After departing with a company, you remember the non-solicitation agreement signed during your preliminary employment.
After painstakingly working on building customer relations for your previous company, you’re left with no choice but to leave these meaningful connections.
Several employees may leave the company after gaining valuable experience, only to find out that their prime kickstarter contact list is off-limits.
On the employer’s end, a non-solicitation agreement acts as a shield from poachers. Organizations don’t want to risk losing their connections and employees.
Fortunately, the enforceability of the contract can keep things fair. If the document isn’t comprehensive or reasonable enough, employees are free to take it up to court.
- What is a Non-Solicitation Agreement?
- Non-Solicitation Agreement vs. Non-Compete
- What is the Purpose of a Non-Solicitation Agreement?
- Who Has to Sign a Non-Solicitation Agreement?
- What is Considered Non-Solicitation?
- How Long is a Non-Solicitation Period?
- How Enforceable is a Non-Solicitation?
- What Happens if You Break a Non-Solicitation Agreement?
- How Do You Get Around a Non-Solicitation Agreement?
- Frequently Asked Questions
- Wrapping Up
What is a Non-Solicitation Agreement?
A non-solicitation agreement limits an employee’s ability to solicit or negotiate with employees and clients following their departure.
To demonstrate, Employee A has a list of client contacts in Company A. They signed a non-solicitation before their employment.
After departing Company A for Company B, Employee A can’t use the prior’s client contact list. Otherwise, they’ll face serious legal repercussions.
Non-Solicitation Agreement vs. Non-Compete
Non-compete and non-solicitation agreements are ideal documents to protect an employer’s business.
That said, the non-compete agreement stipulates that an employee can’t work for a competitor for a specified period after leaving the company.
The non-solicitation agreement differs because it details that the employee can’t use the company’s resources for personal gain.
What is the Purpose of a Non-Solicitation Agreement?
A non-solicitation agreement protects a company’s revenue and client loyalty. It prohibits former employees from soliciting your client and employee list.
The agreement needs to meet a location scope and period. For example, you can enforce the clause to encompass the city area for 12 months.
Who Has to Sign a Non-Solicitation Agreement?
The agreement involves three prime parties, the new employee, the employer, and the salesperson. Enforcing the clause requires their signatures.
Employers should protect their company’s proprietary information and clientele from new employees willing to poach their resources.
Otherwise, the recruits can quit and approach competitors or new firms with the client and employee list. Besides that, the law entitles employees to legally review the clause before signing it.
Employers are responsible for crafting the document. They can also appoint the company’s lawyer to create the non-solicitation clause. Following the employee’s agreement, employers will also sign the document.
If the company hires third-party salespeople, making them sign the non-solicitation agreement is essential. If not, they can legally use the client’s contacts for personal or organizational gain.
What is Considered Non-Solicitation?
An example of non-solicitation can stem from preventing resigned or terminated employees from luring other employees with them to a new company.
Another instance can fall between a past employee attempting to network with their previous company’s business partners.
Employees can undervalue their past employer to poach clients for their new venture.
How Long is a Non-Solicitation Period?
Non-solicitation periods typically extend for 12 months. Employers can extend the timeframe to years, but they would need a reasonable cause to uphold in court.
How Enforceable is a Non-Solicitation?
The good news is that non-solicitation agreements are more enforceable than other clauses. It’s because they don’t limit trade but rather the previous employee’s contact list.
Conditions of Enforceability
Enforcing the clause also requires some conditions to uphold in court.
The document needs to be clear, reasonable, and straightforward. Otherwise, an employee can be within their rights to hold it up in court.
For instance, an employer crafted an agreement detailing that former employees can’t solicit prospective clients.
The company is prohibiting employees from professionally engaging with future clients. The non-solicitation will likely be unenforceable since the clause is too broad and unreasonable.
The contract’s enforceability also depends on its location. In California, documents such as non-solicitation and non-compete agreements are unenforceable.
Other agreements like non-disparagement are enforceable in the state.
The client list in question needs to be valuable enough to hold up in court. If an employer files a lawsuit and their trade secrets are already public, the law likely won’t hold the solicitor accountable.
Clients and employees that leave the company on their accord don’t count in the non-solicitation agreement.
