As an employer, do you know that “Avoiding Ambiguous or Overreaching Employee Non-solicitation Agreements” is one of the key considerations when drafting employee non-solicitation agreements? Regarding this consideration, an employee non-solicitation agreement might be rendered unenforceable when terms such as “encourage” and “influence” are used as a way of expanding the reach beyond employee solicitation, since such usage is considered too broad. Instead, a knowledge requirement should be included to avoid such an issue since it helps in qualifying the obligation not to solicit employees. For instance, a qualified employee non-solicitation agreement may be something like “the employee agrees that for a period of twelve months after the termination of his/her employment, the employee will not intentionally or knowingly encourage or induce a company employee to sever his/her relationship with the company.”
As promised in Part IV, this blog post marks the start of five additional blog posts on key considerations for every employer when drafting client/customer non-solicitation agreements that are enforceable under the law. Accordingly, we have hammered on “Defining Clients that will be Specifically Covered by the Non-solicitation Agreement and Determining the Scope of Prohibited Customer Solicitation” as the first key consideration in this regard.
Defining Clients that will be Specifically Covered by the Non-solicitation Agreement and Determining the Scope of Prohibited Customer Solicitation
By way of backdrop, although some differences may exist, employers must ensure that client/customer non-solicitation agreements focus on the same issues that would be presented in traditional non-competition agreements.
On the one hand, one of the things that a client/customer non-solicitation agreement should include is a reasonable scope of restricted customer solicitation. Ideally, the types of clients the former employee is being prohibited from soliciting, and the types of products or services that such an employee is barred from offering to a company’s clients, should be described in a client/customer non-solicitation agreement. As a best practice, an employer should ensure that the former employee is not restricted from offering services for the clients/customers of a business that they did not provide for the clients/customers while engaged with the business.
Moreover, even if the employee did not solicit the business, it is critical to consider whether the acceptance of business from customers or even the active solicitation of clients/customers should be prohibited when drafting the client/customer non-solicitation agreement. Employers should understand that in some jurisdictions, clauses in which the acceptance of business in particular situations, including where the former employee exclusively carried out business activities while employed by the business, is prohibited have been enacted and enforced.
On the other hand, unless a former employee was a key or high-level employee, a clause prohibiting the solicitation of “all clients” would be deemed unreasonable by a court. Instead, a client/customer non-solicitation agreement that is likely to be enforceable is the one that limits restrictions to clients about whom the former employee had knowledge of confidential information while employed by the business or company, clients that had material contact with the former employee, and clients within a certain geographic range.
In Part VI of this series, we will move the discussion forward by hammering on the importance of “Including Reasonable Time Limits,” which is another key consideration for every employer when drafting client/customer non-solicitation agreements.
In the meantime, stay tuned for more legal guidance, training, and education. In the meantime, if you have any questions or comments, please let us know at the Contact Us page!
Always rising above the bar,
Isaac T.,
Legal Writer, Author, & Publisher.