How To Protect Your Client Or Customer List With A Non-Solicitation Agreement

Launching your business may have been easy but running it while dealing with challenges is tough. 

Imagine creating a long successful list of your well-paying customers, only to realize that your sales staff / employees steal them away from your business. 

Doesn't feel good, does it?

This is why you must have a non-solicitation agreement duly signed by all of your top-level executives, salespersons, and employees with access to your list. 

But what exactly is a “non-solicitation agreement” and how will it help you protect your client and/or customer list? 

This article will help you with all relevant points. Starting with what is a non-solicitation agreement, what are the key pointers, and the best practices.

What Is A Non-Solicitation Agreement?

In legal terms, a “non-solicitation agreement” is one where the employees agree and pledge to stand by an agreement that states they will not solicit the company’s customers or clients for their own interest or a competitor's benefit, while they are with the company or after they leave the company.

In addition to the above, the agreement can also have a clause whereby the employee is expected not to solicit other employees to quit the job along with them and move on together to a new company. 

At times, the non-solicitation agreement is added as a section in a different agreement. It could be in a non-compete agreement, an employment contract or in a non-disclosure agreement.

In any case, if it seems relevant, you must add non-solicitation terms to your agreements

Note that the above agreements are not mandatory and if an employer wants to protect the customer list, he/she can have a separate non-solicitation agreement created. Also, there isn't any consensus as to when is the agreement signed or presented to the employee. 

Meaning you can do it at any time prior to or after someone is hired. 

Additionally, you should note that these agreements can be used also with independent contractors, consultants, and other professionals that may need access to your list to perform their work. 

That is an extra level of business protection.

Why Do You Need A Non-Solicitation agreement?

Knowing what a non-solicitation agreement is, the next question that arises is why would you need to have a non-solicitation agreement.

To answer the above, think of employees or sales staff who aren't trustworthy and might take the possibility to take away your l customers. 

The sole purpose behind the creation of non-solicitation agreements is to protect employers from being exploited by their employees (or consultants) (when they take away employees or customers to a competitors company)

It is common for the employees to leave a company to work for a competitor or to start their own business. 

Odds are the new employer would try to get the customers of the previous company. Having a non-solicitation agreement prevents the former employee from doing this. .

In simple terms, a non-solicitation agreement prevents client-poaching, keeping the customers and client lists intact.

How To Draft A Non-Solicitation Agreement?

When it comes to drafting the non-solicitation agreement, it is important to take care of the clause added, the restrictions imposed, and the reason why it is being implemented. 

An important term here is the contract terms that notifies the duration for which employees must stick to the agreement.

With that being said, the non-solicitation agreement created must include restrictions against:

Selling goods or services to the company's existing customers or potential buyers on behalf of another company.
Copying or securing a copy of the client list without authority.
Selling or sharing the client list with unauthorized third parties.

Even though the non-solicitation agreement seems to be overlooked, it is a necessary legal document and a must for companies to incorporate within their standard business contracts to ensure that employees and sales staff do not take away their potential customers.

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Yoel Molina, Esq. (AKA “Mo”)

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