Employment contracts typically need to include many different protections for an employer and clear expectations for both parties. Particularly when organizations hire professionals for executive roles or other positions where employees may have access to intellectual property and proprietary company information, restrictive covenants integrated into the contract can be crucial for the protection of the business.
For many years, noncompete agreements have been a staple in many employment contracts. However, some companies have started moving away from noncompete agreements because of changes in state and federal statutes. Other restrictive covenants, including nondisclosure agreements, can often help protect companies in the same way that non-compete agreements do. Non-solicitation agreements, in particular, have become increasingly popular among employers when they are hiring new workers or moving existing staff members into new positions.
What is the purpose of a non-solicitation agreement?
There are two different goals that companies can achieve with non-solicitation agreements. Oftentimes, the main concern governing a non-solicitation agreement is the prevention of client or customer poaching. Companies want to prevent their current workers from trying to solicit clients or customers to do business with them after they leave the organization. Whether they go to work for a competitor or start a competing business, their non-solicitation agreement prevents them from reaching out to parties that do business with their former employer.
Other times, the main goal of a non-solicitation agreement might be to protect the talent that a company has already recruited. A worker starting their own company may try to hire their former coworkers or subordinates. They could also receive a referral bonus if their new employer hires someone they recommend.
What starts as one employee leaving the sales department or accounting team could snowball into the loss of many of the most important workers in a single department or across multiple different departments within the company. Non-solicitation agreements can help companies avoid scenarios in which a former employee harms the company’s future operations by trying to do business with customers or seeking to lure away other people who work for that organization.
Adding the right terms to employment contracts can help companies mitigate the risk that comes with each new hire or promotion. Organizations also need to be ready to enforce restrictive covenants if their workers violate their employment contracts after leaving their positions with a company.
