Like non-compete agreements, non-solicitation agreements can be difficult to deem legally enforceable. When crafting such an agreement, an employer must strike a balance between protecting its business’ interests and allowing the employee to continue his or her career without hindrance.
Whether the terms in your non-solicitation agreement are legally enforceable can depend on where you live in the United States. In every state, the state may not create a law that allows companies to require employees to sign non-solicitation agreements. In California, the restriction against this type of agreement is even greater. It is illegal to ask an employee to sign a non-solicitation agreement in California.
Do not sign a non-solicitation agreement until you have discussed it with an experienced employment attorney. In most cases, you can work with your attorney to draft a more favorable agreement. As long as your revisions do not put the employer into a position where it can lose business, you should be able to negotiate a fair agreement.
What is a Non-Solicitation Agreement?
A non-solicitation agreement is a clause in a larger document, such as an employment contract, that prohibits employees from soliciting the company’s clientele for him or herself or his or her new employer after he or she leaves the company. They may also be used to prevent employees from soliciting their former colleagues for work with their new employers.
A non-solicitation agreement may also be included as part of a non-compete or non-disclosure agreement or, less commonly, as a standalone document.
Non-solicitation agreements, like non-compete and non-disclosure agreements, exist to protect the investment that a company makes in its staff and position within its market. Some of the specialized skills and access that employees hold can take years of ongoing, expensive professional development to cultivate. By investing this time into an employee then allowing him or her to go work for a competitor, a company could lose a significant amount of money while its competitor enjoys a fully trained worker without having to make an investment.
What May Be Included in a Non-Solicitation Agreement?
A non-solicitation agreement may prevent an employee from soliciting one or more of the company’s employees or customers for his or her own benefit or the benefit of another company for a specified length of time following the end of the employee’s time with the company.
If this length of time is too long, the agreement may be determined to be invalid. Likewise, there are some cases where a blanket ban on contacting all of a business’ current clients can harm the employee’s career. In cases where the employee has built a relationship with a specific customer over the course of years, possibly even bringing that customer to the company, preventing the relationship from continuing can destroy the employee’s career. In cases like this, the employee may want to include language in his or her non-solicitation agreement that makes an exception for that customer.
A Valid Business Reason is Required
A non-solicitation agreement’s validity is largely determined by what the company has to protect. For example, it would not make sense for a grocery store to ask its cashiers to sign a non-solicitation agreement – learning how to operate a cash register and perform transactions can be learned in nearly any retail setting and do not take a significant amount of specialized training to develop. Likewise, a grocery store does not have a list of clients that must be protected – almost everybody goes to the grocery store.
Companies that rely on non-solicitation agreements for protection tend to be technology companies, financial planning companies, pharmaceutical companies and other types of businesses that rely on innovation and highly-trained, specialized professionals.
Valid business reasons to ask employees to sign non-solicitation agreements include having sensitive trade secrets that employees must access for work or lists of clients that are not readily available to the public.
To determine whether a customer list needs to be protected, your attorney must ask the following questions when reading your non-solicitation agreement:
- Did the company put a considerable amount of time, money and other resources into building and maintaining this customer list?
- Is the customer list readily available to the public?
- Does the customer list contain sensitive information?
- In other words, would a competitor benefit in any way from knowing who the company serves?
Employees Must Be Able to Voluntarily Leave the Company
All a non-solicitation agreement can do with regards to losing employees to the competition is prevent former employees from soliciting their former colleagues for work. If an employee voluntarily leaves the company to work for a competitor, there is nothing the company can do with this type of agreement. Preventing employees from working with the competition may only be done with a non-compete agreement.
Customers must also be allowed to voluntarily leave the company. When a customer leaves, it may only be determined to be a violation of an employee’s non-solicitation agreement if the customer was pressured or enticed to leave in any way, such as through the use of sensitive information about the former company.
If You Are Asked to Sign a Non-Solicitation Agreement …
If you are asked to sign a non-solicitation agreement, speak with an experienced employment attorney about your state’s laws regarding such agreements and whether yours is in line with them. You might also want to ask his or her advice about whether your agreement is unnecessarily restrictive and if so, how your attorney can draft a new agreement for you to submit to your employer for consideration.
Do not sign a document that you do not understand and do not, under any circumstances, allow yourself to feel like you need to sign a restrictive document just to have work. You deserve to have a fair contract that allows you to pursue your career to its full potential without hindering your company’s ability to protect what is has built.