When Non-Solicitation Agreements Are Enforceable
Non-solicitation agreements are commonplace in many industries. These types of contracts typically prevent employees from soliciting customers of a business or asking employees of a business to work for their own company. Since non-solicitation agreements prevent people from freely earning a living, they are only enforced in certain circumstances. However, there are a number of situations when non-solicitation agreements are enforceable.
Scope of Non-Solicitation Agreements
One situation when non-solicitation agreements are enforceable is when the contract is narrowly drafted so that it is no greater than needed to protect a business. For instance, a company would be warranted in asking that workers not solicit customers that the employee meets during the course of their employment. However, a business would not be warranted in asking that employees not solicit any clients, whether acquired during the course of employment or elsewhere. Since the scope of non-solicitation agreements are very important to the enforceability of these contracts, it pays to speak with an experienced attorney to ensure that these contracts are drafted well.
Harm to the Employee
Another time when non-solicitation agreements are enforceable is when the contract does not unduly harm the employee. For instance, if a non-solicitation agreement makes it impossible for an employee to earn a living in their chosen field, it is likely that such a contract will be deemed unenforceable. However, if an employee is merely incidentally affected by a non-solicitation agreement, the contract will be more likely to be enforceable. As a result, attorneys should be wary of drafting a burdensome non-solicitation agreement that has a higher likelihood of being found unenforceable.
Harm to the Public
One important factor affecting when non-solicitation agreements are enforceable is the potential harm to the public by a given non-solicitation agreement. Courts will only enforce non-solicitation agreements if people will not be harmed in the process. For instance, there may be a situation in the medical field when enforcing a non-solicitation agreement may make it more difficult for patients to find quality care. In these circumstances, non-solicitation agreements will likely not be enforced. However, in industries that have little impact on the public, it is more common that non-solicitation agreements will be enforced. The industry at issue in a non-solicitation agreement will have a major impact on whether the contract is enforceable.
Non-Solicitation of Employees
It is common for non-solicitation agreements to require employees to refrain from soliciting other employees to start another company. Business owners are justifiably fearful that they would lose goodwill and time spent training employees if those workers solicit other employees when starting a new business. Courts are more likely to enforce this type of agreement than agreements that prohibit the solicitation of clients. This is because preventing workers from soliciting employees is less restrictive than preventing workers from soliciting clients, since this imposes less hardships to their ability to run a business. In any case, agreements that workers refrain from soliciting employees of a business is another situation when non-solicitation agreements are enforceable.
Time Period
Similar to non-compete agreements, the time periods involved in non-solicitation agreements are important to determining when non-solicitation agreements are enforceable. Courts will deem non-solicitation agreements to be unduly burdensome if they involve time periods for many years. This is because preventing people from growing their business by soliciting former clients and employees for many years is more likely to harm business owners and the public. Whether a time period in a non-solicitation agreement is too long is a fact-sensitive inquiry. Usually an agreement with a time period of one year is appropriate, but time periods for ten years might be unduly burdensome. A skilled attorney can conduct research and see when courts have upheld past non-solicitation agreements to determine what might be an appropriate time period for a given agreement.
Trade Secrets
One important situation when non-solicitation agreements are enforceable is when trade secrets are involved. Courts understand that companies have a legitimate interest in protecting their trade secrets, which include their methods, operations of their business, instructions on how to make their products, and other proprietary information. Soliciting employees to work for another company can jeopardize trade secrets, since those employees might apply the information they learned to another job. What constitutes a trade secret can be different in various contexts, so it pays to speak with an experienced attorney who can research which information is covered by this doctrine.
Type of Field
The kind of work a business does will also have a major impact on when non-solicitation agreements are enforceable. For instance, non-solicitation agreements are more likely to be enforced in fields where professionals apply years of training and education to perfect their skills. However, non-solicitation agreements are less likely to be enforced in fields that do not require specialized skills. In these fields, there is not as much of a need to protect the interests of a business, and as a result, non-solicitation agreements are less likely to be enforced.
Because of all the nuances associated with non-solicitation agreements, it often pays to speak with an experienced attorney when drafting such contracts. Using form agreements that do not cater to the requirements of a specific state might make a non-solicitation agreement more likely to be found unenforceable by a court. If you are looking for an experienced New York and New Jersey business attorney to review a non-solicitation agreement or handle any other legal issue, please feel free to contact The Rothman Law Firm to request a free consultation.