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IDAHO PASSING LAW HANDCUFFING TOP MLM-NETWORK MARKETING DISTRIBUTORS WITH NON-COMPETE  AGREEMENTS

Ed Note: Melaleuca's legal department sent a nasty gram that SB 1393 below is not all Melaleuca's doing, so I should not call it "Melaleuca's law." Although fully within my editorial rights under the First Amendment,  they did pluck my heart strings. Therefore, I will split the editorial "baby" in half and quote from the Post Register online and print newspaper - Idaho Falls, Idaho:

Wednesday March 19, 2008  "Taking Care of Business" - Phil Davidson
"The proposal came at the bequest of the Idaho Association of Commerce and Industry, the States most influential business lobby.  A similar but much broader version put forth at the urging of Melaleuca Inc. CEO Frank Vandersloot was killed in the Senate last year."

If you want to check out the full article it is only $6 a month to subscribe to the Post Register in Idaho Falls. For their electronic subscription, click here: http://www.postregister.com/subscribe/ Interesting paper!  On the page with the article below they have a neat graphic by Steve Fischbach of a pair of handcuffs with NON COMPETE AGREEMENT across them.  I am trying to buy the graphic for future use!

Tuesday March 25, 2008  "Tightening The Cuffs" - Phil Davidson
"Although the initiative had the back of several member of the state's most influential business lobby, one of it's main supporters was Melaleuca Inc CEO Frank Vandersloot."

Now back to my editorial ranting about the dangers of Independent Contractors being equated with employees by the Internal Revenue Service.  This means that MLM Distributors and Companies may be forced to do earnings withholding on a monthly basis if the IRS and House Ways and Means Committee sees no separation in how they are treated.   Read the bill below (and my red markups) and see if you can find a difference between an Employee and Independent Contractor!

Rod Cook Ur. Editor

IDAHO SENATE BILL NO. 1393
View Bill Status - View Bill Text
View Statement of Purpose / Fiscal Impact
Text to be added within a bill has been marked with Bold and Underline. Text to be removed has been marked with Strikethrough and Italic. How these codes are actually displayed will vary based on the browser software you are using. This sentence is marked with bold and underline to show added text.  This sentence is marked with strikethrough and italic, indicating text to be removed.
Bill Status: S1393.......................................by COMMERCE AND HUMAN RESOURCES
BUSINESS INTERESTS - Adds to existing law relating to labor to provide for agreements and covenants to protect employers' legitimate business interests.  02/08    Senate intro - 1st rdg - to printing - 03/18    3rd rdg - PASSED - 43-27-0

Bill Text
                                                                     
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
Fifty-ninth Legislature                   Second Regular Session - 2008
                   
                                      IN THE SENATE

                                   SENATE BILL NO. 1393

                        BY COMMERCE AND HUMAN RESOURCES COMMITTEE

  1                                        AN ACT
  2        RELATING TO LABOR; AMENDING TITLE 44, IDAHO CODE, BY THE  ADDITION  OF  A  NEW
  3        CHAPTER  27, TITLE 44, IDAHO CODE, TO PROVIDE FOR AGREEMENTS AND COVENANTS
  4        TO PROTECT EMPLOYERS' LEGITIMATE BUSINESS INTERESTS, TO DEFINE  TERMS,  TO
  5        PROVIDE THAT A COURT MAY LIMIT OR MODIFY CERTAIN AGREEMENTS AND TO PROVIDE
  6        FOR  ENFORCEMENT,  TO PROVIDE THAT CERTAIN RESTRICTIONS OF DIRECT COMPETI-
  7        TION SHALL NOT EXCEED A SPECIFIED PERIOD OF TIME AND TO PROVIDE REBUTTABLE
  8        PRESUMPTIONS.

  9    Be It Enacted by the Legislature of the State of Idaho:

10        SECTION 1.  That Title 44, Idaho Code, be, and the same is hereby  amended
11    by  the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
12    ter 27, Title 44, Idaho Code, and to read as follows:

13                                                        CHAPTER 27
14                                 AGREEMENTS AND COVENANTS PROTECTING
15                                      LEGITIMATE BUSINESS INTERESTS

16        44-2701.  AGREEMENTS AND COVENANTS PROTECTING LEGITIMATE  BUSINESS  INTER-
17    ESTS.  A  key  employee or key independent contractor may enter into a written
18    agreement or covenant that protects the employer's legitimate business  inter-
19    ests  and prohibits the key employee or key independent contractor from engag-
20    ing in employment or a line of business that is in direct competition with the
21    employer's business after termination of employment, and  the  same  shall  be
22    enforceable,  if  the  agreement or covenant is reasonable as to its duration,
23    geographical area, type of employment or line of business, and does not impose
24    a greater restraint than is reasonably necessary  to  protect  the  employer's
25    legitimate business interests.

