October 4, 2011

Idaho Supreme Court Clarifies Law Regarding Employment Contracts

By Scott E. Randolph

Employment is at will in Idaho, unless the intention to modify that default rule is clearly communicated and understood by both parties to the transaction. That is the rule highlighted by the Idaho Supreme Court in its recent decision of Mackay v. Four Rivers Packing Co., Docket No. 35974. The employer in that case, Four Rivers Packing Co., appealed a jury verdict in favor of a former employee, Mackay, in an action alleging breach of a long-term employment contract. Four Rivers argued that that the contract was unenforceable and that the trial court had failed to properly instruct the jury regarding the statute of frauds and default Idaho rules regarding the employment relationship.

The Idaho Supreme Court affirmed the jury verdict in favor of Mackay, holding that the jury had been properly instructed and that the evidence supported the jury's verdict in Mackay's favor. Turning first to the issue of the statute of frauds, the Court held that the district court had properly instructed the jury because there had been no evidence at trial that the employment was for a specified term. Thus, the contract was possible to perform within a year and the contract was not required to be in writing. The court also held that substantial evidence supported the jury's finding that Four Rivers had offered Mackay long-term employment and that it had breached that contract.

The lesson from the case is that the scope of the employment relationship – including its duration – should be carefully communicated to avoid any contractual obligation that either party did not intend. The default rule is that employment is at will in Idaho and may be terminated at any time for any reason by either party. Employers should be cautious anytime they deviate from the rule as it may have consequences similar to the result presented in Mackay. Finally, the Idaho Supreme Court awarded fees on appeal to Mackay, based on the established rule that actions for breach of an employment contract are considered commercial transactions within the meaning of Idaho Code § 12-120(3).

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