inclined to blue-pencil an agreement.

The rebuttal presumptions in Idaho statutes technically only apply to non-compete agreements. No Idaho appellate court has analysed the statutes in the context of non-solicitation agreements related to employment. Still, a non-solicitation agreement must be narrowly tailored and limited in duration. An agreement that prohibits a former employee from soliciting all customers of a company, including those the employee did not know or work with, is subject to challenge and likely unenforceable. See Frieburger v J-UB Engineers, Inc, 141 Idaho 415, 111 P3d 100 (2005).

In the context of other types of agreements (eg, purchase and sale agreements containing non-solicitation clauses), public policy regarding the freedom to contract may be more applicable. “Freedom of contract is a fundamental concept underlying the law of contracts and is an essential element of the free enterprise system”. See Morrison v Nw Nazarene Univ, 152 Idaho 660, 661, 273 P3d 1253, 1254 (2012). 

The Idaho Supreme Court recently issued an opinion regarding how courts are to interpret what is – and what is not – “solicitation” for purposes of enforcing non-solicitation agreements. See Insure Idaho LLC v Horn, 572 P3d 183 (2025). Until the Horn decision came out, passively accepting business could be considered “solicitation”. In Horn, the Idaho Supreme Court held that “the plain meaning of solicitation requires some overt act initiated by one party, seeking something in return from a second party”. The Court went on to hold that “[t]o be clear, the mere acceptance of business, without more, does not fall within the plain meaning of solicitation; nor can a court infer solicitation from the simple communication between parties alone”. Moreover, the Court held that it is unreasonable to infer solicitation from the sole fact that one accepted the business of another.

The Horn case is recent enough that no clarifying authority exists regarding evidence required to prove “solicitation” under the new standard. Yet, based on the Court’s holding in Horn, a party seeking to enforce a contractual non-solicitation clause likely would have to put forth evidence (most likely, either testimony by former clients or communications between the offending party and those clients) showing, as the Court in Horn put it, “affirmative action that entreats, implores, pleads, or petitions for the business at issue” by the offending party. In the litigation context, the party seeking to enforce a contractual non-solicitation clause could subpoena communications and depose the former clients in an attempt to obtain such evidence (assuming it exists).

Careful consideration should be given to the likelihood of obtaining evidence consistent with the Court’s holding in Horn – prior to filing suit. If that evidence does not exist (or it cannot be obtained despite all efforts to do so), a court could dismiss the suit and award fees to the offending party (as happened in the Horn case). 

Idaho Supreme Court Attorney Fees

IC Section 12-121 allows for the court, in any civil action, to “award reasonable attorney’s fees to the prevailing party or parties when the judge finds that the case was brought, pursued or defended frivolously, unreasonably or without foundation”. An analysis of recent Idaho Supreme Court decisions awarding attorney’s fees shows the potentially expansive application of IC Section 12-121, which appellants should factor into their decision when considering filing an appeal.

Hyde v Oxarango concerned an appeal from the district court regarding a dispute over a family farm and the district court’s order dismissing the ensuing complaint. Rochelle Oxarango, Gretchen Hyde and Dinah Reaney are sisters and owners of a family farming and ranching business that is managed in a limited partnership. Oxarango and her husband, Robert Oxarango, are general partners along with the sisters’ father, James Little. Hyde and Reaney are limited partners. Hyde and Reaney sued the Oxarangos, asserting derivative and direct claims relating to breach of fiduciary duty and sought expulsion of the Oxarangos as general partners. See Hyde v Oxarango, Docket No 51625, 2026 WL 478542, *1 (20 February 2026).

The Idaho Supreme Court upheld the district court’s decision, finding that:

• the limited partners did not plead with particularity why demand on all general partners would be futile, and thus lacked standing to bring derivative claims;
• the limited partners did not suffer any injury distinct from injuries allegedly suffered by the partnership, and thus lacked standing to bring direct action;
• the limited partners did not suffer any injury distinct from injuries allegedly suffered by the partnership, and thus lacked standing to seek expulsion; and
• appeal by the limited partners was brought frivolously, unreasonably and without foundation, and thus general partners were entitled to attorney fees and costs under statute.

In responding to the plaintiffs’ appeal from the district court’s grant of a motion to dismiss for failure to state a claim for relief under Rule 12(b)(6), the Oxarangos sought attorney’s fees under IC Section 12-121, asserting that “Hyde/Reaney pursued this appeal frivolously, unreasonably and without foundation”. See Hyde 2026 WL 478542, at *10. The Court set forth the standard by which it considered a ruling under IC Section 12-121:

“An award of attorney fees under Idaho Code Section 12-121 will be awarded to the prevailing party on appeal only when this Court is left with the abiding belief that the entire appeal was brought, pursued, or defended frivolously, unreasonably, or without foundation” (see Edwards v Lane […] 578 P3d 525, 531–32 (2025) (quoting Severinsen v Tueller, 174 Idaho 669, 681, 559 P.3d 771, 783 (2024)). “[W]hen a party pursues an action which contains fairly debatable issues, the action is not considered to be frivolous and without foundation” (see Garner v Povey, 151 Idaho 462, 468, 259 P3d 608, 614 (2011) (quoting C & G, Inc v Rule, 135 Idaho 763, 769, 25 P3d 76, 82 (2001)). “An award of fees under Section 12-121 is within this Court’s discretion” (see Aizpitarte v Minear, 170 Idaho 186, 203, 508 P3d 1260, 1277 (2022) (citing Owen v Smith, 168 Idaho 633, 648, 485 P.3d 129, 144 (2021)). Id.

