614.9445171
4200 Regent Street, Suite 200, Columbus, Ohio 43219
Schedule a Consultation
Business Attorney | Law Office of Maritza S. Nelson, LLC
  • Home
  • Who We Serve
  • Practice Areas and Fees
    • General Counsel Service
    • Business Law >
      • LLC Formation
      • LLC Operating Agreements
      • Close Corporation Formation
      • Corporate Bylaws
      • Close Corporation Agreements
      • Other Business Law Services
    • Business Contracts >
      • B2B Service Agreements
      • Contract Review and Advice
      • Customer Agreements
      • Financial Agreements
      • Joint Venture Agreements
      • Lease Agreements
      • Noncompete Agreements
      • Nondisclosure Agreements
      • Waiver and Release Agreements
      • Website Privacy Policies
      • Website Terms of Service
    • Business Sales >
      • Business Purchases and Sales
      • Letter of Intent
      • Purchase Agreements
      • Buy-Sell Agreements
      • Membership Interest Transfer Agreements
      • Business Succession & Disaster Planning
      • Business Dissolutions
    • Raising Money From Investors >
      • Private Placement Memorandums
      • Investment Agreements
    • Franchising and Business Opportunities >
      • Franchise Disclosure Documents
      • Franchise Agreements
      • Ohio Business Opportunity Plans
    • Nonprofit Law >
      • Nonprofit Formation
      • Co-op Formation
      • Tax Exempt Status
      • Nonprofit Governance
      • Nonprofit MOUs and Agreements
      • Nonprofit General Counsel Service
    • Intellectual Property >
      • Trademark Search
      • Trademark Registration
      • Trademark Maintenance
      • Copyright Registration
      • Work For Hire Agreement
      • Licensing Intellectual Property
      • Assigning Intellectual Property
      • Proprietary Information and Invention Assignment Agreements
      • Confidentiality Agreements
      • Intellectual Property Audit
    • Employment Law >
      • Employment Contracts
      • Employee Handbooks
      • Employment Policies
      • Independent Contractors
  • Adding Value
    • Legal Audit Checklist
    • Legal Dictionary
    • 7 Common Legal Mistakes
    • Succession and Emergency Planning Worksheet
    • Business Contracts: Review Checklist
    • Webinars >
      • HR 101: Managing the Growing Pains That Come With Growing Your Business
      • Hiring Independent Contractors
      • Legal Audit and Risk Assessment
      • Structuring a Social Enterprise
  • Bio
  • Blog
  • Scheduling
    • Prospective Client Scheduling
    • Existing and Former Client Scheduling
    • Networking Scheduling
  • Home
  • Who We Serve
  • Practice Areas and Fees
    • General Counsel Service
    • Business Law >
      • LLC Formation
      • LLC Operating Agreements
      • Close Corporation Formation
      • Corporate Bylaws
      • Close Corporation Agreements
      • Other Business Law Services
    • Business Contracts >
      • B2B Service Agreements
      • Contract Review and Advice
      • Customer Agreements
      • Financial Agreements
      • Joint Venture Agreements
      • Lease Agreements
      • Noncompete Agreements
      • Nondisclosure Agreements
      • Waiver and Release Agreements
      • Website Privacy Policies
      • Website Terms of Service
    • Business Sales >
      • Business Purchases and Sales
      • Letter of Intent
      • Purchase Agreements
      • Buy-Sell Agreements
      • Membership Interest Transfer Agreements
      • Business Succession & Disaster Planning
      • Business Dissolutions
    • Raising Money From Investors >
      • Private Placement Memorandums
      • Investment Agreements
    • Franchising and Business Opportunities >
      • Franchise Disclosure Documents
      • Franchise Agreements
      • Ohio Business Opportunity Plans
    • Nonprofit Law >
      • Nonprofit Formation
      • Co-op Formation
      • Tax Exempt Status
      • Nonprofit Governance
      • Nonprofit MOUs and Agreements
      • Nonprofit General Counsel Service
    • Intellectual Property >
      • Trademark Search
      • Trademark Registration
      • Trademark Maintenance
      • Copyright Registration
      • Work For Hire Agreement
      • Licensing Intellectual Property
      • Assigning Intellectual Property
      • Proprietary Information and Invention Assignment Agreements
      • Confidentiality Agreements
      • Intellectual Property Audit
    • Employment Law >
      • Employment Contracts
      • Employee Handbooks
      • Employment Policies
      • Independent Contractors
  • Adding Value
    • Legal Audit Checklist
    • Legal Dictionary
    • 7 Common Legal Mistakes
    • Succession and Emergency Planning Worksheet
    • Business Contracts: Review Checklist
    • Webinars >
      • HR 101: Managing the Growing Pains That Come With Growing Your Business
      • Hiring Independent Contractors
      • Legal Audit and Risk Assessment
      • Structuring a Social Enterprise
  • Bio
  • Blog
  • Scheduling
    • Prospective Client Scheduling
    • Existing and Former Client Scheduling
    • Networking Scheduling

