What is a Non-Competition Clause? What is a Non-Solicitation Clause? How are they different?
By Daniel Sorensen & Lawrence Smith
Employees should be careful about signing agreements with non-competition and non-solicitation clauses. Sadly, many employees are unfamiliar with these clauses. Employees often finds themselves seeking advice on such paragraphs after they have already signed an agreement containing either a non-competition or a non-solicitation clause.
So what is a non-competition clause? A non-competition clause restricts you during your employment and after your employment ceases from engaging in employment competitive to the business of your current or previous employer. Usually, non-competition clauses restrict competition for a specific amount of time within a specific geographical area. Courts have established that in order for a non-competition clause to be enforced, its restrictions must be reasonable on the employee, and the intentions of the clause must be absolutely clear. If you breach a non-competition clause, your employer may be able to sue both you, and your new employer.
So what is a non-solicitation clause? A non-solicitation clause prevents you from contacting or doing business with present, past, or sometimes even prospective clients of your employer. Such a clause will usually prohibit you from contacting these clients for the purpose of selling a product or service for a specific period of time. Like a non-competition clause, if you breach a non-solicitation clause, the employer that you signed the non-solicitation clause with may be able to sue both you and your new employer.
The wording of non-competition and non-solicitation clauses is important in determining whether such clauses are enforceable. For that reason, if you are being asked to sign such a clause, or if you have questions about such clauses now that you have signed one, it is a good idea to get legal advice.
If you have questions regarding a non-solicitation or non-competition clause, contact us today.