Non-Compete and Non-Solicitation Agreements

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Preventing Client Poaching: The Importance of Non-Compete & Non-Solicitation Agreements

In most vocational settings, the superstars of the organization can usually be easily identified. In a recent study1 of more than 600,000 workers in various industries, researchers found that these high performers are 400 percent more productive than those who exhibit “average” employee behavior and work involvement.

These employees are stand-out workers with an appetite for success and a talent for creating deep relationships with both clients and organization executives. “[These employees]… are the linchpins of the business and form an integral part of growth plans,” says Dominic Holmes, Partner at Taylor Vinters.2 This type of drive, work ethic, and aptitude is not easily found, which can make these top performers something of a flight risk.

With their natural ability to connect and the expertise necessary to continually exceed client expectations, should this type of worker leave the organization, certain members of the organization’s clientele may be tempted to follow suit.

The most common legal measure of protection from such vulnerability is the use of non-compete and/or non-solicitation agreements. Both are contracts that limit the ability of a former employee from participating in activity that may be detrimental to the organization.

Non-Compete Agreements3

Non-compete agreements bar an employee from starting a competing business or working for a competitor for a set period of time after employment ends. Often, the enforceability of these agreements is confined to a specific geographical area.

Non-Solicitation Agreements4

This kind of employer-employee contract is generally seen more favorably by the court due to its less restrictive nature. A non-solicitation agreement does not limit the employee’s right to work in his or her area of expertise like a non-compete agreement. Instead, this type of contract simply prevents the former employee from soliciting clients from the former employer for a specific period of time. In the eyes of the court, this is a reasonable request in order to preserve the client base of the organization.

In order to best protect against client poaching, the wording, restrictions, and conditions of such an agreement are paramount. Contact one of the qualified attorneys at Bannister, Wyatt & Stalvey, LLC to protect your business today.

 

  1. https://www.mckinsey.com/business-functions/organization/our-insights/attracting-and-retaining-the-right-talent
  1. https://www.taylorvinters.com/article/how-to-stop-a-departing-employee-from-poaching-clients/
  2. https://www.nolo.com/legal-encyclopedia/understanding-noncompete-agreements.html
  1. https://www.nolo.com/legal-encyclopedia/understanding-nonsolicitation-agreements.html

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