Non-solicitation agreements are quite common in industries and workplaces. These type of contracts prevent the employees of the particular company to not solicit any customer of the business by asking them to work personally for the employee. Its presence assures that the employee cannot use the client or any employee for their own work after they leave a certain job.
However, non-solicitation agreements put a stop to earn a living. There are certain circumstances when non-solicitation agreements are applicable. Here, we will acknowledge why companies use this agreement, the language used in the contracts, and under which circumstances it is enforceable.
Why Do You Use Non-solicitation Agreement?
Non-solicitation agreements can be signed at the beginning of a job as a separate agreement, or they could be signed in the middle of a job. These agreements are most common in service or sale businesses when there is a limited customer.
Non-solicitation agreements are used to restrict employees from soliciting both employees and customers after leaving the job. If a person works for a company that sells copper wires, it is understood that he would have spoken to the sellers of the specific product around the world.
If the person is offered a better opportunity and he moves to it, there will be restrictions in case he has signed a non-solicitation agreement with the previous company. The agreement would restrict from asking the new company to change their dealers since the individual is not working with them anymore.
Similarly, companies might ban passive or indirect solicitation, which implies that if an employee starts his own business, he cannot advertise it while leaving the office. These restrictions are used to prevent the loss of employees.
Another condition when a non-solicitation agreement can be used is to decide the IP ownership. It is better to make it clear that all copyrights, trademarks, patents, and trade secrets belonging to the company.
What Makes a Non-solicitation Agreement Enforceable?
Like any other restrictive clause, strict non-solicitation agreements are difficult to enforce within any organization. However, the scope of non-solicitation agreements is essential to be enforced. Here, we will discuss the aspects that make a non-solicitation agreement sample enforceable.
- Harmless to Employee
- Reasonable Time Period
- Trade Secrets
A non-solicitation agreement is enforceable only when the contract is not harmful to the employee for any cause. It includes a scenario where the company has made it impossible for the employee to earn a living by any other means. In such a case, the agreement would be nullified and unenforceable. However, the companies should avoid drafting a burdening agreement.
The non-solicitation agreement should involve a reasonable time period in order to be enforceable. The claim will be deemed by the court if the non-solicitation agreement has a very long span of time, which restricts the employee. This is because restricting any person for a very long time to grow their business with the people they know is likely to harm the person and his business.
One major reason why non-solicitation agreements can be enforced on employees is the involvement of trade secrets. Trade secrets involve the methods, proprietary information, operations, and instructions to make products. Soliciting work for another company can endanger the trade secret because it can be used to make products for another company.
Non-Solicitation Language in Contracts
A typical non-solicitation language in contracts between a business and its employees should follow the following instructions:
- The language of the agreement should define how long the employee must abide by the agreement. It should also discuss the time of employment as well as the time duration after he leaves the job.
- It should contain a pledge by the employee for not violating the rules and instructions on which he agreed upon. He must not break the rule as any kind of entity, i.e., as a salesperson, partner, or owner of a company.
- There should be restrictions in the main part that includes restrictions on the employee for selling any product to the company’s customer.
- It would involve the strict policy on recruiting anyone within the business environment to change their job or relationship with clients or company.
- It must show displeasure and restriction on soliciting or attempting to solicit any person who was an employee in the company for a certain time.
- The agreement should be made clear that the employee was granted enough time for consideration.
- The agreement should make it clear that the employee has agreed upon all the restrictions applied to him before he signs the contract.
Non-Solicitation Agreements vs. Non-Compete Agreements
Non-solicitation agreements and non-compete agreements are two different kinds of contracts that can be made within the business organization. Some companies require their employees to sign both agreements before joining the company. Both of them are considered similar but have differences. Here, we will acknowledge the differences between them.
- Non-solicitation Agreements
- Non-compete Agreements
Non-solicitation agreements are specific, and they prevent the departing employee from hiring the employees of the company in his business. These agreements have a certain duration of time and radius.
Moreover, the employee is not allowed to use the instructions or methods that his former company has been using. In this case, he might face serious penalties due to endangering the trade secret of the company.
This is a general sort of agreement in which the employee is not allowed to open any business in opposition to his company. This agreement is signed due to uncertainties of the company because their employees might jeopardize their methods and their secrets to open their own company.
There are time duration and area of restrictions mentioned in the contract. This means that the employee of a certain company is not eligible to open any company within a certain area for a time duration.
The article has concluded a detailed introduction about the non-solicitation agreement. This agreement is presented to the employee of the company at any time of his duty. He has to obey all the rules and satisfy the concerns of the company. These rules include the restriction on soliciting the workers of any company.
The employee is not allowed to advertise his business in the business environment. The article has differentiated the context of non-solicitation agreements and non-compete agreements. The language used in the agreement is also explained in detail. All of the aspects are thoroughly discussed in the article.