Restrictive covenants are a common inclusion in modern employment contracts. Businesses require that new hires and those receiving promotions make certain concessions in exchange for employment opportunities.
Many companies have workers sign non-compete agreements that prevent them from starting a business in the same industry or taking a job with a competitor. Employers also frequently use non-disclosure agreements to protect trade secrets and the reputation of the company.
Sometimes, employers may want to consider using another type of restrictive covenant to limit the harm a worker could cause the company after leaving their position with the business. Non-solicitation agreements are a useful type of restrictive covenant that can help companies avoid unfair competition and the misuse of non-public information, such as employee rosters and client lists.
What protection does a non-solicitation agreement offer?
As the name implies, a non-solicitation agreement prohibits an employee from attempting to solicit others for business purposes in a way that could harm their employer. There are two primary applications of non-solicitation agreements.
One has to do with customers or clients. Non-solicitation agreements can prohibit current or former employees from using relationships they establish while working at the company for personal gain. They can’t reach out to contacts at other businesses or copy a client list before leaving their job to try to do business with those clients or customers in the future.
The other potential use of a non-solicitation agreement is to protect company talent. When one worker from a company gets a job with a new business, they might reach out to their former teammates or subordinates to see if they want to come work for that company as well.
Former employees who start their own businesses or professional practices might also attempt to lure the best and brightest workers away from the company that previously employed them. Non-solicitation agreements can prohibit employees from taking business opportunities or workers on whom the company relies.
In addition to including the right terms in a non-solicitation agreement, employers must also be ready to proactively enforce their employment contracts should infringement occur. Developing robust organizational protections through comprehensive contracts can help reduce risks associated with hiring new talent.
