In industries where there is a limited number of customers, there is a need to protect their client relationships from being solicited by anyone, especially by a former employee who knows their business inside and out.
Nonsolicitation agreements can help them protect their business interest. However, they must guarantee the enforceability of these agreements. Here, we delve into the factors employers should consider when crafting nonsolicitation agreements.
Lack of specificity in prohibited activities
Employers must avoid vagueness when they draft a nonsolicitation agreement. In addition to clearly outlining which activities they forbid, they must be precise with how they define terms. Including a comprehensive glossary of terms might be a good idea. It can enhance the agreement’s integrity and effectiveness.
For example, employers should clearly define who they consider a “client.” They may also want to explain what encompasses a “business relationship.” If they use vague statements like “don’t solicit clients,” this may become a loophole. Instead, employers may specify that reaching out via emails, calls or meetings is not allowed. Doing so enhances agreement clarity, preventing any potential disputes.
Unreasonable temporal and geographic restrictions
Nonsolicitation agreements can hit a roadblock in court if they go overboard on time or geography. Employers must weigh the limits and keep them sensible. Sticking to a fair timetable (think one year) and pinpointing a specific stomping ground (say, a city or state) gives the agreement a better shot at holding its ground.
Lack of consideration or mutuality
For nonsolicitation pacts to stick, both sides need to pitch in. Agreements that tip only one way, missing the nod from the employee or giving nothing in return, might not hold water. So, employers must make it a square deal. To reinforce its legitimacy, they should ensure that the agreement reflects a fair exchange, such as access to confidential information or specialized training.
The strength of nonsolicitation agreements lies in their precise drafting. Employers must avoid vague language and unilateral terms to ensure the agreement’s validity. Seeking guidance from legal professionals can provide tailored insights to optimize its enforceability.