In finding that an award of fees and costs was appropriate under IC Section 12-121, the Court noted that Hyde and Reaney’s arguments were poorly reasoned, and that  “Hyde/Reaney failed to comply with [the] pleading requirement, and their appeal merely invites this Court to second-guess the district court’s decision… as a result, we conclude that the appeal was brought frivolously, unreasonably, and without foundation”. Id.

The Idaho Supreme Court used almost identical language in Bickerstaff v Bickerstaff in support of their decision to award attorney fees under IC Section 12-121, noting that “[a] prevailing party is also entitled to attorney fees under the statute ‘if the appeal merely invites the appellate court to second-guess the trial court on the weight of evidence’” (citing Crowley v Critchfield, 145 Idaho 509, 514, 181 P3d 435, 440 (2007)) and that the “arguments on appeal simply asked us to reweigh evidence and second-guess the magistrate court’s findings”. See Bickerstaff v Bickerstaff, No 53588, 2026 WL 1261279, *24 (8 May 2026).

In Spears v Antelope Mountain Resort, LLC, family members of a deceased employee brought action for wrongful death, intentional infliction of emotional distress (IIED), and negligent infliction of emotional distress (NIED) against the employer and employer’s limited liability company, following the murder of an employee by the employer’s grandson who resided on the employer’s property; the district court ultimately granted summary judgment in favour of the defendants, and the plaintiffs appealed. See Spears v Antelope Mountain Resort, LLC, 585 P3d 314 (2026). On appeal, the Idaho Supreme Court found in favour of the respondents, and held that:

• the employment relationship did not reflect the degree of custody and control quintessential to the special relationship from which a duty to aid or protect could arise, thus precluding wrongful-death claims;
• the defendants did not voluntarily assume the duty to aid or protect the employee, thus precluding wrongful-death claims;
• the defendants’ purported failure to warn or otherwise protect the employee did not amount to extreme and outrageous conduct required for IIED claims;
• there was no evidence that the defendants intended to cause family members emotional distress, precluding IIED claims;
• the defendants did not owe a duty to family members, precluding NIED claims; and
• the family members’ appeal of summary judgment on IIED and NIED claims was frivolous, and thus the defendants were entitled to partial attorney fees.

In ruling on the respondents’ request for attorney fees under IC Section 12-121, the Court used slightly different language in detailing the analysis that the Court undertakes in considering an award under IC Section 12-121. The Court may award reasonable attorney fees to the prevailing party upon finding that “the case was brought, pursued or defended frivolously, unreasonably or without foundation”. See IC Section 12-121. In evaluating such a request, the Court considers “[t]he entire course of the litigation”. See Telford Lands LLC v Cain, 154 Idaho 981, 993, 303 P3d 1237, 1249 (2013). “Apportionment of attorney fees is appropriate for those elements of the case that were frivolous, unreasonable, and without foundation”. See Idaho Mil Hist Soc'y, Inc v Maslen, 156 Idaho 624, 632, 329 P3d 1072, 1080 (2014).

See also Spears, 585 P3d at 329. The Court, while acknowledging that “awarding attorney fees against a tort plaintiff carries the risk of disincentivizing victims and their heirs from vindicating their compensatory rights, deterring future negligence, and punishing tortfeasors”, still found that the respondents were entitled to a partial award of attorney fees. Id. The Court noted that the “NIED and IIED claims lacked a sound legal basis”, and that the Court did not believe “the district court’s grant of summary judgment to Mary Russel on those claims is fairly debatable”. Id. However, the Court did find “the Flaget heirs’ arguments on appeal concerning the district court’s treatment of the special-relationship and assumed-duty theories to be more plausible, even if unartfully presented in the briefs and at oral argument” and did not award attorney’s fees for that specific portion of the appeal. Id.

In light of the decisions in Hyde, Spears and Bickerstaff, potential appellants should consider whether their appeals raise legitimate questions of law in disputing the decision of a lower court; otherwise, they may face significant fees under IC Section 12-121 for essentially asking the Idaho Supreme Court for a second opinion. More recently, the Idaho Court of Appeals awarded attorney’s fees under IC Section 12-121 against a pro se litigant serving a unified life prison sentence for first-degree murder. See Randall v Miller et al, Docket No 63670, Slip Op (13 May 2026). Randall, the plaintiff, sued his former attorney, who handled a majority of the criminal defence for legal malpractice. The defence moved for summary judgment and received a favourable ruling from the district court, which was upheld on appeal.

In awarding attorney’s fees, the Idaho Court of Appeals recited the language referenced above, including the statement that appellate courts do not second-guess decisions of the trial court. It is significant that the Idaho Court of Appeals is awarding fees under 12-121, and particularly more significant that it issued an award against a pro se plaintiff serving a life prison sentence. If your clients are thinking that taking up an appeal to get a second opinion is in their best interest, reasonable attorneys should have a discussion about the fee risks associated with that strategy.