Early in the employer-employee relationship, it is important for employers to consider whether they will need restrictive covenants, including non-compete agreements, confidentiality agreements, and non-solicitation agreements. For most employers, their relationships with their employees, clients, and customers are valuable. Upon the termination of employment, a restrictive covenant can have an impact on an employment separation agreement, and it may also be the subject of litigation. A New York corporate law attorney at Klapper & Fass can prepare carefully tailored non-solicitation agreements and other restrictive covenants, as well as representing your company in litigation when necessary.Devising a Non-Solicitation Agreement
A non-solicitation agreement needs to be written to be enforceable. Often, a non-solicitation agreement is not a separate agreement but is included in employment agreements or policies that an employee signs before coming on board. Sometimes, the agreement requires the employee to forfeit certain benefits, like option grants, if he or she fails to comply with a restrictive post-employment covenant.
Solicitation can be defined as contacting former colleagues or clients or promoting a new business venture when contacted by a former client. For example, an employee who tries to get a former colleague to leave the company to work for the employee in a start-up may be soliciting that colleague.
When a non-solicitation agreement prohibits direct and indirect solicitation, the former employee is not permitted to help a new employer pursue former clients or colleagues. For example, if an employee quits one advertising company to work for another and then sends an email to everyone he knows, including a former employer's clients, stating he has terminated his relationship with the former employer and joined a new employer who is committed to good service, this may be considered solicitation in the form of a targeted mailing. In a case involving similar facts, a New York court ruled that it might be permissible for a former employee to inform his contacts in a mass mailing that he was moving to a new company, but noting the new employer's good service was a type of impermissible solicitation.
Generally, the scope of a non-solicitation provision needs to be limited. Often, it is limited to customer relationships that the employer creates or maintains at its own expense. An employer's non-solicitation agreement usually will not extend to an employee's personal clients who come to a firm solely to receive his services due to his own recruitment efforts, independent of the employer.
Additionally, non-solicitation agreements cannot be overly broad in terms of time and geographic scope. A non-solicitation agreement that stops an employee from accepting business from former clients that voluntarily want to keep working with the employee for 24 months may be reasonable. However, when the non-solicitation agreement runs for many years, and there is no geographic limitation, a court is likely to find it overly broad.
Non-solicitation agreements must also be necessary to protect the employer's legitimate interests, not injurious to the general public, and not overly burdensome. The court will balance an employer's legitimate interests in protecting confidential information and protecting clients it obtained through its own name and resources against the employee's interests. Courts also usually recognize that if an established business and its good will have been sold, there is a duty on the part of the seller not to solicit its former customers.
New York courts are required to determine whether a non-solicitation agreement or provision is enforceable on a case-by-case basis. In some cases, the court will simply delete unenforceable provisions and let the enforceable parts stand. However, in other cases, an employer with an overbroad provision runs the risk of having the entire agreement deemed unenforceable. As a general rule, New York courts will not enforce an employee restrictive covenant that does not involve an employer’s trade secrets or where the employee is not a key employee on the theory that a restriction which prevents an employee from pursing his or her livelihood is against public policy.Explore Your Options with a Corporate Law Attorney in New York
The New York corporate law lawyers at Klapper & Fass can help you prepare a strong non-solicitation agreement and litigate any disputes that may arise in connection with it. We maintain offices in White Plains and Manhattan, from which we serve the five boroughs of New York City as well as Nassau, Rockland, Suffolk, and Westchester Counties. Our litigation attorneys also provide legal representation in Texas, Michigan, Pennsylvania, Illinois, Missouri, California, and other states around the nation. Contact us at 914.287.6466 or via our online form to set up an appointment.