Non-Compete vs Non-Solicitation Agreements

When starting a business or hiring new employees for an existing one, it’s in your best interests to take measures to protect the business’ assets and success. Through non-compete and non-solicitation agreements, you can create boundaries for your employees that can help ensure that your operations remain viable regardless of their choices.  While both of these types of agreements have many aspects in common, there are also major differences, and they should both be considered when it comes to employment. Let’s discuss each of these options in-depth.

Both non-compete and non-solicitation agreements are restrictions that may be added on to a broader agreement (e.g., employment contract) or as a stand-alone contract.  Regardless of form, they’re both geared toward limiting the actions of employees to help allow for your business to continue as usual if and when they are no longer employed by you.  Both must adhere to specific lengths of time, during and/or after employment, and are enforceable only if deemed reasonable. 

Whereas the basics of each agreement are similar, the differences lie in what actions they actually restrict:

Non-compete agreements typically prevent an employee from working in or for a competing business during their employment and for an allotted amount of time after they leave.  Because this measure is considered to be very restrictive, as it can prevent people from continuing employment in their field, it  must be carefully drafted so as to appropriately limit its geographic scope and the period of time that it covers.  Courts typically will not enforce a non-compete agreement that imposes unreasonable restrictions on a person’s right to earn a living. 

Non-solicitation agreements, on the other hand, may prevent employees from soliciting your business’ customers on their own behalf during their employment and for an allotted amount of time after they leave.  They may also prohibit an employee from asking your other employees to follow them in terminating or changing employment. If drafted properly and enforceable, these restrictions can focus on protecting your business’ ability to maintain staff as well as customers, both crucial to continuing operations.

When considering whether to incorporate these agreements or clauses, both options may be available to protect your business. However, I strongly recommend that you consult an attorney who is skilled in drafting these types of agreements/clauses so that they can help ensure that the restrictions you choose will be enforceable, therefore providing the protection that you seek for your business.  As always, let know if I can help.

The information presented here is for general educational purposes only. It does not constitute legal advice and does not create an attorney-client relationship.