Non-Solicitation Agreements are agreements between an employer and an employee, which the employer usually requires the employee to sign as a condition of providing employment or other benefit to the employee. In a non-solicitation agreements, the employee agrees if her employment is terminated, and she decides to go into business for herself, that she will not solicit either the employees or the customers of the company. The purpose of non-solicitation agreements is similar to that of non-competition agreements. Essentially the company wants to make sure that an employee of the company doesn’t use the trade secrets and other advantages gained during her employment to the company’s detriment after the employee’s employment is terminated.

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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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Regarding non-solicitation agreements made between an employer and employee, there have been many cases that address their enforceability. Cases addressing this issue have been litigated in both federal and state court. The issue usually boils down to whether the court believes that the non-solicitation agreement unduly restricts the former employee’s right to “make a living” and fairly compete with the former employer. It is essentially a balancing act between the limitation that the clause places on the former employee to earn a livelihood versus the employer’s legitimate right to protect its trade secrets and restrict its former employees’ from interfering with its clients or current employees.

The issue is not one without real world consequences. Many times if an employee leaves a company, especially on bad terms, that employee may wish to go into business for herself, using the experience and skills learned or acquired at her former employer as a means to promote her business or earn a living. Other times this employee may wish to take with her certain employees from the company that she would like to work for her. Also, she may want to solicit the company’s clients to get her business going. In all the these cases, the court will decide whether the non-solicitation clause is narrowly drafted to protect the employer’s interest, or whether it is too broad and unduly restricts the former employee’s right to earn a living. When drafting these non-solicitation agreements, an employer should be cognizant of these precedents and should carefully draft the contract to protect its interests while minimizing the restrictions on the employee.

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Along with non-competition agreements, Non-Solicitation Agreements are the primary way in which companies protect their interests vis-à-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.

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.

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