Non Solicit Agreements in Massachusetts
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Agreements not to solicit customers and/or employees are common in employment contracts. Typically these provisions restrict you for a period of time after your employment ends.
Historically most employment agreements included both non compete and non solicitation clauses. New law in Massachusetts has created more obstacles to enforcement of non competes. For this reason, we can expect broader use of non solicit agreements to accomplish similar goals. This may also mean that courts will look harder at non solicitation clauses than they used to. Below is some basic information about what non solicit agreements are, how they relate to non compete agreements, and what questions you might want to raise with an employment attorney before signing one. |
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What is a Non Solicit Agreement?
A non solicit agreement typically restricts you from "soliciting" customers or employees. These provisions also sometimes include vendors or consultants.
"Solicit" means basically to ask someone for something. If you agree not to solicit customers, you are agreeing not to ask them to do business with you at a new company. Similarly, if you agree not to solicit employees, you are agreeing not to try to get other team members to move with you to a new company.
The words in the agreement are critical. If all the agreement says is that you will not solicit, you may be free to do business with customers or employees if they seek you out after you leave the company.
More commonly, a non solicitation provision will say that you will not "directly or indirectly" solicit the employer's customers or employees. What "indirectly" means in this context is often subject to dispute. It is pretty clear that if you ask someone else to do the solicitation for you, you are "indirectly" soliciting.
It is less clear whether "indirectly" covers responses to broadly based marketing. For example, you may run a facebook ad that your former customer sees and responds to. Whether this is indirect solicitation is not always clear from the face of the agreement.
If you hold a high-level position in your company, you may also have a common law duty of loyalty or fiduciary duty that may restrict your ability to solicit employees or customers while on the job.
"Solicit" means basically to ask someone for something. If you agree not to solicit customers, you are agreeing not to ask them to do business with you at a new company. Similarly, if you agree not to solicit employees, you are agreeing not to try to get other team members to move with you to a new company.
The words in the agreement are critical. If all the agreement says is that you will not solicit, you may be free to do business with customers or employees if they seek you out after you leave the company.
More commonly, a non solicitation provision will say that you will not "directly or indirectly" solicit the employer's customers or employees. What "indirectly" means in this context is often subject to dispute. It is pretty clear that if you ask someone else to do the solicitation for you, you are "indirectly" soliciting.
It is less clear whether "indirectly" covers responses to broadly based marketing. For example, you may run a facebook ad that your former customer sees and responds to. Whether this is indirect solicitation is not always clear from the face of the agreement.
If you hold a high-level position in your company, you may also have a common law duty of loyalty or fiduciary duty that may restrict your ability to solicit employees or customers while on the job.
When is a Non Solicit Really a Non Compete?
To address the uncertainty about the meaning of "solicit," some agreements state broadly that you will not accept business from the employer's customers. If the company is small and has a limited number of customers, this may properly be considered a non compete.
There are companies, however, that serve a wide customer base. All of these customers may not even be known to the employee who signs a non solicitation agreement.
Moreover, many of these customers may spread their business among many vendors in their industry. Some customers, like Google or Amazon, may be so large that you cannot operate in your field without occasionally doing business with them.
In those cases, the non solicit may truly be a non compete. As such, there is an argument that it has to meet the legal requirements for enforcement of a non compete. For example, it will have to be reasonably necessary to protect a legitimate employer interest, like protecting trade secrets, confidential information or goodwill.
There are companies, however, that serve a wide customer base. All of these customers may not even be known to the employee who signs a non solicitation agreement.
Moreover, many of these customers may spread their business among many vendors in their industry. Some customers, like Google or Amazon, may be so large that you cannot operate in your field without occasionally doing business with them.
In those cases, the non solicit may truly be a non compete. As such, there is an argument that it has to meet the legal requirements for enforcement of a non compete. For example, it will have to be reasonably necessary to protect a legitimate employer interest, like protecting trade secrets, confidential information or goodwill.
Effect of New Non Compete Law on Non Solicitation Agreements
Since October 2018, employers in Massachusetts have to pay "garden leave" if they want to enforce a non compete agreement. There are also new, concrete restrictions on who can be held to those kinds of restrictive covenants. The statute, however, specifically states that it does not apply to non solicitation agreements.
What this means is that we can expect employers to be more aggressive with non solicit agreements. You may see these provisions drafted as broadly as possible to restrict not only solicitation but acceptance of business from a former employer's customers.
This means it is more important than ever to get legal advice before signing a non solicit agreement. It is unclear whether a broad non solicit will be held to the same standards as a non compete under the new law. You may be agreeing to more significant post-employment restrictions than you want, and those restrictions may well be enforceable.
What this means is that we can expect employers to be more aggressive with non solicit agreements. You may see these provisions drafted as broadly as possible to restrict not only solicitation but acceptance of business from a former employer's customers.
This means it is more important than ever to get legal advice before signing a non solicit agreement. It is unclear whether a broad non solicit will be held to the same standards as a non compete under the new law. You may be agreeing to more significant post-employment restrictions than you want, and those restrictions may well be enforceable.
What to Ask an Employment Lawyer About Your Non Solicitation Agreement
Before you sign a non solicit agreement, it is a good idea to have it reviewed by a lawyer. Some questions you should ask include:
- How broadly is "solicit" defined in the agreement and what activities does it likely cover?
- Is "customer" sufficiently defined so it only covers people you have done business with?
- What are the enforcement mechanisms in the agreement. For example, does it require arbitration? Does it make you responsible for attorneys' fees if they prove you breached the agreement?
How Our Employment Lawyers Can Help
We can help you review your employment agreement to make sure you are making an informed decision and protect your interests. You can use the button below to schedule a call back from a member of our team or give us a call at 781-784-2322.