Join our mailing list and receive our Legal Audit Checklist.

Check out our latest blog posts, webinars, and other valuable content.
Join the List

1/19/2021

0 Comments

Non-Solicitation Agreements

 
Picture
If you’ve worked hard to build your client or customer base, or even put significant time and effort into training your employees or recruiting the right subcontractors, you probably want to protect that investment. Non-solicitation agreements are typically used by businesses of all sizes to ensure that their employees and subcontractors will not solicit (or run off with) the company’s customers, clients, or even other employees or contractors that the company has worked so hard to find and develop in the first place. ​
The right contract language protecting the investment your business has in its relationships may take the form of a standalone agreement, but it can also be a clause in an existing contract. For example, you might include a non-solicitation clause in an employment or independent contractor agreement. In some instances, we’ve even seen non-solicitation clauses included in operating or partnership agreements to make sure that if a business partner leaves the business, they don’t try to take all of the customers with them!

How does a non-solicitation agreement different from a non-compete or a non-disclosure agreement?
Non-solicitation agreements are often used in conjunction with non-competes and nondisclosure agreements. Together, these types of agreements or clauses are referred to as restrictive covenants--contractual promises that restrict what one (or sometimes both) of the parties to an agreement can do during and even after the agreement terminates. So how do these agreements differ?
  • A non-solicitation clause restricts poaching (or attempts to poach) certain defined groups, i.e. a particular group of customers.
  • ​A non-compete clause restricts competition, i.e., an employee cannot engage in activities that compete with your business when they leave your employment, even if those activities don’t involve your existing customers.
  • A nondisclosure agreement restricts the sharing and unapproved uses of confidential information. This might even include your client list.

Depending on the circumstances, your business may only need one or two of these clauses or agreements, or you might need to have all three depending on what business information, relationships, and activities you are trying to protect. For example, a non-solicitation clause might prohibit a former employee or contractor from calling up your customers and asking them to follow that worker to their new business. But it wouldn’t prohibit your customers from reaching out to that former worker (especially if they have a relationship with that individual) and deciding on their own accord to follow the former employee or contractor. To prevent the latter situation, a non-compete agreement would be more appropriate because it would prevent the former employee or contractor from taking on your customers despite the customer’s wishes. (Of course, before going down this road, you’ll have to decide whether such a situation would only antagonize your customers/clients. And you need to be especially careful with independent contractors who are often running their own businesses and may already have business relationships with your competitors.)

Enforcing a Non-Solicitation Agreement
Generally, non-solicitation agreements are enforceable in Ohio. However, they need to be carefully drafted if you actually expect a court to enforce the agreement. Too often, a client will ask us to draft a non-solicitation clause that reaches well beyond protecting the client’s legitimate business interests. Let’s say, for example, that you want to prohibit former employees or contractors from soliciting business from any client that your company has ever done business with. This type of language would presumably extend to customers you haven’t worked with or even interacted with in years. It would even include clients that the former employee or contractor in question has never worked with. 

