As a business owner, you know that your employees are your most valuable asset, and losing a particularly talented worker can represent a blow to both team morale and to success. It can also represent real risk, as there is always the chance that, in leaving, an employee might move on to a competitor. In order to head off that possibility, many businesses require employees to sign non-compete or non-solicitation agreements. Both can be extremely effective for protecting your organization.
A non-solicitation agreement is helpful for preventing an employee – or even a partner – from attempting to steer your company’s existing clients to another company. Whether they are heading off to work for a competitor or starting a new endeavor for themselves, the goal of a non-solicitation agreement is to prevent them from leveraging the relationships that they originally established in support of your company to enhance their value in their new position.
Imagine that one of your most successful sales representatives decides that they want to work somewhere else. They have built a robust clientele in their assigned territory, and now they are heading to another company that sells the same product or service that you do. Without a non-solicitation agreement in place, they could request that same assigned territory with their new employer and immediately contact your clients, letting them know that they have left and urging them to switch their business to your competitor.
A non-solicitation agreement recognizes that the business development relationships that your employees have established have real financial value, as do any trade secrets that employees have learned during their tenure with your company. The point of creating the agreement is to prevent you from suffering material damage, but in order for the agreement to be enforceable it is necessary that you provide something to the employee in return. In most cases, signing a non-solicitation agreement is required at the time that an employee is hired and the job itself is considered consideration. If you want an existing employee to agree to sign a non-solicitation agreement, you will need to offer a bonus, an increase in salary, or a promotion.
A non-solicitation agreement needs to be carefully crafted, as the only way for this type of contract to be enforceable is for its terms to be reasonable in terms of duration and geography. There must be a balance between protecting your business’ interests and allowing the employee to make a living after they leave your firm. For information on how we can help you create non-solicitation agreements that will effectively protect your business, contact us today.