Understanding Non-Solicitation Agreements: A Guide for Today’s Job Seekers

As part of the hiring process, new hires are often asked to enter into several different contracts with their employers, like non-compete or non-solicitation agreements.

This article is meant to shed some light on what job seekers and new hires must know about non-solicitation agreements, like what they are and whether they are enforceable.

What Are Non-Solicitation Agreements?

Non-compete agreements are designed to stop employees from working with a competitor or starting a competing business if they leave the company. Non-solicitation agreements are meant to restrict former employees from poaching their employer’s business relationships and personnel.

Non-solicitation agreements typically fall into two categories:

1. Non-solicitation of customers/clients

This type of non-solicitation agreement, or language within an employment contract, is designed to prevent employees from contacting or enticing a company's clients or customers to do business with them after they leave.

2. Non-solicitation of colleagues

This agreement or language is designed to restrict a former employee’s ability to recruit current employees from their previous employer to join them in their new venture or business.

Are Non-Solicitation Agreements Enforceable?

In May 2024, the Federal Trade Commission (FTC) of the United States published a rule that banned non-compete agreements and similar restrictive clauses in employment contracts. However, before the rule could go into effect, a federal court ruled that the FTC couldn’t enforce it. So, as of now, non-competes are generally enforceable. However, as mentioned before, non-competes are different from non-solicitation agreements. So, neither the FTC rule nor related litigation has changed or limited the enforceability of non-solicitation agreements.

As such, as it currently stands, the enforceability of non-solicitation agreements varies from state to state, depending on the specific terms of the agreement. For example, California has strict rules against enforcing these agreements. States like New York or Florida are more likely to follow them if they are fair and meant to protect legitimate business interests.

Here are some general rules and circumstances surrounding the enforceability of non-solicitation agreements.

• Reasonableness

Under most legal doctrines, a non-solicitation agreement can only be enforceable if it is reasonable in scope, duration, and geographic area. For instance, a court is likely to deem an agreement enforceable if it prevents an employee from soliciting former clients for more than 10 years across the United States. Meanwhile, an agreement that limits an employee’s solicitation efforts for only a year within a certain city or county will likely be found enforceable.

• Business Interests

To make a non-solicitation agreement work, the employer must show that the language and limits are meant to protect a real business interest, like trade secrets and customer relationships.

• Consideration

In some states, non-solicitation agreements must be supported by consideration — something of value or benefit to the employee — to be enforceable. This could come in the form of a bonus or additional income.

How Should Job Seekers Act When Presented with A Non-Solicitation Agreement?

If you are a job seeker or new hire presented with a non-solicitation agreement or similar language in an employment agreement, it would be wise to negotiate for favorable terms that limit the scope of such restrictive language. If an employer is unwilling to budge on what appear to be very unreasonable terms, you should seek the advice of an attorney on how to proceed.

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