A non-solicitation provision forbids people from pursuing, or soliciting, their current or former employer's clientele or their current employees.
These provisions are common elements in employment contracts, as well as in employment separation agreements. They often go hand-in-hand with non-compete agreements, though non-solicitation provisions are narrower in scope: They only prohibit solicitation, a small subset of competitive behavior. Since a new Massachusetts law went into effect and made it more difficult to enforce non-compete agreements in 2018, more and more businesses are turning to non-solicitation agreements to protect themselves.
Importantly, non-solicitation provisions walk a fine line between the interests of the business in protecting its book of clients and its staff, on the one hand, and the ability of former employees to use their industry knowledge and expertise for their own gain, on the other.
The employment contract litigation lawyers at the Katz Law Group can provide quality legal representation, regardless of which side of the dispute you are on.
Non-Solicitation Provisions Limit Employees and Protect Employers
Non-solicitation provisions exist to protect employers by limiting what employees can do during and after their time at their job. If employees could take all of a business' clients or its staff with them whenever they decided to start a competing company, people would think twice about starting their own business, in the first place.
However, any limitation on a current or former employee's behavior is a serious matter. If employers had the power to punish a former employee for interacting with a former client in any way, whatsoever, it would lead to absurd results: Employees could get in trouble if one of their former boss' customers or one of their old coworkers goes to the same gym. Additionally, working at a job leads to expertise in the industry. If employees were restricted from soliciting certain potential customers, it would undermine their value to future employers and hamstring their success in their chosen profession.
Requirements for Non-Solicitation Agreements in Massachusetts
Massachusetts law aims for a compromise between these competing interests. Courts in the state will enforce non-solicitation agreements if:
- The employee receives something in exchange for their agreement to refrain from soliciting coworkers or clients, known as consideration, and
- The non-solicitation provision is a reasonable way to protect a legitimate business interest.
Under Massachusetts contract law, consideration is an exchange of value. For an agreement to be a binding contract, both sides have to give something and both sides have to receive something.
For non-solicitation agreements, the employer gets the employee to promise not to solicit clients or workers from the employer. When the agreement is a part of the hiring process – as many of them are – the employee gets the job in return for making this promise. If the non-solicitation agreement is struck at a later time, though, the employer may have to provide additional consideration to make it a valid agreement.
In most cases, a lack of consideration is not going to make a non-solicitation agreement unenforceable. However, it can happen.
A Reasonable Way to Protect a Legitimate Business Interest
Any non-solicitation agreement that is signed will only be enforced by a Massachusetts court if it is a reasonable way to protect a legitimate interest of the business. Businesses cannot create non-solicitation agreements that are so overbroad that their employees could never get another job.
For example, non-solicitation agreements may be enforced when they protect a business from overt attempts to coerce its clients into signing with a competitor. However, they are unlikely to be enforced by a court when a business tries to use non-solicitation agreements to stamp out lawful or ordinary business competition from their former employees.
Acceptance of Business Versus Direct or Indirect Solicitation
A crucial issue with non-solicitation provisions is what types of conduct can amount to a “solicitation.” There are some clear-cut cases:
- Dwight gets fired from his job as a paper salesman and immediately calls all of his clients to urge them to follow him to a new company he was going to create. This is nearly always going to be considered a solicitation.
- Dwight gets fired and gets a new job at a competing paper company. While there, one of his old clients leaves Dwight's old company and signs with his new one, though Dwight had no part to play in the switch. This is almost never going to be considered a solicitation.
The first situation is a direct solicitation: The employee is actively seeking to solicit the former employer's business with a direct communication. These are very likely to violate a valid non-solicitation agreement.
Solicitations can be indirect, too, though: Employees can violate a non-solicitation agreement with indirect communication by, for example, giving their new boss a list of their old employer's clients.
When a communication becomes a solicitation, though, is often murky and very fact-dependent – even the field of business can impact whether a particular action violates a non-solicitation agreement. However, it is not necessarily a solicitation every time a former employee accepts business from a prior employer's client.
Having an experienced lawyer on your side to prove your case can make a huge difference.
What Can Happen When a Non-Solicitation Provision is Violated?
If a valid non-solicitation agreement is violated, the results can be severe. The aggrieved former employer can pursue:
- A temporary restraining order, which forbids the former employee from continuing to solicit clients or staffers, and
Those damages can amount to a considerable sum. Many non-solicitation agreements specify what types of damages will be available to the employer, if the agreement is broken. They may even set a dollar amount for each violation – a stipulation known as liquidated damages.
However, if the employer can prove to the court that the solicitation cost them a certain amount of money in lost business, they can pursue that amount in court by filing a lawsuit for breach of contract.
Employment Contract Litigation Lawyers at the Katz Law Group
The business and contract litigation attorneys at the Katz Law Group can help workers or businesses protect their interests and enforce their rights in non-solicitation disputes. Contact them online or call their law office at (508) 480-8202 for legal help in Worcester, Framingham, Marlborough, or the rest of Massachusetts.