Non Solicit Agreements – Are they worth it?

Do you have a non-solicit agreement with your employees? I do. It’s part of the employment contract that I have every employee sign before they start work. It’s not something I intentionally set out to do. Back when I was hiring my first employee, I purchased an employee agreement template and the non-solicitation clause was already there. I just went with it, I figured even if it didn’t do any good, it couldn’t hurt anything to have it in there.

But let’s talk about this. Does a non-solicitation agreement really do any good? If you’ve been in business for some time and if you have employees, it’s not a question of if an ex (or current) employee will try to take your clients, it’s a matter of when. I’m not saying everyone is dishonest. I believe that most people are more or less honest. It’s just a matter of odds. As your business grows and you hire more people or as you replace the people you lose in this volatile economy you will encounter some dishonest employees.

Let’s take a moment here to clarify the difference between a non-solicitation agreement and a non-compete agreement.

A non-compete clause refers to terms that restrict your ability to work for a competing employer. Most non-competes state that you can’t work for other employers that compete, directly or indirectly, with your employer’s business. The non-compete period starts when your employment starts or ends and typically continues for certain period of time, which can be months or years. Some non-competes also have geographic restrictions, which forbid you from working for employers in a specified area.

A non-solicitation clause forbids you from doing business with your former employer’s clients. The non-solicitation period starts when your employment starts or ends and typically continues for a certain period of time. Some non-solicitation clauses may forbid you from asking former co-workers to join you at a new workplace. A non-solicitation clause doesn’t stop you from working for competitors.

That last sentence is important. A non-solicitation clause doesn’t stop you from working for competitors. Most small pet care business’s have a non-solicitation rather than a non-compete for this reason. Pet care workers, especially pet sitters and dog walkers, tend to do this sort of work as a side hustle. They often have other sources of income. In most cases they have to do this to earn enough money to support themselves because pet sitting job hours, unless you are a very established company, are variable and inconsistent. For example, I have several employees who do walks for Rover.com. While rover is a direct competitor to my business, I don’t mind my employees doing these walks. It allows them to earn additional income doing something they love and they’re not interfering with my clients. For my business It means that I can keep employees longer because they don’t have to choose between me and another pet job. They can do both. They’re happy, I’m happy, win win.

For the reasons above I’m going to focus on the non-solicit agreement here. So back to the question. Does a non-solicit agreement really work? The answer of course, as with most legal documents, is it depends. To be enforceable in Florida for example a non-solicitation agreement must generally satisfy two tests. First, the employer must have a legitimate business interest in enforcing the non-solicitation agreement. This might include protecting existing customer relationships or protecting confidential information. Second, the non-solicitation agreement must be reasonable in duration and scope. Duration means the amount of time that it covers. Scope means the geographic area that it covers. These conditions or similar conditions are taken into account in most other states. In short, the agreement must have reasonable limits in terms of time, area, and types of work.

Enforceability will also depend on the specific circumstances and the type of business or industry. And add to that enforceability varies greatly by state as well with some states being more favorable than others to an employer in this situation.

If you have non solicitation agreement with an employee that you feel or know is being violated the general course of action is to contact an attorney and ask them to send a cease-and-desist letter to the offender. This letter will generally request that the offender immediately stop all solicitation activities in agreement with the contract they signed. If they continue to violate the agreement it is up to the employer to file a lawsuit to pursue the matter. The only way to actually test the efficacy of a non-solicitation agreement is to take it to court. The defense will try to show that the restrictive covenant was too restrictive. This kind of thing is decided on a case-by-case basis.

So, in summary, yes. I believe a non-solicitation agreement is a good idea but I would recommend having an attorney in your state review it for legality and thoroughness.

Another article you might like;

How to Fire a Client

https://www.thepetbusinesscoach.dog/fire-a-client/ 

About Eliza

Eliza is the owner of two successful pet related businesses; Preferred Pet Partners, a pet sitting and dog walking company, and The Pet Business Coach, offering coaching and resources to aspiring or current pet related business entrepreneurs. She maintains two awesome blogs. One for pet parents https://preferredpetpartners.com/blog/ and one for pet business owners https://thepetbusinesscoach.dog/blog-page/.  Eliza also supports various animal rescue and shelter organizations. Eliza and her husband have a growing pet family. Visit her websites: www.preferredpetpartners.com or www.thepetbusinesscoach.dog.