You’ve worked hard and spent significant resources to build your customer list and train your staff, so it makes sense for you to want to protect your investment. A non-solicitation agreement is one of the most effective methods of doing so.
A non-solicitation agreement can be a standalone agreement or a clause within an employment contract. It can be presented to an employee or partner to sign at the outset of your relationship or at any other point while working together. Its purpose is to prevent the signer from going to a competitor (or starting their own business) and soliciting your existing customer base. It can also be used to prevent the individual from luring other employees to join them in their new workplace or venture.
Not every business finds non-solicitation agreements useful. They are most frequently used in sales organizations, and particularly in organizations where clear competitors exist. A trade publication that sells advertising targeting a particular industry could suffer a significant loss of business if a talented salesperson were to be recruited by a competitor and begin reaching out to the clients they sold to for their original employer. A non-solicitation agreement would clearly benefit the publication, both to protect their customer list and to prevent the salesperson from encouraging their colleagues to join them at their new employer.
It’s important to note that there are limitations to how a non-solicitation agreement can be used or crafted. There are certain requirements for the agreement to be considered enforceable, including:
- There must be a legitimate and clear reason for asking the employee to sign the non-solicitation agreement. A scenario like the one described above is understandable: there is a limited and identifiable list of customers that has been cultivated and which would represent a loss if shared with a competitor.
- There must be a demonstrable value to what the non-solicitation list is protecting. There is a difference between customers who find a business by conducting a Google search and those that have been developed through an extensive process.
- It must be clear that other employees and customers are able to follow the individual employee if they have not been solicited. A popular colleague’s departure could encourage others to seek employment with the new employer, and a popular salesperson’s departure could cause a customer to seek them out.
An enforceable non-solicitation agreement can provide significant protection for your business. To learn how we can create such an agreement for your organization, contact us today.
