Check all the information in one place to understand a non solicitation agreement

Non-solicitation agreements - which ban professionals who quit their job from contacting their former company’s clients - show up in a lot of employment contracts these days. Sometimes these non-solicitation agreements are good-faith attempts to protect valuable customers. Other non-solicitation agreements can be worded in ways that give your former company the leverage to wreck your career development plan or drown you in frivolous lawsuits. 

To explain non solicitation agreements and how they can be used/misused, this article covers the following topics.

• Why companies use non solicitation agreements

• Potential restrictions imposed by a non solicitation agreement

• Penalties for violating a non solicitation agreement

• Checking contracts for non solicitation agreement

• When non solicitation agreements are offered in bad faith

• Negotiating a non solicitation agreement

Why companies add non solicitation agreements to contracts

Non solicitation agreements can be and are used by companies all over the world. That said, non-solicitation agreements are particularly popular with businesses that make a living by building strong long-term relations with a limited pool of clients. For instance:

• Law Firms

• Pharmaceutical Companies

• Machine-Part Manufacturers

• Vehicle Repair Shops

• Hairstylist Franchises

• Security Agencies

• Language Tutoring Companies

These industries and others employ salespeople, agents, and other representatives who talk with clients face-to-face and earn their trust with soft communication skills and excellent service. The wrinkle here is that clients often place their trust in the employee, not the company they talk to. If said professional jumps ship to a competitor or quits to start their own company, every customer they’ve represented might follow with them, stripping away a big part of the original company’s profits.

This is where non solicitation agreements come in.

Potential restrictions imposed by a non solicitation agreement

Non solicitation clauses are easily inserted into any standard employment contract, and can bind new company employees to one or several of the following terms.

Non solicitation clauses like these are often designed to expire after about a year (long enough for an ex-employee’s former clients to move on, but not so long that an ex-employee’s career is outright crippled). Even so, it’s important to carefully review the language of non solicitation clauses in your contract to make sure they don’t restrict you in blatantly unfair ways.

Consequences of violating a non solicitation agreement

Can businesses actually enforce their non solicitation agreements? The answer to this question varies depending on where you live. 

In some states, non-solicitation agreements are unenforceable or outright illegal. In other states, companies can enforce their non-solicitation agreements as long as they don’t blatantly keep a former employee from making a successful career change or interfere with a competitor’s attempts at recruitment. 

If a company’s non solicitation agreement is enforceable, breaking it can expose you to all sorts of legal troubles. An aggrieved company will typically start by sending you a cease-and-desist order and may escalate to a lawsuit if you refuse to cut ties with the individuals described in the non-solicitation clause. Lose this suit, and you’ll be legally required to pay damages to your old company.

With a good lawyer and valid reasons for contesting the non solicitation agreement (i.e. unfair restrictions on your ability to pursue your current career and talk to old friends) you can win these sorts of lawsuits in court. Even then, there’s a chance your old company may harass you with multiple lawsuits and damage your finances from all the legal fees. 

To avoid such stressful and costly court battles, think twice and read twice before signing any contract with non solicitation (or non compete) clauses.

How to find non-solicitation agreements in employment contracts

If a company’s employment contract is particularly dense with text, it’s easy to miss the sections with non-solicitation clauses even if you read the contract front to back. If you’re seeking employment with a client-focused business and don’t want to agree to terms of non-solicitation by accident, there are a few ways to double-check the contract.

The simplest way to check for non-solicitation clauses is to just ask your would-be employers about it. Broach the topic of non solicitation clauses during  your next job interview or any job offer negotiations you engage in.

If you received an electronic copy of your employment contract, you can also try to locate non-solicitation agreements using a word processor or PDF viewer’s word search function. 

When non solicitation agreements are offered in bad faith

In states where non solicitation agreements aren’t illegal, a court of law will generally uphold such agreements if they fit the following criteria:

• They expire after a reasonable span of time (one to two years, in most cases).

• The company must maintain their current “stable” of clients if they want to stay in business.

• The terms of the agreement don’t stop former employees from making a decent living in their new positions.

• The terms of the agreement don’t impede competition from other businesses.

• The terms of the agreement don’t restrict the activities of former employees who move to other countries or states.

If a non-solicitation agreement breaks one or more of these guidelines, that’s a warning sign your new company doesn’t have your best interests at heart (or may be trying to monopolize their local slice of industry). 

If you’ve gotten other warning signs about this new company’s working conditions or treatment of employees, you may be better off politely declining this job offer and searching elsewhere for work.

How to negotiate a non-solicitation agreement

Before walking away, however, another option is to talk with your hiring manager and try to negotiate a non solicitation agreement with better terms.

First, you can try to persuade your new employer to remove a clause or two from the non-solicitation agreement, giving you more freedom to interact with former clients or colleagues when you eventually move on to another job.

Second, you can try to reduce the duration of the non solicitation agreement–for instance, moving the date of expiration from two years after leaving the company to one year.

Finally, you can try to negotiate for more and better types of employee benefits that balance out the inconvenience of the non solicitation agreement: higher salaries, extra severance pay, better medical insurance, more vacation days, etc.

Key takeaways

1. Non solicitation agreements are designed to keep you from poaching valuable customers, clients, or employees when you quit your job.

2. Non-solicitation agreements typically try to forbid you from soliciting or seeking to hire clients or colleagues you worked with in the job you just quit.

3. Breaking a non solicitation agreement can lead to lawsuits from your old company, though non solicitation clauses in an employment contract can’t be enforced in certain states or countries. 

4. Don’t consent to non-solicitation agreements that would hinder competition and/or keep you from making a living outside the company.

5. You can negotiate with hiring managers to get non-solicitation agreements that expire sooner or offer you fewer restrictions.