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What does a non-solicitation agreement for an employee do?

On Behalf of | Dec 14, 2023 | Restrictive Covenants

Employment contracts help clarify the relationship between individual workers and the business that hired them. Businesses typically use employment contracts to explain what they expect from the employee and what the compensation should be for the work that they do.

Businesses sometimes also include additional documents in employment contracts or special clauses to reduce the risk involved with hiring new workers. Restrictive covenants are popular contract inclusions that prohibit workers from engaging in certain conduct in the future. Many people know about non-disclosure agreements and non-compete agreements. Fewer know about non-solicitation agreements.

Non-solicitation agreements protect relationships

Successful businesses largely run on relationships. They need to have good relationships with clients or customers. They also need to maintain positive relationships with employees to motivate them to do the best work possible. Non-solicitation agreements help prevent workers from misusing their job-related relationships for personal gain.

People get to know their coworkers and those who patronize a business while employed at a company. Some people may turn around and use those new relationships for personal gain after they exit an organization. For example, someone might make a copy of a client list and then reach out to each of those businesses when they start their own competing firm in the future.

Companies could lose a significant amount of revenue if a popular customer service representative or salesperson exits the organization. Other times, workers from any department who don’t have access to resources like client lists could also engage in solicitation that could damage the organization. They might reach out to former coworkers and attempt to offer them a job at the company where they currently work or that they started themselves.

Non-solicitation agreements can address one or both of those issues. They help a company protect its intellectual property and valuable relationships. Some organizations will find that a non-solicitation agreement might be the most effective tool for limiting company exposure when hiring new professionals.

Integrating thoughtful terms into employment contracts can make a massive difference for business owners that are worried about unfair competition and other misconduct when the workers that their organizations hire move on to new opportunities.