Definition
The term nonsolicitation agreement refers to a contract that states an employee will not solicit the customers or clients of their employer for their own benefit. A nonsolicitation agreement can also prohibit the employee from soliciting other employees after terminating employment.
Explanation
A nonsolicitation agreement is a document typically presented, and signed, by an employee as part of a company's onboarding process. By signing the document, the employee is agreeing they will not solicit customers or clients for their own gain; these agreements may also include other employees. That is to say, the employee signing the contract agrees not to recruit former coworkers after terminating employment.
Nonsolicitation agreements can also be a section of a larger contract the employee might sign. For example, non-compete agreements (NCA), non-disclosure agreements (NDA), and nonsolicitation agreements may all be sections of one document. While it is more common for employers to present these agreements to an employee as part of the onboarding process, employers may also ask an employee to sign this contract as part of a severance package.
Nonsolicitation agreements are more common in industries that compete on price or when the total number of customers is relatively small. As is the case with a NCA, nonsolicitation agreements may be enforceable if the terms do not unfairly limit a competitor from hiring a qualified worker and it doesn't prohibit a former employee from earning a living.
Note: Individual states, such as California, have passed a number of laws that protect an employee's rights. If the legality of an agreement is called into question, the best course of action is to consult with an experienced labor attorney.
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