Non-Solicitation Agreements: Key Points

Posted on 28 April 2009

When drafting a non-solicitation agreement on behalf of an employer, it is important to draft the following distinct clauses: (1) the employee may not solicit the employer’s existing employees, independent contractors, or employees or contractors of its subsidiaries; (2) the employee may not solicit the employer’s existing clients; and (3) the employee may not interfere with the employer’s existing business relations with its customers, suppliers, or other businesses with which it conducts business. The non-solicitation agreement must also address the length of the restriction on solicitation.

1. Employee may not solicit the company’s current employees. This provision should read something like: “Either alone or in association with others, Employee may not solicit, or facilitate any organization with which the Employee is associated in soliciting, any employee of Entrust or any of its subsidiaries to leave the employ of Entrust or any of its subsidiaries.”

2. Employee may not employ the company’s current employees. The non-solicitation agreement should further read that the Employee “may not solicit for employment, hire or engage as an independent contractor, or facilitate any organization with which the Employee is associated in soliciting for employment, hire or engagement as an independent contractor, any person who was employed with Entrust or any of its subsidiaries at any time during the term of the Employee’s employment with Entrust or any of its subsidiaries”

3. Employee may not solicit company’s customers or clients. The non-solicitation agreement should state that the Employee may not “solicit business from or perform services for any customer, supplier, licensee or business relation of Entrust or any of its subsidiaries, induce or attempt to induce, any such entity to cease doing business with Company or any of its subsidiaries, or in any way interfere with the relationship between any such entity and Company or any of its subsidiaries.”

4. Time limitation. In order for it to be enforceable, the agreement must limit the restriction on solicitation to a certain time frame. The non-solicitation agreement generally shall not apply to any individual whose employment with Employee or any of its subsidiaries has been terminated for a period of one year or longer.

5. Not an Employment Contract. In order to preserve the default at-will employment relationship, the contract drafter should make it clear that the non-solicitation agreement does not constitute an employment agreement. This clause could read as follows: “The Employee acknowledges that this Non-Solicitation Agreement does not constitute a contract of employment and does not guarantee that the Company or any of its subsidiaries will continue his/her employment for any period of time or otherwise change the at-will nature of his/her employment.”

These are the most important provisions of a non-solicitation agreement.

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