What are the variations between non-competition and non-solicitation – Enterprise Law Authorized Blogs Posted by Casey B. Inexperienced

Every business owner, executive, manager and employee has heard of or signed a non-solicitation or non-compete agreement. These documents are standard employment contracts and letters of offer. Understanding the differences between these agreements and their enforceability makes it easier to achieve business goals.

Both agreements are restrictive covenants. This means that each party agrees to be limited by the terms contained in the agreement or contractual clauses. However, just because the parties are in agreement does not mean that a court will automatically uphold the restrictions in the document.

Non-compete obligations
As a company, a non-compete agreement is often the more difficult of the two restrictive agreements to enforce. This is because the company has a heavy burden of proof of unfair competition. To enforce a non-compete clause, the company must demonstrate that a former employee has confidential information about the business interests and that the company prevented the employee from working for a competitor for a reasonable period of time and in a reasonable geographic area. If the company does not provide this evidence, it is difficult to enforce a non-competition clause. Ultimately, it is up to a court to rule on the appropriateness of the restrictions placed on the former employee.

That doesn’t mean all hope is lost. In many cases, a court will modify the non-compete clause so that it is less restrictive on the former employee while protecting legitimate business interests. An important point about non-compete clauses and clauses is that they should only apply to employees. Any company attempting to exercise a non-compete agreement with an independent contractor can be subject to scrutiny and fines and penalties by the government for misclassifying employees.

Non-solicitation restricts a former employee in other ways. They cannot recruit existing, potential, and sometimes former clients to work with them in their new business. Even if enforcement is easier than a non-compete clause, there are still challenges.

The biggest of these enforcement challenges is that the company needs to demonstrate that a former employee has asked an existing, prospective, or former customer to leave. Companies often don’t know why a customer is leaving, which makes enforcement difficult, but not impossible.

Possible clauses
To help companies understand the difference between these restrictive agreements, there are key elements that can help a company enforce these clauses. The exact needs of each company vary. For this reason, and in order to fully understand and review a company’s restrictive covenants, it is advisable to speak to an experienced corporate lawyer.

For non-compete obligations:
Limit the former employee to working in a similar position for a customer or competitor.
Restrict the former employee only within one geographic area around the company’s office.
Remove the restrictions after a reasonable period of time, such as two years.
For non-solicitation:
Restrict former employees from soliciting existing and potential customers and current employees.
Limit the limitation to no more than two years.
Philadelphia business attorneys at Sidkoff, Pincus & Green PC assist clients with anticompetitive and amicable agreements
If your company is faced with non-compliance by current or former employees, or if you want to know if your restrictive agreements are enforceable, we can help. You care about your business and you need guidance that you can trust. Sidkoff, Pincus & Green PC’s Philadelphia corporate lawyers can help you with your business needs. Contact us online or call us at 215-574-0600 for an initial consultation. Based in Philadelphia, we serve customers across Pennsylvania and New Jersey.

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