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What's Really Behind a "Non-Solicitation" Claim?
Sometimes the non-solicitation claim is legitimate. The employer is simply enforcing the non-solicitation clause to protect its business. In other instances, however, our Pittsburgh lawyers see the employer engaging in predatory behavior to harass a former employee, purely to restrict competition.
Employers wanting to restrict competition have typically done so through a non-compete agreement, but there is a coming ban on non-compete agreements, nationally. Both the US Senate and Federal Trade Commission (FTC) have plans to do away with non-compete agreements. In fact, The FTC's ban will preclude nearly all anti-competitive claims by an employer, with three key exceptions: non-disclosure agreements or NDAs (limiting employees from disclosing information learned from the employer), solicitation of customers or employees or the misappropriation of trade secrets.
There are, however, important defense to non-solicitation clauses. See the FAQs below.
Contact Us Today!
Our Pittsburgh lawyers have noticed a spike in claims alleging "solicitation" by employers against outgoing employees. Get in touch with our Pittsburgh attorneys today. Our Pittsburgh attorneys handle other restrictive covenant matters (such as non-competes) and other post-separation claims and defenses, such as alleged theft of trade secrets, or trade disparagement.
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Frequently Asked Questions
What can happen to me if I violate a non-solicitation agreement?
The agreement must specify the consequences and remedy for the former employer in the event of a breach. There are three main types of remedies.
1. Actual Damages. To prove actual damages, the former employer must show how it actually lost money or was harmed by the alleged breach of a contract. This can be exceedingly difficult to prove, if not impossible, especially if the person solicited ignores the solicitation entirely, for example.
2. Stipulated Damages. The parties may stipulate in an agreement to the amount of damages for the breach of a contract. This is called a stipulated (or liquidated) damages clause, where the contract states some specific amount a party must pay for for violating the agreement. These are enforceable, but only if the amount of stipulated damages bears a reasonable approximation to the actual potential damage. For example, if a customer's account and future business is only worth $500 to an employer, at most, the stipulated damage for soliciting that customer cannot be $10,000.
3. An Injunction to Prevent or "Enjoin" Solicitation. A non-solicitation clause is a restrictive covenant, which can trigger a judge's power "in equity," which are expansive. In equity, a judge may order the sheriff physically restrain someone from engaging in future solicitation.
Given the harsh nature of such a claim in equity, a fairness standard is employed. A judge is not bound to follow the letter of any restrictive covenant. All restrictive covenant can be re-written by a judge if not reasonable. This means, the covenant (1) may not unduly or unfairly limit the former worker and (2) must be necessary to protect the employer's business interest.
How does a non-solicitation clause and a non-compete agreement differ?
Both are restrictive covenants, discussed above.
The difference is: a party to a non-compete agreement may be precluded from doing competitive work for a competitor in the same industry. A non-solicitation agreement, on the other hand, is much more broad. No actual "competition" need take place. Rather, the mere act of communicating with a former employer's customer, client, or employee can be actionable. This is true, regardless of whether the communication results in new business for the Defendant-former employee. Thus, unlike non-compete agreements, the prohibited "solicitation" need not benefit a competitor of the prior employer.