Unless the employees are under a non-compete clause, they can part ways and work for the past employee who signed the non-solicitation agreement.
If the latter didn’t approach the client using company resources, then a non-solicitation agreement is inapplicable.
What Happens if You Break a Non-Solicitation Agreement?
Breaching a non-solicitation agreement can damage an employee’s career and financial livelihood.
Employers can enforce court-ordered consequences from a cease and desist to a restraining order.
The Former Employee Can Issue a Cease and Desist
The court can issue a cease and desist in the initial steps of a non-solicitation contract breach. As an employee, you can see this as a preliminary warning to halt soliciting activities.
The issuance warns the employee of the violating actions. It places an injunction or judicial order to restrain former employees from further soliciting company employees and clients.
You Are Prone to Lawsuit
If the employee solicits a former employer’s clients and employees after signing the non-solicitation, the latter can issue a lawsuit.
The company can sue the employee for incurring damages and remedial costs. The process involves pleadings, negotiations and mediation for settlements, examinations, a pre-trial, and the official trial.
How Do You Get Around a Non-Solicitation Agreement?
Non-solicitation agreements are prevalent among multiple industries, such as the sales and real estate markets. They attempt to protect a business’ trade secrets or, in other cases, customer lists.
After leaving employment and pursuing an entrepreneurial position, you’ll likely find the contract restrictive and unfair.
You may need the lists to kickstart your business since you worked diligently to build the clients’ loyalty towards your previous company.
Fortunately, you can find ways to get around the agreement.
Don’t Sign It
As a new employee, you’ll likely witness several contracts, from job offer letters to employment contracts. You may be more concerned with negotiating a salary amount. A non-solicitation agreement can get lost in the mix.
Employers may not even label them as non-solicitation agreements. Instead, they can call them promissory note agreements or account distribution clauses. That said, your first option can be to avoid signing the document.
After inducting multiple employees, some contracts can slip through your HR manager’s mind.
For this reason, don’t openly refuse the document. As an executive-status employee, it’s easier not to sign the non-solicitation agreement.
Seek Legal Counsel
A legal counsel offers a lot more legal perspective for you to get around a non-solicitation agreement. They’ll be able to examine the document’s enforceability in your state and find a leeway.
While seeking legal counsel is a viable solution, it can strain your professional reputation. In turn, your career and client list are at stake.
Make a Deal With the Employer
One of the best methods to get around the clause is through a formal deal with your previous employer. It requires open communication, flexibility, and extensive negotiations between both parties.
You can ask your employer to relieve the restriction to a smaller geographic radius rather than city-wide. Alternatively, arrange a clause that allows you to solicit specified clients.
Frequently Asked Questions
Can You Work for a Competitor if You Signed a Non-Solicitation?
Employees can legally work for a competitor if they sign a non-solicitation agreement. It only prevents solicitation with a company’s client and employee list.
A non-compete clause would prevent employees from working for a competitor.
How Serious is a Non-Solicitation Clause?
The seriousness of the non-solicitation clause depends on its enforceability. As a legally binding document, getting around it can be challenging.
Fortunately, some states, like North Dakota, complicate the enforceability process.
Are Non-Solicitation Clauses Enforceable in the UK?
Non-solicitation clauses are enforceable in the UK. Some courts can challenge the document’s enforceability if deemed unfair or improperly formulated.
For this purpose, seeking legal assistance when creating the document is advisable.
Is the Non-Solicitation Clause Enforceable in India?
Non-solicitation clauses are enforceable in India. Their validity in court rests on how reasonable they seem.
That said, the Indian court deals with enforceability on a case-by-case basis.
Non-solicitation agreements protect businesses by shielding their trade secrets. The latter primarily constitutes valuable employees and client contact lists.
By prohibiting previous employees from soliciting these resources, the business can rest assured that their trade secrets are safe.
Despite the clause’s enforceability, some clauses are unreasonably written, deeming them voidable.
For instance, some employees are under contract to cut professional ties with former clients for over a decade. In this case, a court order can appeal to the employee’s side.
Let us know in the comments if you have any questions. Overall, non-solicitation agreements require deliberate documentation and a careful read from employers and employees.