Non-solicitation: Overview, definition, and example
What is non-solicitation?
Non-solicitation refers to a clause or provision in a contract that prohibits a party from soliciting, recruiting, or attempting to do business with the other party's employees, clients, or customers for a specified period of time after the contract ends. Non-solicitation clauses are often included in employment contracts, partnership agreements, or business contracts to protect a company’s workforce, business relationships, and proprietary information. The purpose is to prevent one party from taking advantage of the other party’s resources, such as staff or clients, after the business relationship has ended.
For example, an employer may include a non-solicitation clause to prevent an employee from contacting the employer’s clients to offer competing services after leaving the company.
Why is non-solicitation important?
Non-solicitation clauses are important because they help protect a company’s goodwill, intellectual property, and business relationships. By preventing employees or former business partners from poaching clients or recruiting employees, these clauses preserve the stability and value of a company’s workforce and client base. For employers, non-solicitation agreements are a way to safeguard against the risk of losing key personnel or valuable business relationships when a contractual relationship ends.
These clauses are especially crucial in industries where client relationships and skilled labor are vital for business success, such as consulting, technology, or sales.
Understanding non-solicitation through an example
Imagine a sales executive working at a marketing agency. The executive has built strong relationships with key clients over several years. Upon leaving the company to join a competitor, the marketing agency invokes a non-solicitation clause from the employee’s contract to prevent the executive from reaching out to those clients for business in the future. The clause ensures that the sales executive cannot directly solicit the agency’s clients for a set period of time after their departure.
In another example, a business owner may enter into a partnership agreement with another company. The agreement might include a non-solicitation provision to prevent the business from hiring key employees from each other’s companies or approaching the other company’s customers to divert business once the partnership ends.
An example of a non-solicitation clause
Here’s how a non-solicitation clause might appear in a contract:
“During the term of this Agreement and for a period of [X] years following the termination of this Agreement, the Employee agrees not to directly or indirectly solicit, induce, or attempt to induce any employee, contractor, or client of the Company to terminate their relationship with the Company or engage in business with a competing entity.”
Conclusion
Non-solicitation clauses are a critical part of protecting a company’s workforce, clients, and business interests. By including non-solicitation provisions in contracts, businesses can prevent the disruption of key relationships and avoid unfair competition. Whether in employment agreements, business partnerships, or other professional contracts, non-solicitation provisions help ensure that employees or business partners cannot use confidential information or personal connections to benefit themselves or a competitor after the relationship has ended.
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.