Why You Need a Non Solicitation Agreement with Your Employees
For over 30 years, the attorneys at Hale Ball have been involved in the drafting, review, enforcement and defense of covenants not to compete, covenants not to solicit customers or clients, and covenants not to solicit company employees. During that time, the law governing such documents has changed dramatically, with many of the changes coming in the most recent years.
Covenants not to compete are agreements with your employees that provide that, while the employees are working for you, and for a period of time after they leave, they cannot compete with your business. These types of agreements attempt to prevent an employee from working within the industry in which the employer is involved. Because covenants not to compete attempt to exclude employees from working in an industry, they can have dramatic negative effects on an employee's ability to earn a living. As such, courts are less likely to enforce them unless they are very carefully drafted.
The courts provide some more leeway in respect to covenants not Solicit clients or customers. Covenants not to solicit customers are seen by the courts as being more limited in scope and, if properly drafted, achieve a legitimate purpose of protecting an employer's most valuable asset, its customer base. A covenant not to solicit will prevent an employee from providing competing products or services to an employer's client base, but will allow the employee to compete in the industry as to all other potential clients.
Covenants not to solicit employees are likewise seen more favorably by the courts because the intent of the covenant is to allow an employer to protect its other valuable asset, its employees. The covenant also does not prevent an employee from competing against the employer. Rather, it merely prevents the employee from being able to raid an employer's base of trained employees.
Although covenants not to solicit, and covenants not to compete, are generally more likely to be held to be enforceable by the courts, recent cases have placed important restrictions on how they are to be drafted. Covenants not to solicit that were believed to be enforceable just a few years ago are now being struck down as too broad.
If you goal is to protect your assets, ie, your customer base and your employee base, you should strongly consider a properly drafted covenant not to solicit customers or client, and a covenant not to solicit employees. Please feel free to call Robert Baumgartner or Scott Pohlman, 703-591-4900 to discuss this further.
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