Non-solicitation Agreement | Hands Off Our Clients!

Non-Solicitation vs. Non-Competition

The termination of one’s employment is rarely an easy experience. For employees who have spent many years of their life in one place, it means the loss of income, missed colleagues, and for some, even the loss of a sense of purpose. Even worse, to add insult to injury, an employee may have clauses in their employment agreements that restrain them from being able to get back on their feet. The legal terminology for these clauses is “restrictive covenants.” In a recent blog, we discussed the various different kinds of post-employment obligations that an employee has following dismissal.

In this article, we look specifically at the most common kind of restrictive covenant – the non-solicitation agreement or non-solicitation clause – and how it differs from a non-competition agreement, and what to do if you believe that you may be subject to one.

The first thing to understand about a non-solicitation agreement or clause is what they are not. Many employers and employees alike confuse a non-solicitation agreement with a non-competition clause. The key distinction between the two is that a non-solicitation agreement prohibits one from deliberately trying to take business or employees away from his or her former employer, while a non-competition clause will, to a certain degree, prevent one from working at all. This is an important distinction, because a non-competition agreement is presumptively unenforceable, as they are considered a restraint of trade. In other words, an enforceable non-competition agreement is the exception to the rule. On the other hand, a properly drafted and appropriately limited non-solicitation clause may, in fact, be enforceable, considering the temporal length, severity, and geographic scope of the restriction.

Some employers will try to get a non-competition agreement through the “back door” by calling something a non-solicitation agreement when it is really a non-competition agreement in disguise. This was the case in Donaldson Travel Inc. v Murphy, where an employer attempted to place restrictions on “accepting business”. The court held that this was in actuality a non-competition clause (and an unreasonable one at that), and therefore unenforceable.

Non-solicitation clauses will be scrutinized by the courts as well, but there is much greater likelihood that they will be held to be enforceable. For example, a clause preventing a dentist from soliciting patients of a dental clinic for 2 years after their employment ends, could be reasonable and enforceable. That was exactly what a dentist learned the hard way in Smilecorp Inc. v Pesin, who made copies of patient lists and took them with him to his new practice after the termination of his employment.

Non-Solicitation Agreements and Social Media

One relatively new issue that yet to be explored in Canada, but has arisen in other jurisdictions, is how to deal with the implication of LinkedIn profiles. If an employee leaves one company to work for a direct competitor, and updates his LinkedIn profile, that employee’s LinkedIn contacts will all of the sudden be invited to “congratulate” the employee. Many of those LinkedIn contacts may not only be colleagues, but clients of that employee’s former employer. In the U.S., some employees have been sued for sending messages through LinkedIn to the company’s former employees, but even there the courts have not yet addressed what LinkedIn activity will violate a non-solicitation agreement. Legal precedent on this issue is inevitable in Canada, but for now, caution is certainly warranted.

Takeaway for Employees

Do Not Assume Anything.

The most important thing to remember when it comes to a non-solicitation agreement. Ideally, a non-solicitation clause should be reviewed with an employment lawyer at the beginning of an employment relationship. In some cases, you may even be able to negotiate an unreasonable non-solicitation agreement or non-competition clause into a more reasonable one.

Unreasonable Doesn’t Mean Unenforceable.

Even breaching a completely unenforceable non-solicitation agreement can mean an expensive lawsuit from a former employer. If you’re worried about the effects of a non-solicitation clause following a termination, speak with an employment lawyer.

Takeaway for Employers

A Poorly Drafted Clause Can Have Devastating Consequences.

There are many legitimate reasons to want your employees to be subject to a non-solicitation agreement. However, it is critically important that any non-solicitation clause is reviewed by a qualified employment lawyer. Not only will a poorly drafted clause end up being unenforceable, but an overly aggressive restrictive covenant could land the company with a significantly increased liability for severance. Nemirovski v. Socast Inc. serves as an example of just such a case.

The employment lawyers at Samfiru Tumarkin LLP are experienced in busting non-solicitation agreements, as well as drafting, interpreting, and negotiating restrictive non-solicitation clauses. If you are dealing with a non-solicitation agreement contact us.