Non-solicitation: Overview, definition, and example
What is non solicitation?
Non-solicitation refers to a clause commonly found in contracts, especially employment or business agreements, that prohibits one party from directly or indirectly soliciting or recruiting certain individuals or clients from the other party. In the context of employment, a non solicitation agreement often prevents employees from enticing co-workers, clients, or customers to leave the employer's company and join a competitor or start a competing business for a specified period after leaving the company.
The purpose of a non-solicitation clause is to protect the business interests of the party requesting the agreement, such as protecting client relationships, intellectual property, or workforce stability.
Why is non solicitation important?
Non-solicitation is important because it helps safeguard an organization’s relationships with its clients, employees, and partners. It prevents the risk of one party taking unfair advantage of those relationships by persuading clients or employees to leave or join a competitor. For businesses, it offers protection against the loss of customers, key employees, or trade secrets, which could significantly harm the organization’s competitive edge.
For employees, agreeing to a non-solicitation clause often allows them to pursue new opportunities without the risk of breaching the agreement, provided they do not target clients or colleagues from their previous employer.
Understanding non solicitation through an example
Imagine a company, Company A, has an employee, Employee B, who works closely with key clients. As part of their employment agreement, Employee B agrees to a non solicitation clause that prohibits them from contacting Company A's clients for business purposes for 12 months after they leave the company. If Employee B leaves Company A and tries to solicit Company A’s clients to join a new company, they would be in violation of the non solicitation clause.
In another example, a technology company, Company C, requires its employees to sign a non solicitation agreement that prevents them from recruiting other employees to join a competing firm after leaving. If Employee D leaves Company C and attempts to hire their former colleagues for a competing business, this action would be prohibited by the non-solicitation agreement.
An example of non solicitation clause
Here’s how a non-solicitation clause might appear in an agreement:
“The Employee agrees that during the term of employment and for a period of 12 months after the termination of employment, the Employee shall not directly or indirectly solicit, engage, or encourage any employee, contractor, or client of the Company to leave the Company or cease doing business with the Company.”
Conclusion
Non-solicitation clauses are essential tools for protecting a business’s valuable relationships, whether with employees, clients, or contractors. By including these clauses in contracts, organizations can reduce the risk of losing key employees or clients to competitors, preserving their competitive advantage. It’s important for both employers and employees to understand the scope and limitations of such clauses to ensure that they are fair and enforceable.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.