Unlock the Power of eSignature Legitimateness for Non-Solicitation Agreement in the United States

How to eSign a document: eSignature legitimateness for Non-Solicitation Agreement in United States

what is a non-solicitation agreement a non-solicitation agreement is an agreement that's usually signed between a company and an employee and the employee is agreeing that after they leave they will not solicit employees of the company vendors of the company or customers of the company what does that mean exactly well let's say the employee goes to work for a competitor and prior to that the employee signed a non-solicitation agreement by signing that the employee agreed the employee will not ask employees from The Old Company to go to the new company or vendors from The Old Company to go to the new company or customers from The Old Company to come to the new company in other words an employee is is entrusted with the relationships of the employer when the employee comes and the employer recognizes it would be really harmful to introduce the employee to these relationships later have the employee leave and have that employee then solicit those relationships and try to take that away as well it's hard enough for an employer to lose a good employee even a not so good one necessarily but to then have other relationships solicit and brought over now you might be wondering if the person who signs a non-solicitation agreement doesn't solicit but someone else solicits them is that a violation let's play it out let's say for example an employee signs a non-solicitation agreement then goes to the new employer and one of the vendors from the old employer reaches out and says hey we would like to serve you instead of your old company or maybe it's a customer of The Old Company reaches out to the employee and says hey can we continue to work with you at the new company is that okay you might be thinking well it should be okay because there was no solicitation by the the employee who transferred but usually solicitation or non-solicitation agreements say it doesn't matter who in iates the contact it's not just solicitation it's also any other efforts to take away business from the original company it would also be any other transactions or engagements with a new company and typically there's a period of time like 2 years for example now you might be wondering are non-solicitation agreements enforcable they generally are yes in virtually every state if not all of them and you might be saying but wait I heard that non-solicitation Agreements are not enforcable in some states like California for example what you're probably thinking about is a non-compete agreement so let's talk about the difference between a non-solicitation agreement and a non-compete agreement what is the difference between a non-solicitation agreement and a non-compete agreement a non-solicitation agreement says a person will not take relationships to a subsequent company we're talking about the relationships that were introduced and they won't be carried over that's non-solicitation by contrast a non-compete agreement is where a person cannot compete they cannot actually do business in an area typically it's geographically limited so it might be a 10 m radius from the former employer or a 100 mile radi radius or 100 mile radius from any of the former employers business locations are noncompete agreements enforceable in many states they are in fact in most States but not all states for example a non-compete agreement between an employer and an employee generally is not enforcable in California why did I say between an employer and employee because there can be non-compete agreements between other parties for example let's say I start a business I sell widgets throughout the United States and I've built a lot of great relationships selling widgets and maybe I even sell those widgets on infomercials and then I decide to sell my company to a new buyer and the buyer says we'll pay you a million dollars for this business but you need to agree not to compete with us for 10 years we don't want you starting a brand new business competing somewhere else and under a new company and now all the people who recognize you start to associate that Goodwill with the new company so they have me sign a noncompete that for 10 years I will not start a new business that competes with them that is enforceable in virtually all states and all circumstances why cuz it's from a seller of a business to the business and to the new buyers that's very different from employer to employee non-compete agreements because with employer and employee there is a bargaining power differential in other words the employer has a lot more bargaining power the employee has a lot less whereas with a buyer and a seller of a company there's usually much more similar bargaining power also I just think legislator in states are more concerned about protecting employees who are generally considered more vulnerable and susceptible to being taken advantage of than business owners who are selling their businesses let's face it most people when they sell their business they have lawyers involved they have protection they know what they're walking into a lot of times employees don't know what they're walking into they didn't go to law school they might be quite Young when becoming an employee so there are a number of states now that are either outright Banning non compete agreements or having significant restrictions on them right now in the Minnesota Legislature there is legislation going through that would prohibit non-compete agreements in the employer and employee relationship moving forward so those that were signed in the past would still be in place but moving forward they'd be prohibited okay so non-solicitation agreements that has to do with relationships they're enforceable non-compete agreements that has to do with competition in the marketplace just the ability to do business that is viewed with scrutiny by the courts and not enforceable in some states feel free to register at Aon hall.com sfree you'll get on our free newsletter doesn't come out that often and it's all 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