A non-solicitation agreement is a provision in an employment agreement which prohibits an employee from soliciting an employer’s customers after leaving the company. Such an agreement need not be limited only to customers but may prohibit an employee from soliciting other employees to leave the employer’s company as well.
Good customers, clients, patients, etc. are not easy to come by and employers who have them want to keep them. Non-solicitation agreements are added to employment agreements to protect an employer from the harm caused by a former employee taking these customers or employees to a competitor. It is becoming increasingly common for employees to leave their jobs in order to start their own company. A new company will not survive long without customers. Customers with whom the former employee has an existing relationship are the easiest customers to attract to the new company that otherwise has no history or reputation in the industry. The simplest way of preventing this client-poaching is a restrictive covenant limiting a former employee’s ability to contact these customers.
Non-solicitation agreements can also extend to soliciting other employees. Like good customers, good employees are not always easy to come by and an employer may have invested a sizeable amount of time and money into finding and training its employees. Thus, it is not uncommon or unreasonable for the employer to want to protect that investment by prohibiting former employees from taking other employees with them when they leave. For example, if Mary worked for Company A and left to start her own company, she might want to take Lisa with her, a skilled and knowledgeable associate that Mary probably gets along with and thinks would make a good addition to her team. If Mary signed a non-solicitation agreement when she started to work for Company A, she would not be able to take Lisa with her without the possibility of a lawsuit from the company. It is in Company A's best interest to make sure that Lisa's knowledge and skills stay with the company.
Non-solicitation clauses are generally more enforceable in court than non-compete agreements because they are viewed not as restraints on trade (as non-compete agreements sometimes are) but rather restraints on whom a former employee may contact. Like non-compete agreements, however, non-solicitation agreements are only enforceable if they are reasonable. What is considered reasonable varies from jurisdiction to jurisdiction and can best be determined by a knowledgeable attorney in your particular jurisdiction.
Generally speaking, courts consider a non-solicitation agreement to be reasonable only if it is no broader than necessary to protect an employer’s legitimate business interests. Courts attempt to balance an employer’s need to protect its legitimate business interests with an employee’s need to find work. A non-solicitation agreement that makes it too hard for a former employee to be able to work in the same field would likely not be considered reasonable. By way of example, a non-solicitation agreement that defines solicitation as any form of advertisement would likely not be reasonable because it is not only overly broad but is damaging to the free market. Such a broad definition of solicitation would likely make it virtually impossible for the former employee to find work in the same field if he could not advertise his company or his new employer would have to cease all advertising in order to hire the individual. Courts closely scrutinize non-solicitation agreements to make sure the terms are narrowly tailored, clearly defined, and overall are reasonable.
That is not to say any hardship imposed on a former employee by a non-solicitation agreement is unreasonable or would render the restrictive covenant unenforceable. Courts have upheld the validity of non-solicitation agreements that cause a former employee to move to another city or state in order to work in the same field and avoid violating the agreement. Each case, however, turns on the specific circumstances present in that situation.
When being asked to enter a non-solicitation agreement, an employee should consider whether the agreement is reasonable. Such a determination may not be self-evidence which is where a knowledgeable attorney can be of great assistance. An employee being asked to enter an unreasonable non-solicitation agreement may be able to negotiate more reasonable terms of the agreement.
When asking an employee to enter a non-solicitation agreement, it is not in the employer’s best interest to ask an employee to sign an unreasonable non-solicitation agreement. Such an agreement would be less likely to be enforceable and may cause the employer to incur large litigation costs trying to enforce it. An experienced attorney can be an invaluable asset not only in drafting the restrictive covenant and situations where an employer is seeking to enforce a non-solicitation agreement against a former employee.
The attorneys at DiTommaso have extensive experience negotiating and litigation non-solicitation agreements for employers and employees in Chicago and throughout Cook, DuPage, Lake, and Will counties. Whether you are considering entering a non-solicitation agreement or need to determine if a restrictive covenant is enforceable, our attorneys can assist you in determining the best course of action. You can contact us online today or call us at 630-333-0000 to set up a free consultation.