Along with non-competition agreements, Non-Solicitation Agreements are the primary way in which companies protect their interests vis-a-vis former employees. Whereas a non-competition agreement restricts an employee from working for a competitor, a non-solicitation agreement allows him to work for a competitor but restricts his actions while there.
When an employee leaves his job, he may be obliged to sign a Non-Solicitation Agreement (or a separation agreement that contains both non-solicitation and non-competition provisions), in which he agrees, for consideration, not to solicit either his former colleagues or his former clients to leave the company partnership in question. Former colleagues and clients are the most commonly cited groups, but vendors, suppliers, and other types of business partners may also be included in the scope of the agreements.
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The purpose of such an agreement is to protect the company's legitimate business interests. And indeed, current employees and client lists may well be legitimate interests. Then again, they may not.
The enforceability of Non-Solicitation Agreements often turns on their reasonableness. Certain agreements aim to prohibit all manner of contact between a departing employee and his colleagues, even social contact. However, these agreements are not typical, nor are they typically enforced to such a point. Similarly, some non-solicitation agreements cast a wide protective net over all manner of company property.
Client lists very often are considered trade secrets and thus worthy of protection, especially if the company spent considerable time and effort compiling the lists and they are not generally public knowledge. However, if the employee had a hand in the creation of the lists and would be professionally crippled not to be able to contact his former clients, then a company would be hard pressed to have its Non-Solicitation Agreement enforced. Such agreements would be deemed non-competition agreements and a restraint on trade, effectively handcuffing the employee.
Non-solicitation Agreements set out a specific period of time and a geographic scope. Thus, for example, the employee may not solicit his former colleagues and clients anywhere within 50 miles of the city of Dallas for two years from his date of termination. The higher the time limit and the greater the territorial scope-without showing a correspondingly compelling business interest, such as the fact that the client base is regional or national-then the less likely a court will be to enforce the Non-Solicitation Agreement.
The parties may negotiate over not only the consideration owed for the employee's signing this agreement, but also the trigger mechanism. The company will want the agreement to apply no matter how the employee leaves, whereas the employee will resist and argue that the agreement should apply only if he quits or is terminated for cause-not if he is let go without cause.
Meanwhile, an employee will attempt to carve out pre-existing clients from the agreement's scope and to cultivate his clients as friends, so that when the employee sends a former client an annual holiday card, the portion about his new job will seem less like a solicitation and more like an exchange of news between friends.
Good Non-Solicitation Agreements find that proper balance between protecting the legitimate business interests of a company and not unduly restricting an employee's right to work.
Non-Solicitation Agreements - Throwing a Protective Cordon Around Employees and Clients
Ross Yader is a Non-Solicitation Agreement Research Analyst for RealDealDocs.com. RealDealDocs gives you insider access to millions of legal documents online drafted by the top law firms in the US that you can download, edit and print. Search For Free at RealDealDocs.com.
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