Courts will often treat these types of broad, far-reaching non-solicitation clauses much like non-compete clauses. The court will ask whether the restrictions:
  • Are no greater than what is required to protect the business;
  • Impose an undue hardship on the former worker; and
  • Injure the public.
See e.g., Professional Investigations v. Kingsland. 

In this example, the non-solicitation language you want would go well beyond what is necessary to protect your business’s interests. It potentially hampers the employee’s or contractor’s ability to work in their given career field, especially if your business has, at one time or another, worked with a significant portion of your target market. If your goal is simply to make someone’s life difficult if they stop working for you, then there’s a good chance your contract language won’t be enforceable.

Key Takeaways
Non-solicitation clauses, like non-compete agreements, should include reasonable restrictions limiting their scope:
  • Focus on customers, clients, employees, or contractors that the impacted worker will develop a working relationship with while they are working for your business.
  • Consider reasonable geographic limitations, especially if you have customers or clients in other states. It’s one thing to limit a former employee’s or contractor’s ability to solicit your clients in the market that person was actually working in. It’s quite another to suggest that they can’t solicit clients from your second location across the state or even across the country, especially if they had no interactions with those clients. 
  • Incorporate reasonable time limitations, e.g., the former employee or contractor cannot solicit customers that entered into agreements with your business within the last two (2) years. 
  • ​Don’t try to combine a non-solicitation clause and a non-compete clause into one sentence. Yes, we attorneys tend to use 100 words where 10 might do, but these clauses serve different purposes and are meant to accomplish different things. Keep them separate to avoid unnecessarily muddying the waters.
  • Finally, get it in writing, and get it signed! I’ve never seen a court enforce a verbal restrictive covenant. And just burying non-solicitation / non-compete language in your employee handbook isn’t good enough either because your employee handbook is not (or at least shouldn’t be) a contract. 
If you have questions about using non-solicitation agreements to
​protect your business relationships:
SCHEDULE A CONSULTATION
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Categories

    All
    Advertising Law
    Business Formation
    Business Law
    Confidentiality Agreements
    Contracts
    Copyright
    Corporation
    COVID 19
    COVID-19
    Employment Law
    Firm Announcements
    General Legal Advice
    Hiring An Attorney
    HR Policies
    Independent Contractors
    Intellectual Property
    Limited Liability Company (LLC)
    Motivation
    Non Profit
    Partnership
    Privacy Policy
    S Corp
    Small Business
    Social Enterprise
    Sole Proprietorship
    Trademarks
    Trade Secrets

    Archives

    January 2023
    December 2022
    September 2022
    August 2022
    June 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    August 2019
    July 2019
    May 2019
    December 2016
    July 2016
    June 2016
    February 2015
    October 2014
    September 2014
    August 2014
    July 2014

    RSS Feed

Services

General Counsel Service
Business Law
​
Business Contracts
Business Sales
Raising Money From Investors
Franchising and Business Opportunities
Non-Profit Law
Intellectual Property
Employment Law

About

Who We Serve
Bio​
Adding Value
Webinars
Blog
Contact
​Careers
​Scheduling

Legal

The information contained on this website is not legal advice or legal opinion and should not be relied upon. Furthermore, nothing contained in this website is intended to create or establish, and does not constitute, an attorney-client relationship. 

Fee Information
Document Retention Policy 
Privacy Policy
​Client Communications Policy

Subscribe to the mailing list to receive useful tips for entrepreneurs and business owners.
Join Mailing List
Copyright © 2014-2023. | 4200 Regent Street, Suite 200, Columbus, OH 43219 | 614.944.5171 | info@msnlawoffice.com
Photo used under Creative Commons from jseliger2