Non Solicitation of Customers Agreement

As a business owner, it’s important to protect your company’s customer base. One way to do this is through a non-solicitation of customers agreement. This agreement restricts departing employees from actively seeking out or poaching your existing clients for a specified period of time. It is important to understand the ins-and-outs of non-solicitation agreements in order to safeguard your business and minimize legal risks.

A non-solicitation of customers agreement is a type of restrictive covenant that typically comes into play when an employee leaves a company. It is generally part of an employment contract or a separate agreement that is signed by the employee. This agreement prohibits employees from contacting clients or customers of their former employer for a specified period of time, usually between six months and one year.

The purpose of a non-solicitation agreement is to protect the employer’s customer base, confidential information, and trade secrets. This is especially important in industries where customer relationships are crucial, such as professional services, consulting, and sales.

Non-solicitation agreements are becoming increasingly common, as more companies recognize the importance of protecting their customer base. However, they are not without controversy. Critics argue that these agreements can stifle competition and limit an employee’s ability to find new work. In some states, non-solicitation agreements are not enforceable or are subject to restrictions.

Despite these criticisms, non-solicitation agreements remain a useful tool for many businesses. Here are some key things to keep in mind when drafting or enforcing these agreements:

1. Make sure the agreement is reasonable in scope and duration. A non-solicitation agreement that is too broad or lasts too long may be unenforceable.

2. Be specific about what is covered by the agreement. Clearly define the customers or clients that are off-limits, as well as the types of activities that are prohibited.

3. Ensure that the agreement is signed by the employee. Non-solicitation agreements are only enforceable if the employee has signed them.

4. Consider offering the employee something in return for signing the agreement. This could be a signing bonus, additional severance pay, or other compensation.

If you are considering implementing a non-solicitation of customers agreement, it is important to consult with an experienced attorney who can help you navigate the legal complexities of these agreements. With the right guidance, you can protect your business and safeguard your customer base.