Demystifying Non-Solicit Agreements in Massachusetts: Protecting Your Professional Future
Navigating Non-Solicitation Agreements in Your Employment Contract
In the world of employment contracts, non-solicitation agreements have become increasingly common, especially following recent changes in Massachusetts law that have made the enforcement of non-competes more challenging. To navigate this evolving landscape, it's essential to grasp the ins and outs of non-solicitation agreements and their potential implications on your career after leaving a job.
What Exactly is a Non Solicit Agreement?
A non-solicitation agreement is a contractual clause that typically prohibits you from actively "soliciting" either customers or fellow employees, and sometimes even vendors or consultants. The term "solicit" is the key here – it essentially means asking someone for something. In the context of these agreements, not soliciting customers means refraining from approaching them to do business with your new employer. Similarly, not soliciting employees means not attempting to recruit your former colleagues to join you at your new workplace.
The precise wording of the agreement is crucial. If it merely states that you won't solicit, you might still be free to engage with former customers or employees if they reach out to you after you've left the company.
More often, though, a non-solicitation provision will include language that you will not "directly or indirectly" solicit the company's customers or employees. The interpretation of "indirectly" can sometimes be a subject of dispute. While asking someone else to solicit on your behalf is clearly "indirect solicitation," whether certain actions, like broadly targeted marketing, fall under this definition can be less clear.
Additionally, if you hold a high-level position within your company, you might also have a common law duty of loyalty or fiduciary duty that restricts your ability to solicit employees or customers while still employed.
When Does a Non-Solicit Agreement Become a Non-Compete?
To address the ambiguity surrounding the term "solicit," some agreements take a broader approach and state that you won't accept business from the employer's customers. In cases where the company is small, with a limited customer base, this may effectively function as a non-compete.
However, many businesses serve a wide range of customers, some of whom you may not even be familiar with as an employee who signs a non-solicitation agreement. Moreover, certain customers, like tech giants Google or Amazon, could be so significant that avoiding any interaction with them in your field may be nearly impossible.
In such scenarios, a non-solicit agreement could indeed resemble a non-compete, potentially requiring it to meet the same legal requirements for enforcement. This means it would have to be reasonably necessary to protect a legitimate employer interest, such as safeguarding trade secrets, confidential information, or goodwill.
The Impact of New Non-Compete Law on Non-Solicitation Agreements
Since October 2018, Massachusetts employers have been required to provide "garden leave" payments if they intend to enforce a non-compete agreement. Additionally, specific limitations now exist regarding who can be bound by these restrictive covenants. Importantly, the law explicitly excludes non-solicitation agreements from these new requirements.
As a result, it's expected that employers will turn to non-solicitation agreements as a more feasible means to achieve similar goals, possibly drafting them as broadly as possible to limit not only solicitation but also the acceptance of business from a former employer's customers.
Given these developments, seeking legal advice before signing a non-solicit agreement has become crucial. The enforceability of a broadly drafted non-solicitation clause in light of the new law remains uncertain. You might be inadvertently agreeing to more significant post-employment restrictions than you anticipated, and these restrictions could be legally binding.
Key Questions to Ask an Employment Lawyer About Your Non-Solicitation Agreement
Before you put pen to paper on a non-solicitation agreement, it's advisable to have it thoroughly reviewed by a skilled attorney. Here are some essential questions to discuss:
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