Non-competition agreements (“non-competes”) often contain clauses referred to as “non-solicitations.” These provisions are sometimes viewed as synonymous to a non-competition clause but there are important distinctions between the two. Massachusetts courts use a similar analysis on the two types of provisions, non-solicitation provisions serve a different function. The usual purpose of a non-solicitation is to prevent a former employee from stealing clients, prospective clients or other employees from their former employer. As such a non-solicitation contrasts with a non-compete which ordinarily intends to bar a former employee from directly competing with the former employer in subsequent employment.
The basic non-solicitation clause is simple, usually stating that the employee agrees not to solicit certain categories of individuals for some period of time. As with non-competes, non-solicitations will be enforced when they are supported by valid consideration and are generally reasonable to protect a legitimate business interest. Protecting employer good will towards employees and/or customers qualifies as a legitimate business interest. Businesses have an interest in protecting the customer relationships developed by employees during employment, which also relates to an employer’s legitimate interest in protecting customer good will. While non-competes require a narrowly tailored provision to be enforceable, Massachusetts courts will often enforce non-solicitations for longer periods than non-competes, as a non-solicitation is less of a burden on an employee who is still otherwise able to work.
Standard non-solicitation language is relatively straightforward. It can be surprisingly difficult, however, to determine when a solicitation has occurred, and Massachusetts courts have not yet worked out all of the details. For instance, if a former employee subject to a non-solicitation is directly contacted by a client of the former employer, has the employee breached the non-solicitation merely by receiving the business? As with many legal questions, the short answer is that it depends.
Massachusetts courts have observed that the line between solicitation and acceptance of business is a hazy one. Thus far, the courts have not drawn a bright line legal distinction between circumstances when the client makes first contact with the former employee, and when the employee makes first contact with the client. Instead, courts look to the facts of the case to determine whether the former employee made an improper solicitation. Further complicating the analysis, while a former employee may be barred from soliciting, the employee’s new employer is under no such restriction and neither are the customers in question because those parties are not subject to the non-solicitation agreement entered into by the employee and former employer. Nevertheless, the employee and new employer should tread carefully to ensure that the employee and new employer’s actions do not yield other causes of action for the aggrieved former employer, such as an unfair business practice claim for behavior that may not strictly run afoul of the non-solicitation provision.
Judicial analysis of non-solicitations recognizes that the context of the particular industry is important. When the individual subject to a non-solicitation is selling fungible, off-the-shelf goods, initial contact with prohibited parties is likely quite important, as there is probably little to differentiate the sellers. Where a complex transaction is involved and products are highly customized, prohibited contact may be less important to securing a sale. Further distinction can be drawn between an overt direct solicitation, and a more subtle indirect solicitation. Directly inviting an employee or customer to engage with a new company would clearly breach a non-solicitation, but more subtle “nudge-nudge wink-wink” approaches can be equally damaging. The courts will look at the overall context of the business relationship and the agreement at issue to resolve whether particular conduct breaches the non-solicitation agreement. Given the fact specific nature of the inquiry, it can be a difficult question to determine in any particular instance whether contact with a client is prohibited by the non-solicitation.
Non-solicitation agreements are another powerful tool for employers to protect legitimate business interests. Like non-competes, non-solicitations must be drafted and implemented carefully to be enforceable and useful. Massachusetts courts will engage in a fact-intensive analysis to determine whether a non-solicitation is valid and under what circumstances the provision has been breached. Both employers and employees should consult with an experienced Massachusetts employment attorney to determine their rights and obligations with respect to any particular non-solicitation provision.