Non-Solicitation Clause - Explained
What is a Non-Solicitation Clause?
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What is a Non-Solicitation Agreement?
It is an agreement typically signed between an employer and employee that restricts the employee from soliciting the clients or other employees after leaving the current job. The employees of a company have access to the client list of the company. After leaving the job, an employee may approach the clients of his or her former employer on behalf of his or her new employee or his or her own business. The employee may also approach the other employees for working with him or her in the new business. The non-solicitation agreement restricts both of these. A non-solicitation agreement may be a stand-alone agreement, or it may be a clause included in broad another agreement such as employee agreement or independent contractor agreement.
Back To: HUMAN RESOURCES, EMPLOYMENT, & LABOR
What does a Non-Solicitation Clause Include?
There are three types of restrictive covenants, non-solicitation agreements, non-compete agreements, and non-disclosure agreements. All of these restricts the employees to use any information or connection gained from the employer for personal benefit. A company doesn't want their employees to leave their company and join a competitor. If one employee gets a better offer from a competitor, the employee might want to take fellow efficient employees with them. This happens especially when a high ranked official decides to leave the company. Companies restrict this scope with a non-solicitation agreement. If the employee breach this contract, a lawsuit can be filed against the employee. For example, Nikki decides to leave her present company X in order to join another company Y. John works under Nikki and Nikki knows John is efficient in his works. Nikki might want to approach John to leave company X and join Y with Nikki. If there is a non-solicitation agreement is in place Nikki wont be able to take John with her in the new company. Non-solicitation can also be included in the sale of a business agreement. Catherine sells her company to X enterprises. Catherine might want to take some of her efficient staffs with her to work in her new venture. With a non-solicitation agreement in place, this scope is restricted. Similarly, the companies do not want to lose out their clients to the competitors. If the leaving employee has the access to the client list, they employee might solicit those clients on behalf of the new company. The non-solicitation agreement prevents this by putting the restriction on the employee. The law concerning the non-solicitation agreement varies from one state to another. The court decides from case to case if the agreement is breached by the employee. The law of California says the restrictive covenants are unenforceable unless it involves divulgence of trade secrets.
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