Originally published in the ABA Journal of Labor & Employment Law - Volume 28, Number 1, Fall 2012.
I. Introduction -
"I didn't solicit them; they approached me." That is a common defense invoked by someone accused of violating a non-solicitation covenant. In addition to requiring employees to be bound by non-compete and non-disclosure covenants, employers routinely require employees to be bound by covenants precluding them from soliciting customers or co-workers. As courts have become increasingly reluctant to enforce non-compete provisions, the scope and enforceability of non-solicitation provisions, in turn, have become increasingly significant.
Litigants frequently debate whether a former employee has breached a non solicitation covenant by accepting business from a customer, or by hiring a former co-worker, in instances when the former employee does not initiate the contact. Often, an agreement will prohibit employees from "soliciting" customers or co-workers without defining the term "solicit." In such instances, courts typically will defer to the common meaning of the term "solicit" as defined in dictionaries, and will take into account public policy considerations. Employers may avoid the potential for uncertainty by defining the term "solicit" or by specifying in the agreement that an employee may not accept business from the employer's customers or hire the employer's other employees. However, courts in many jurisdictions will not enforce such broad restrictions on free enterprise.
Part II of this article describes cases from across the country in which courts have enforced non-solicitation agreements when former employees accepted business from prior customers. Part III discusses cases in which the non solicitation agreements at issue did not specifically preclude the acceptance of business from prior customers, and courts' refusals to construe the agreements as including such a prohibition. In Part IV, this article provides cases in which courts refused to enforce non-solicitation covenants that did in fact prohibit former employees from accepting business from former customers. Part V distinguishes between former employees actively soliciting business from prior customers and former employees that receive such business without solicitation, and analyzes the legal ramifications for such distinctions. Part VI goes outside of the solicitation of business context to an analysis of cases in which the agreements at issue preclude the solicitation of former co-workers. Part VII looks at agreements that outright prohibit former employees from hiring a former employer's employees. Lastly, Part VIII concludes the article.
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Topics: Former Employee, Non-Compete Agreements, Non-Solicitation Agreements, Restrictive Covenants, Solicitation Provisions
Commercial Law & Contracts Updates, Labor & Employment Law Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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