For example, If Jill signed a non-compete agreement, she might have to agree not to sell employee benefits materials to any other business for two years and within a radius of 50 miles. NYU Law School. 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. Even if there are many customers for a company’s products, it might want a nonsolicitation agreement if it sells something that isn’t unique and competes primarily on price. All three attempt to restrict or force someone not to do something, either during the time of employment or after. What's the difference? Let's take the case of Jill Jones (not a real person or company), who worked as a marketing manager for Kartun Kopies LLC, which makes and sells employee benefits materials. What if a former employee runs into a former customer at the grocery store and hands out a business card? The two agreements sound similar but they are different. A non-compete agreement is more general. In a restrictive covenant, the signer gives the agreement not to solicit in return for a consideration from the other party. Executive acknowledges that because of Executive’s position in the Company, Executive will have access to material intellectual property and confidential information.During the term of Executive’s employment and for one year thereafter, in addition to Executive’s other obligations hereunder or under the Proprietary Information Agreement… Consideration is the concept that each party to the contract must give something to the other. Consult with an experienced employment lawyer to find out how to proceed. However, some companies include a nonsolicitation agreement in the stack of paperwork it asks new hires to sign. A nonsolicitation agreement prevents either of these situations from happening legally. The court said that since there was no direct solicitation of clients, the agreement hadn't been breached. A non-solicitation agreement, on the other hand, prohibits those signing from reaching out to your clients, employees, and other interested parties and asking them to do business with them. PandaTip: A non-solicitation agreement is vital if an employee has access to systems, processes, or other intellectual property belonging to the employer. What Should Be Included in a Work for Hire Agreement? What to Expect from a Wrongful Termination Settlement, Common Restrictive Covenants in Business Contracts, 7 Things To Know Before Taking a Case to Court, Important Terms to Include in an Independent Contractor Agreement. Such an agreement need not be … An employer that wants to protect only its customer list, for example, might use a standalone nonsolicitation agreement. Solicitation is just a fancy word for asking for something. A nonsolicitation agreement is a contract in which an employee agrees not to solicit a company’s clients or customers, for his or her own benefit or for the benefit of a competitor, after leaving the company. If an employee leaves the company, they could easily start a competing business by hiring away your staff and taking your customers. An employee who is leaving your company calls a client and says, "I'm leaving XYZ Industries. Pursuing or defending a claim for violation of a non-compete or non-solicitation ag… First of all, state law may not allow an employer to require employees to sign a nonsolicitation agreement. "Are Restrictive Covenants Enforceable in California? This solicitation of employees might also be required in the case of the sale of a business. If he has signed a non-solicitation agreement, he may not be able to do that without risking a lawsuit. Non-solicitation agreements prohibit individuals or companies from trying to go after someone or something. Jill might have to also sign a non-solicitation agreement agreeing not to take Kartun's employees or their customers for five years and within a radius of 400 miles. A non-solicitation agreement prevents employees from accessing and using valuable information – namely client/customer lists – for their own benefit after leaving the company. Since the scope of non-solicitation ag… "Non-Solicitation and Non-Compete Agreement." He has a great administrative assistant, and he tries to solicit her to come with him. To be enforceable, they must have reasonable limits in terms of time, area, and types of work. It can mean a variety of things. But it doesn’t have to be. An experienced local lawyer can help you figure out whether the agreement is legal – and what you should do if an employer makes signing it a condition of employment. EXECUTION COPY . If the purpose of a nonsolicitation agreement is to protect the company’s customer list, the company must have spent time, energy, and money establishing its client database – and it must contain information that isn’t readily available to the general public. These agreements are sometimes referred to as “anti-raiding” agreements. "Chris, why don't you call Sally and ask if she wants to come with me to my new company?". There must be a loss to have damages. Joe is leaving his job at XYZ company. Salespeople, personal services employees, and brokers have a difficult situation if they leave a company. We have also successfully defended employees against such claims. This restriction makes it almost impossible to advertise a new business without risking the violation of a non-solicitation agreement. If anyone could figure out who a company’s customers or clients are just by looking in the phone book, a court probably won’t protect the customer list. 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