A non-solicitation agreement is a contract that prohibits an employee from soliciting a company`s clients or customers for a certain period of time after leaving the company. The agreement is meant to protect a company`s intellectual property, confidential information, and client list from being poached by ex-employees who might want to start up a competing business.
However, non-solicitation agreements are not always enforceable and can be challenged in court if they are considered overly broad or unreasonable. Here are some guidelines to create a reasonable non-solicitation agreement:
1. Time Limitation: The agreement should clearly specify the length of time for which the employee is not allowed to solicit the company`s clients. Typically, non-solicitation agreements may last for six months to one year.
2. Geographic Limitation: The agreement should also specify the geographic areas in which the employee is prohibited from soliciting clients. It`s important to consider the company`s target market and where its clients are mainly located.
3. Scope of the Agreement: The agreement should clearly define what constitutes solicitation. It`s essential to specify that the prohibited activity includes approaching the company`s clients directly or indirectly, using any means of communication.
4. Legitimate Business Interest: The agreement must have a valid business interest that it seeks to protect, such as confidential information, trade secrets, and customer goodwill. The non-solicitation agreement should be proportional to this interest.
5. Reasonable Compensation: Consider offering reasonable compensation to an employee who is subject to a non-solicitation agreement. Some companies may pay a bonus or provide extra job security for signing the agreement.
In conclusion, a reasonable non-solicitation agreement should have limitations that are not overly broad, but instead, in line with the legitimate business interests of the company. By doing so, it can be an effective tool to protect a business from ex-employees poaching clients or customers, while still being enforceable in court.
