Non-Solicitations

The purpose of a non-solicitation agreement is usually to protect the customer list of a company from being used by their competitors. These lists are very valuable to business owners as most of them would have invested a huge amount of time, energy and resources into establishing and building relationships with their customers. It would be very detrimental for the company if their hard-won customers were to be solicited by their competitors.

Non-solicitation agreements are typically used in sales or service business when there is a small customer pool. However, even companies who have many customers may want a non-solicitation agreement if the products or services they sell are not unique and they compete mainly by price. This is because an employee well-versed in the company’s pricing schedule would have advantage in soliciting the company’s customers away.

A non-solicitation agreement is likely to be enforced if it does not prevent an employee from earning a living or unfairly restrict a competitor’s ability to hire employees or attract customers. To be enforceable, the agreement has to fulfill a few criteria. Firstly, the employer must have a valid business reason such as protecting an important customer list or a trade secret. Secondly, the legitimate interest must be worth protecting. For example, in the case of a customer list, the company must have spent time, energy and resources to establish it. Lastly, the agreement cannot prevent an employee, client or customer from moving to a competitor voluntarily.

The length of such an agreement generally depends on the terms agreed on by the employer and the employee. Most agreements typically last about a year.

They are two different legal entities. A non-compete agreement restricts employees from collaborating with competing companies and from working for a competitor in their next position. However, non-compete and non-solicitation agreements can both appear in the same employee contract.