Those who were once your best allies can become your worst enemies in the business world. Employees understand the business and know customers perfectly well.
This combination makes them quite dangerous when the employer fires them or quits. It’s because former employees can use the knowledge from the company somewhere else. Additionally, former employees can take some of the company’s customers.
Therefore, companies use non-solicitation agreements to prevent losing clients’ at the hands of former employees.
As an employee, you must be wondering whether it’s possible to escape a non-solicitation agreement. The article has more information about the non-solicitation agreement and begins by answering the question.
How To Get Around Non-Solicitation Agreements
Non-solicitation agreements pop up in various contexts like promissory note agreements, training agreements, etc.
The agreement is usually important to your employer but might haunt you years later when you decide to switch firms.
Here are the general suggestions on how to escape the non-solicitation agreement.
1. Don’t Sign
The first rule in employment is you should never sign anything from your employer blindly. As far as the agreements go, keenly read the entire document.
After reading it, you’ll be able to decipher whether the conditions are reasonable to your job title.
Larger producers can easily refuse to sign a non-solicitation agreement. However, trainees or low producers can’t openly reject the agreement. But you can ignore signing the agreement and hope that the company doesn’t pick it.
Funny enough, many unsigned employment agreements go unnoticed by companies.
2. Turn Clients into Friends
Amazingly the court can’t prevent you from speaking to friends or people you routinely come across in your personal life. Social relationships and community activities can integrate your client base into your personal life. This way, you’ll be able to be in touch with your clients without raising an eyebrow.
If the clients decide to follow you to your new firm, you’ll be able to prove there was no solicitation.
3. Invest in Your Business
The courts won’t spare you if you steal data from the company before leaving. However, it’s a common practice in many industries.
Instead, you can be different from the crowd. Buy a contact-management software and home computer and then maintain a database from home.
4. Carve Out Pre-existing Relationships
It’s particularly a wise move when you are always switching firms. You should add a rule in any non-solicitation agreement.
The rule should state that the agreement does apply to clients you took or served before joining the firm.
Remember always to keep evidence of your prior contact base and clients.
5. Build Your Book Independently
Some companies require employees to sign the non-consolidation agreement before assigning them accounts.
In such situations, it can be tricky to pass up these accounts in the short run. However, you’ll be able to build and preserve your career in the long run if you decide to forego handouts.
6. Require “For Cause” Termination as The Trigger
Most firms have non-solicitation agreements that apply regardless of reasons for leaving the firm.
As an employee, always insist on the non-solicitation agreement on specific events. For example, you voluntarily terminate the contract when the company involuntarily terminates.
Therefore, if the firm fires you, you’ll be able to argue that the agreement isn’t effective. That’s because there was no termination “cause.”
If you decide to terminate the contract because of poor working conditions, you can argue that the termination was involuntary.
7. Never Treat Clients as Trade Secrets
Avoid the notion of business and personal life by doing business with friends and turning your customers into friends.
You can keep your holiday card lists and phone book as your home office. Remember to intermingle your clients’ names with friends and family.
In case of a job location change, you can inform your holiday card list. The court is less likely to prosecute you if you use the holiday list than a purely business list.
What Is A Non-Solicitation Agreement?
The non-solicitation agreement is simply a contract. It’s usually between the employer (firm or company) and an employee.
The agreement prevents the employee from soliciting the business customers after leaving employment.
Therefore, an employee must agree that they’ll not solicit clients for a certain period after leaving the job.
When it comes to the law, the word “solicit” has a broad meaning. But generally, it means not contacting clients to persuade them to do business with a new, competing, or different firm.
The agreement is so valuable to many businesses. It’s because businesses spend resources to create a customer base and list. They heavily invest in their assets to keep their customer list confidential.
Thus most employers try to prevent employees from accessing the customer list. Here is where the non-solicitation agreements come in handy. Although the agreements aren’t always enforceable, generally, they should satisfy both parties.
When it comes to a non-solicitation agreement, the employer must have a legitimate business interest. It can protect confidential information, business trade secrets, and existing client relationships.
In addition, the agreement should be reasonable in scope and duration. The scope is simply the geographic area it covers, such as a county. At the same time, duration is the time amount it covers, like one year, etc.
The non-solicitation agreement will be more effective if it passes the two-part tests above. However, note that its effectiveness also depends on certain circumstances and facts of the industry and business.
As an employee, always go through the agreement, and in case of any disputes, don’t sign. Instead, seek advice from a legal professional.
When Do Businesses Use Non-Solicitation Agreements
Generally, non-solicitation agreements are common in sales or service businesses. It’s more common in businesses with a limited customer pool.
For example, a company specifically focuses on providing services and parts to an expensive model. Such a company can’t go around creating new business and only depends on those who own that vehicle.
Many companies that sell unique products that compete primarily on price have non-solicitation agreements. In such a situation, employees who know the pricing schedule have an advantage.
Therefore, they can easily solicit customers since they understand how sweet the offer should be to woo them away.
What To Do If Asked To Sign The Non-Solicitation Agreement?
If your employer requires that you sign the agreement, read it keenly. Talk to your lawyer if you don’t understand the agreement or feel it’s so extreme.
The rules of the non-solicitation agreement are always changing, and the lawyer will surely inform you.
However, pick an experienced lawyer since they are more effective. The lawyer will help you find out whether the agreement is legal. In addition, they’ll guide you on the steps to take if the agreement is a condition of employment.
However, note that certain states, such as California, massively protect employees’ rights. Therefore, in such places, any company that forces you to sign a non-consolidation agreement is a red flag. As mentioned, seek professional guidance from an experienced employment lawyer.
Note that any employer that forces you to sign a non-solicitation agreement to get or keep a job is subject to legal liability. A lawyer will help you figure out the various available options.
Common Documents With Non-Solicitation Clauses
The non-solicitation agreement offers some protection to businesses. Today companies make flexible agreements that perform the specific function without being over burdensome to the employees. Here are some of the popular documents that include the non-solicitation clauses.
1. Non-Compete Agreements
This agreement prevents former employees from joining competitors. With the agreement, the employee can’t trade the company’s trade secrets and efficiencies. If you don’t deal with the information leak, your competitors will overtake your market position.
2. Non-Solicitation Agreements
The non-solicitation agreements can be a standalone documents. Alternatively, it can come with other restrictive and unrestrictive clauses. However, some states prohibit using these agreements under state labor laws.
3. Non-Disparagement Agreements
The agreement explicitly prohibits employees from making any negative statements about former businesses. Harmful messages will give the company a negative public image, leading to the loss of customers.
4. Confidentially Agreements
This agreement has the same features as non-disclosure agreements. The only major difference is the restrictions on sharing the company information are longer.
5. Non-Disclosure Agreements
The agreement prevents the employees from disclosing internal business information to their competitors. The agreement is intelligent since competitors can easily use your weakness.
You need to know how to get around non-solicitation agreements to avoid being sued by an employer. The non-solicitation agreement can be present in several employment contracts. It can include employment contracts such as employment letters and offers.
If an employee signs the non-solicitation agreement, they are promising not to solicit the company’s data. However, you should always read the contract keenly before signing it. Plus, if you don’t understand the contract’s content, you can seek help from a professional employment lawyer.