26        44-2702.  DEFINITIONS.  For  purposes of this section, the following terms
27    shall have the following meanings:
28        (1)  "Key employees" and "key independent contractors" shall include those
29    employees or independent contractors who, by reason of the employer's  invest-
30    ment   of  time,  money,  trust,  exposure  to  the  public,  or  exposure  to
31    technologies, intellectual property, business plans,  business  processes  and
32    methods  of operation, customers, vendors or other business relationships dur-
33    ing the course of employment, have gained a high level  of  inside  knowledge,
34    influence,  credibility,  notoriety,  fame,  reputation or public persona as a
35    representative or spokesperson of the employer, and  as  a  result,  have  the
36    ability to harm or threaten an employer's legitimate business interests.
37        (2)  "Legitimate business interests" shall include, but not be limited to,
38    an  employer's  goodwill, technologies, intellectual property, business plans,
39    business processes and methods of operation, customers, customer  lists,  cus-
40    tomer  contacts  and  referral sources, vendors and vendor contacts, financial
41    and marketing information, and trade secrets as that term is defined by  chap-                               

  1    Chapter 8, title 48, Idaho Code.

  2        44-2703.  CONSTRUCTION  AND  ENFORCEMENT. To the extent any such agreement
  3    or covenant is found to be unreasonable in any respect, a court shall limit or
  4    modify the agreement or covenant as it shall determine  necessary  to  reflect
  5    the  intent  of  the  parties and render it reasonable in light of the circum-
  6    stances in which it was made and specifically enforce the agreement  or  cove-
  7    nant as limited or modified.

  8        44-2704.  RESTRICTION  OF  DIRECT  COMPETITION -- REBUTTABLE PRESUMPTIONS.
  9    (1) Under no circumstances shall a provision of such agreement or covenant, as
10    set forth herein, establish a postemployment restriction of direct competition
11    that exceeds a period of eighteen  (18)  months  from  the  time  of  the  key
12    employee's  or  key independent contractor's termination unless consideration,
13    in addition to employment or continued employment, is given to a key  employee
14    or  key  independent contractor. Nothing in this chapter shall be construed to
15    limit a party's ability to otherwise protect  trade secrets or other  informa-
16    tion deemed proprietary or confidential.                                  Ed. Note: Ouch! Blank check! Scary!!!
17        (2)  It  shall  be  a rebuttable presumption that an agreement or covenant
18    with a postemployment term of eighteen (18) months or less is reasonable as to
19    duration.
20        (3)  It shall be a rebuttable presumption that an agreement or covenant is
21    reasonable as to geographic area if it is restricted to the  geographic  areas
22    in  which  the key employee or key independent contractor provided services or
23    had a significant presence or influence.
24        (4)   It shall be a rebuttable presumption that an agreement  or  covenant
25    is reasonable as to type of employment or line of business if it is limited to
26    the  type  of  employment or line of business conducted by the key employee or
27    key independent contractor while working for the employer.
28        (5)  It shall be a rebuttable presumption that an employee or  independent
29    contractor  who  is among the highest paid five percent (5%) of the employer's
30    employees or independent contractors is a "key employee" or a "key independent
31    contractor." To rebut such presumption, an employee or independent  contractor
32    must show that it has no ability to adversely affect the employer's legitimate
33    business interests.

Statement of Purpose / Fiscal Impact
                     STATEMENT OF PURPOSE                            
                           RS 17822

This legislation provides that an employer may enter into agreements with key employees and key independent contractors to protect a company's legitimate business interests.  The legislation defines "key employees" and "legitimate business interests," and creates rebuttable presumptions as to the terms of the agreements.

                        FISCAL IMPACT                             
There is no impact to the general fund.

Contact
Name:  Alex LaBeau  
         Idaho Association of Commerce and Industry - Also known as the Idaho Chamber of Commerce. Your editor has never belonged to a Chamber of any kind that was not lobbying City Hall or the State Legislature for something.
         343-1849