Non-solicitation agreements are a common type of restrictive covenant included in many employment agreements. These provisions, which may exist within the employment agreement or as a stand-alone contract, prohibit current and former employees from soliciting clients or workers associated with the employer. The principle behind non-solicitation agreements is that employers do not want to have to worry about losing clients and/or workers they spent money on gathering and cultivating.
Non-Solicitation Agreements Must be Reasonable to be Legally Enforceable
The general requirements for non-solicitation agreements and their enforceability in court are similar to the ones for non-compete agreements, another common type of employment-based restrictive covenant. Ultimately, non-solicitation agreements are enforceable in New York if they are reasonable with respect to time and geographic area, and if they serve a legitimate business interest.
- Time — Employers may implement a reasonable duration of time in non-solicitation agreements. Some courts have deemed 1–2 years after the worker has left the employer to be reasonable. The longer the duration of time, the more likely the agreement may be deemed unreasonable and unenforceable.
- Geographic area — Some courts have enforced non-solicitation agreements which limit the geographic area to where the employer does business. Interesting questions arise when a company does business nationally or globally, or solely through the internet. Non-solicitation provisions in these contexts should be heavily scrutinized.
Consideration—the Key to Any Effective Contract
The fundamental principle of almost any contract is consideration, which means all parties to the agreement sacrifice and gain something by agreeing to the contract. An employer gains security over internal and external stakeholders by having employees sign a non-solicitation agreement.
What do employees gain? Besides a paycheck and various benefits, employees who sign a non-solicitation agreement often obtain training and new skills. Judges will look closely at the advantages each party gets when deciding on the enforceability of a non-solicitation agreement.
Gray Areas
In any case, the court will analyze the unique facts and circumstances when determining the enforceability of a non-solicitation agreement. Time durations which are acceptable for one industry may not be reasonable for another line of business. The same principle applies to geographic scope.
One area that often causes disagreements is the manner of any communications between the current or former worker and the employer’s clients or employees. Non-solicitation agreements do not prohibit any correspondence between the worker and the worker’s former clients or coworkers.
However, the worker might run afoul if he or she attempts to gain business from former clients that is similar to the employer’s line of business. Also, whether or not a worker runs afoul of a non-solicitation agreement depends on which party initiated contact.
Canales PLLC litigates matters involving claims of violations of non-solicitation agreements and also provides counsel to both employers and employees on this always-evolving and fact-specific area of the law.
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