Last fall, BBU published a blog post on non-competition agreements. This post addresses how your business may benefit from a non-solicitation agreement.
If your business hires particularly skilled employees, or through the term of their employment they will acquire crucial information about how your business operates and thrives, you may have given some thought to utilizing a non-compete agreement. You may not have given as much thought to using a non-solicitation agreement. Each agreement has its own nuances, but as long as your goal is to protect your company’s trade secrets, we have found less resistance from the courts in enforcing non-solicitation agreements.
The Difference Between Competition and Solicitation
At their core, both non-compete and non-solicitation agreements restrict someone’s ability to earn a living, so courts rightfully look at them with a critical eye. Colorado and Federal laws specifically address these agreements.
A non-compete agreement does what it sounds like: It prevents employees from leaving your company, and then taking employment (or working for themselves) in the same or similar field for a specific period of time.
Non-solicitation agreements are somewhat different. The non-solicitation agreement can makes certain clients, customers, and even employees of your business off-limits to your former employee. However, they do not prevent a former employee from working in the same field, or even compete with a former employer.
Courts often scrutinize agreements that prohibit soliciting your clients away from your business when the employee leaves a bit more than those that restrict soliciting employees. Both forms of non-solicit agreements must be carefully drafted to protect valuable and unique confidential information or trade secrets that your company has worked hard to develop.
Drafting Non-Solicitation Agreements
Businesses seeking to prohibit employees from soliciting customers should do their best to make sure that their non-solicitation agreement does not broadly include everyone in the world, but rather, just the customers of your business. Your company must also consider what information the former employee has learned about your customers, including the items they purchase, the prices they pay and they way they do business.
Non-solicitation of your business’ current employees creates different legal issues. A current employee of your company has the right to leave your employment and work where they choose. Of course, subject to the promises that the current employee has made with you.
A many circumstances, a former employee who has agreed to not solicit your employees cannot induce your current employees to leave your business and come to the former employee’s new business. You must always consider the confidentiality promises both the former employee and the current employee have made to your company.
Passive solicitation is usually when your employees contact the former employee on their own. Restrictions will prohibit the former employee from hiring your current employees, even when the idea to leave your business did not originate with the former employee.
Like non-compete agreements, enforceable non-solicitation agreements are complex and must be carefully drafted to protect the confidential and trade secret information your company has worked hard to develop.
The Colorado employment and business law attorneys at Ball & Barry law are here to help you protect your business assets and clients. We also can help former employees who are faced with an unfair or overreaching non-solicitation agreement. If you’d like to learn more about non-solicitation agreements in Colorado, let’s talk. Call BBU at (720) 439-2530 or send us a message today.