Non-Solicitation Agreement
What Is a Non-Solicitation Agreement?
A non-solicitation agreement is a legal contract that restricts employees from recruiting their employer’s clients or customers after leaving the company. Some agreements also include the recruitment of other employees. The typical agreement covers a particular geographic area and period of time.
Understanding Non-Solicitation Agreements
An employer can present a non-solicitation agreement to a worker for their signature at any time during their employment. For example, some companies include them as part of the hiring process as part of their employment contract, while others may introduce the agreement as part of a severance package.
A company also might ask an employee to sign a non-solicitation agreement during a restructuring or sale of the business.
What Is Included in a Non-Solicitation Clause or Agreement?
The wording of a non-solicitation agreement must have specific language regarding the company's work and the employee’s job at the company. In order for the contract to be legally binding, it requires the following elements:
- A statement that the employee is prohibited from recruiting a client, customer, or supplier they have had direct contact with during their time as an employee with the company
- A statement that the employee is prohibited from recruiting other company employees
- A statement expressing how long the agreement applies after the employee leaves the company
- The geographic area that the agreement covers
Is a Non-Solicitation Agreement Enforceable?
State law enters into the enforcement of non-solicitation agreements. For example, the state of California is unlikely to enforce non-solicitation agreements. That state’s courts have consistently ruled in favor of employee rights and competition in the open market.
In other states, the courts will consider the following factors when determining if the agreement is enforceable by law.
- The value of a customer list: The company must have spent time, energy, and money developing its client base, and the list should not be readily available to the general public.
- The protection of trade secrets: Does the employee know or have access to valuable information, such as details about trademarks, copyrights, or patents.
The court will examine the wording of the agreement to see if the language is too broad, too vague, or it covers an inordinate length of time.
A non-solicitation agreement cannot prevent a client, customer, or employee from moving to a competitor voluntarily. Also, the terms of the agreement are not the same as a non-disclosure agreement (NDA) or a non-compete agreement.
These legal contracts may or may not be part of an employee’s hiring or severance package in addition to a non-solicitation agreement, but the courts would evaluate the enforceability of each document separately.
What Is an Example of a Non-Solicitation Clause?
Here is an example of a non-solicitation agreement for a salesperson.
For the duration of the employee’s employment with the company and two years following the termination of that employment (for any reason), the employee will not:
-
Recruit or hire anyone currently employed by or under contract with the employer or employed by or under contract with the employer within six months before the employee’s solicitation.
-
Behave in any way that could result in the other individual terminating their employment or engagement with the employer, such as (but not limited to) attempting to convince the other employee to leave their current position with the company.
-
Participate in any activity that could disrupt the employer’s relationships with contractors, consultants, or employees.
-
Engage in activities that could disrupt the employer’s relationships with customers, including (but not limited to) encouraging customers to end or reduce their business dealings with the employer.
- Intervene in any way with the employer’s interactions with business partners such as distributors, suppliers, and other service providers.
Helpful Resources:
Cornell Law - Non-Solicitation Agreement
Prime Law Group - Everything You Need to Know About Non-Solicitation Agreements
What Is a Non-Solicitation Agreement?
A non-solicitation agreement is a legal contract that restricts employees from recruiting their employer’s clients or customers after leaving the company. Some agreements also include the recruitment of other employees. The typical agreement covers a particular geographic area and period of time.
Understanding Non-Solicitation Agreements
An employer can present a non-solicitation agreement to a worker for their signature at any time during their employment. For example, some companies include them as part of the hiring process as part of their employment contract, while others may introduce the agreement as part of a severance package.
A company also might ask an employee to sign a non-solicitation agreement during a restructuring or sale of the business.
What Is Included in a Non-Solicitation Clause or Agreement?
The wording of a non-solicitation agreement must have specific language regarding the company's work and the employee’s job at the company. In order for the contract to be legally binding, it requires the following elements:
- A statement that the employee is prohibited from recruiting a client, customer, or supplier they have had direct contact with during their time as an employee with the company
- A statement that the employee is prohibited from recruiting other company employees
- A statement expressing how long the agreement applies after the employee leaves the company
- The geographic area that the agreement covers
Is a Non-Solicitation Agreement Enforceable?
State law enters into the enforcement of non-solicitation agreements. For example, the state of California is unlikely to enforce non-solicitation agreements. That state’s courts have consistently ruled in favor of employee rights and competition in the open market.
In other states, the courts will consider the following factors when determining if the agreement is enforceable by law.
- The value of a customer list: The company must have spent time, energy, and money developing its client base, and the list should not be readily available to the general public.
- The protection of trade secrets: Does the employee know or have access to valuable information, such as details about trademarks, copyrights, or patents.
The court will examine the wording of the agreement to see if the language is too broad, too vague, or it covers an inordinate length of time.
A non-solicitation agreement cannot prevent a client, customer, or employee from moving to a competitor voluntarily. Also, the terms of the agreement are not the same as a non-disclosure agreement (NDA) or a non-compete agreement.
These legal contracts may or may not be part of an employee’s hiring or severance package in addition to a non-solicitation agreement, but the courts would evaluate the enforceability of each document separately.
What Is an Example of a Non-Solicitation Clause?
Here is an example of a non-solicitation agreement for a salesperson.
For the duration of the employee’s employment with the company and two years following the termination of that employment (for any reason), the employee will not:
-
Recruit or hire anyone currently employed by or under contract with the employer or employed by or under contract with the employer within six months before the employee’s solicitation.
-
Behave in any way that could result in the other individual terminating their employment or engagement with the employer, such as (but not limited to) attempting to convince the other employee to leave their current position with the company.
-
Participate in any activity that could disrupt the employer’s relationships with contractors, consultants, or employees.
-
Engage in activities that could disrupt the employer’s relationships with customers, including (but not limited to) encouraging customers to end or reduce their business dealings with the employer.
- Intervene in any way with the employer’s interactions with business partners such as distributors, suppliers, and other service providers.
Helpful Resources:
Cornell Law - Non-Solicitation Agreement
Prime Law Group - Everything You Need to Know About Non-Solicitation Agreements