What Is a Non Solicitation Agreement?
Non-Solicitation agreements are commonly used clauses that employers use to prevent employees from working with their competitors. If you sign one you agree that you will not solicit former clients, hire employees or use any company information to help your new position.
For example, suppose you worked for a company selling insurance. You find a new job in a similar role. If you had signed a non-solicitation agreement with your former employee you are not legally allowed to solicit your former contacts for business nor use any confidential information you learned at your former job.
Are Non-Solicitation Agreements Enforceable?
When people talk about a “non-compete” agreement, they typically envision a situation where a former employee is prohibited from working for a competing company. But non-compete agreements are broader than that because they also frequently include “non-solicitation” clauses. A non-solicit means a former employee will not try to do business with a former employer’s customers.
Courts routinely enforce these non-solicitation agreements for up to two years. But courts usually will not uphold a non-solicitation agreement banning the former employee from soliciting potential or “prospective” customers and clients. In New Jersey, if a non-compete is unreasonably broad, then the court will narrow the non-compete to what the judge finds is a reasonable sphere.
Courts in New Jersey have found that an employer trying to protect potential customers (that is, customers that they have solicited for business, but failed to create a relationship), is unenforceable as overly broad. See Platinum Management v. Dahms, 285 N.J.Super 274, 297 (Law Div. 1995). That reasoning makes sense because, in the end, an employer can then argue that everyone is a potential customer.
Should I Sign a Non Solicitation Agreement?
Many companies require employees to sign non-compete agreements which include non-solicit language but often non-solicitation agreements can find their way into employee handbooks, retirement plans, or elsewhere. You should not take signing any agreements lightly since they can significantly limit your options if and when you decide to leave your current job.