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Is your company a strong force in the market?
When you’re successful, competitors will attempt to learn what makes your company outperform them at all costs. It’s for this reason that having employees sign a non-solicitation agreement is essential to protecting your share of the market.
Ensure that terminated or newly resigned employees don’t poach your customers or key employees for your competition. Here’s everything you need to know about non-solicitation agreements.
What is a Non-Solicitation Agreement?
A non-solicitation agreement, also known as non-compete agreements and non-disclosure agreements, is an employment contract where employees agree to not solicit customers for the benefit of a competitor upon resignation or termination. They typically limit where a former employee may work within a specific geographic region. Your non-solicitation agreements must be reasonable for them to remain enforceable.
When are Non-Solicitation Agreements Used?
Non-solicitation agreements are used when you want to prevent former company stakeholders from taking your competitive advantages over to a competitor. Typically, these provisions begin as soon as a non-solicitation agreement trigger occurs. Triggering events are in the form of a resignation, termination, or contract end date.
Non-solicitations are used across a vast number of employment situations. You generally use them if you offer employment to and hire employees. Understanding when to use them can be helpful as well.
Examples of when to use non-solicitation agreements include:
- Example 1 . Preventing legitimate business interest from soliciting employees
- Example 2 . Limiting how much employees can share about your company
- Example 3 . Prohibiting a former employee from soliciting your customers
- Example 4 . Protecting company information from independent contractors
As you can see, non-solicitation clauses are flexible and offer multiple applications. Therefore, you should consider which types of common documents have non-solicitation clauses. Doing so can help you avoid contractual overlap or conflict.
Read more about non-solicitation agreements here.
Common Documents with Non-Solicitation Clauses
Non-solicitation agreements allow for nuanced provisions. This level of flexibility and control will enable you to create the perfect agreement for the intended situation without being overly burdensome in terms of geographic restrictions and time. However, you may use the term non-solicitation agreement to refer to a broader set of contracts that prevent the soliciting of resources.
Common documents with non-solicitation clauses include:
Document 1. Non-Compete Agreements
Non-compete agreements prevent former employees from working for competitors. This type of agreement prevents them from taking your efficiencies and trade secrets to another organization. Not mitigating this leak of information over time can result in your competitors overtaking your market position.
Document 2. Non-Solicitation Agreements
You can use non-solicitation agreements as a standalone document or in combination with other unrestrictive and restrictive clauses. You should also take note that states may prohibit the use of non-solicitation agreements under state labor laws .
Document 3. Non-Disclosure Agreements
Non-disclosure agreements prevent employees from disclosing any internal company information to other businesses, competitors, vendors, and customers. This practice is an intelligent approach since competitors may use your weaknesses to their advantage.
Document 4. Non-Disparagement Agreement
Non-disparagement agreements explicitly prohibit former stakeholders, such as employees and vendors, from making negative public statements about your company. Harmful messages reduce the chances of a negative public image and may discourage libelous or slanderous comments from being made in the first place.
Document 5. Confidentiality Agreements
Confidentiality agreements are similar to non-disclosure agreements. The only difference is that they allow you to impose the restriction of sharing company information for a more extended period following company employment.
Document 6. Service Contracts
Sometimes employees or contractors will go on-site during services provided by a service provider. Service contracts will often protect against the customer poaching the employees with a non-solicitation clause. If the customer did poach the employee, then the service provider would risk losing the business and profit margin of providing the service.
Non-Solicitation Agreement Enforceability
In general, non-solicitation agreements are enforceable. However, they must meet specific guidelines for a court of law to uphold them. An employer cannot impose unnecessary restrictions upon the employee when they leave their positions.
Elements of reasonableness in a non-solicitation agreement include:
- For a valid business reason
- Needing to protect trade secrets
- Not using burdensome geographic restrictions
Some states generally prohibit the use of non-solicitation agreements. For example, it’s illegal to ask employees to sign a non-solicitation agreement in California. California employees are not subject to termination if they refuse to sign one or try to figure out how to get around non-solicitation agreements.
Key Terms in a Non-Solicitation Agreement
For your non-solicitation agreement to perform as intended, you must incorporate key terms and provisions. Leaving out a single section can result in a document that does not protect your legal rights. Ensure that you familiarize yourself with the key terms in a non-solicitation agreement.
Key terms in a non-solicitation agreement include:
- Contract introduction : Include party names and addresses and acknowledge the agreement on a specific date.
- Definitions : Define critical terms that you will use throughout your contract. This section makes your document easier to understand and may protect your legal rights.
- Exclusions : Set the guidelines surrounding what information is prohibited. You should also outline the geographic restrictions.
- Time periods : Non-solicitation agreements generally end with a specific period.
- Severability : Ensure that your non-solicitation agreement remains intact if one or more provisions are found to be unenforceable.
Your non-solicitation agreements may need to contain terms that are specialized for your industry or geographic location. You must also consider the legal implications and considerations associated with employees signing them. Ensure that you communicate these rules and guidelines with your HR department to ensure compliance and uniformity.
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Who Signs a Non-Solicitation Agreement?
The employee or independent contractor signs a non-solicitation agreement. Employers will draft their contracts with employment lawyers and present them to employees for signing. Employees are permitted to review non-solicitation and employment agreements with their legal counsel also.
Get Help with Non-Solicitation Agreement
All types of employment are well-suited for the use of non-solicitation agreements. However, you should get help with non-solicitation agreements by speaking with contract lawyers . They have the experience and knowledge you want when crafting a personalized and protective document for your organization.
Customized Non-Solicitation Agreements
No two contracts are created alike, which means that a non-solicitation that worked well for another organization will not perform the same way for yours. The only way to ensure that your non-solicitation agreements are compliant and enforceable is by discussing your options with contract lawyers.
Benefits of Professional Representation
Attorneys are a tremendous source of support throughout your legal drafting endeavors. They have an innate sense to spot issues and address them immediately. You can also count on them to understand the laws for your geographic region implicitly.
In addition to guidance, working with contract lawyers offer the following benefits:
- Experience with clients in similar circumstances
- Unmatched negotiation tactics against other parties
- Ability to field communications as a “go-between”
- Documents communications and developments routinely
- Accept responsibility for the performance of your agreement
Contract lawyers are more affordable than business owners generally realize. Laws involving contracts are precise, and attorneys have responded by making their services more efficient. You may walk away with a contract for a lot less than you think!
As you can see, there is no comparing the experience of working with a contract lawyer instead of going on your own. Instead of leaving yourself exposed to unwanted or unintended legal consequences, make the investment in yourself and your company by having a contract lawyer professionally draft and prepare your non-solicitation agreements.
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