Non-Solicitation Agreements in New York: The Ultimate Guide for Executives
A non-solicitation agreement is a legal contract between an employer and employee prohibiting the worker from doing business with the company’s customers or other employees after they leave their job.
Many companies, especially those involved in service or sales industries, see these agreements as a way to safeguard their client bases.
For other companies, they’re a way to protect their investments in hiring and training employees in specialized skills.
Many New York employees may not realize they’ve signed a non-solicitation agreement until a dispute arises, and they’re faced with the threat of a lawsuit.
Fortunately, even if you’ve signed one of these contracts, with the help of an employment attorney, you may still be able to get out from under its restrictions and avoid an employer’s potential legal action.
In this guide, we’ll explain how non-solicitation agreements work, describe how they’re enforced in New York, and walk through the ways that an employment lawyer can help you handle a non-solicitation agreement dispute.
If you still have questions or would like to speak with a New York employment lawyer, please contact us online today or call 213-204-8002.
How Do Non-Solicitation Agreements Work In New York?
Legally, non-solicitation agreements are considered a type of “restrictive covenant.” Like a non-compete agreement or a non-disclosure agreement, a non-solicitation agreement is a way for an employer to limit what their employees can do after they leave their jobs.
In this case, a non-solicitation agreement prohibits individuals from “soliciting” — i.e. doing business with — their former employer’s customers, clients, or other employees.
Since there’s no universal legal definition of “solicitation,” though, the exact behaviors that are prohibited by a non-solicitation agreement will vary from contract to contract.
For instance, a pharmaceutical company’s non-solicitation agreement could aim to prevent former employees from poaching their colleagues for rival firms but say nothing about working with former clients or customers.
On the other hand, a business that sells project management software to tech companies might require departing employees to agree not to contact clients or customers they’ve sold to previously.
There will also be specific geographic and temporal parameters applied to the non-solicitation restrictions.
For example, if a chiropractor in Manhattan leaves her clinic to start an independent practice, a non-solicitation agreement might prohibit her from contacting any of her previous clients within New York City for 12 months.
Non-solicitation agreements are often included in a company’s employment contract, or as a clause in a severance package.
But your employer could also present a non-solicitation agreement to you as a separate document at any point in your employment.
Like non-compete agreements, non-solicitation agreements can put real constraints on commercial growth, not to mention an employee’s ability to pursue their professional goals.
Because of this, courts in New York are often disfavorable to enforcing them unless specific criteria are met.
What Makes A Non-Solicitation Agreement Enforceable In New York?
In New York state, for a non-solicitation agreement to be enforceable, it must meet three criteria (BDO Seidman v. Hirshberg, 1999). The restrictions outlined in the contract must:
- Be no greater than necessary to protect the legitimate business interests of the employer.
- Not impose an undue hardship on the employee.
- Not harm the public.
Courts want to strike a balance between employers’ business interests and employees’ freedom to pursue their professional goals. For that reason, the limitations of the agreement can’t be unlimited, for instance, or unduly long or broad.
A non-solicit that prevented a doctor who’d opened a new practice from soliciting former clients anywhere in New York state, or for a period as long as five years, could pose a serious burden on the individual professional.
Additionally, any limitations that could have negative impacts on public health or safety are also off-limits.
For instance, in cases where a company’s non-solicit might prevent medical personnel (or other professionals with specialized skills related to public safety) from working in areas that are isolated or lacking in potentially life-saving services.
Depending on the type of “solicitation” an agreement is designed to limit — i.e. former employees, clients, customers — New York courts will also focus on different things when determining whether they merit enforcement.
Who Is Off-Limits When It Comes To Non-Solicitation Of Customers?
It can be hard for employees to know where to draw the line when it comes to a non-solicit of former clients or customers.
For example, if an executive at a wealth management firm leaves her company, is she barred from soliciting all current customers of her former employer or all of their potential customers?
Or does she have to avoid only those customers that she met and serviced while working with her former firm? What about customers that she knew before joining her former employer?
As a general rule, New York courts are willing to enforce a company’s desire to prevent (at least for a limited time) the competitive use of relationships that an employee acquired specifically during their tenure with the organization.
Most non-solicitation cases, then, will focus on identifying customer relationships that were created solely during the employee’s term of employment.
But relationships with clients developed and nurtured outside of your time with your former employer? Those generally don’t fall under the purview of a non-solicit.
This means that you should be free to contact customers you met before or after you left your former company.
Do Non-Solicitation Agreements Apply To All Former Employees?
Most New York non-solicitation agreements include a clause that prohibits employees from recruiting their former coworkers (at least, for a period of time).
In general, courts in New York are more inclined to enforce agreements targeting the non-solicitation of other employees than of customers.
This is because restrictions on soliciting employees are viewed as less burdensome on individual workers, since they don’t prevent employees from actually practicing their profession.
However, the restrictions still have to meet New York’s criteria for enforceability. This involves ensuring that an employer’s legitimate interest in retaining their human resources doesn’t put undue restrictions on worker mobility or the exercise of trade.
For the most part, courts in New York find that employers’ non-solicit agreements can only be enforced when it comes to employees who have access to uniquely specialized or protected proprietary information.
Non-solicitation agreements designed to safeguard legitimate trade secrets, for example, are likely to be enforced.
If an executive editor leaves the New York Times to take a position at the Washington Post, he could be legally prohibited from reaching out to the employees who compile the Times’ bestseller list, since that is considered a trade-secret process and not disclosed publicly.
A non-solicitation provision could also be enforced if the employees being solicited possess truly unique or extraordinary skills that were developed while being employed by the company.
But outside trade secrets and rare, highly specialized skills, courts tend to reject most other arguments that employers make for the validity of non-solicitation of former employees.
For instance, New York courts have rejected claims that the solicitation of employees will (1) destabilize the company’s workforce, (2) cause the company to lose significant costs incurred in recruiting, hiring, training, and educating employees or (3) cause mass resignations.
How Can I Get Help With My Non-Solicitation Agreement?
Whether or not you’ve officially signed one of these contracts yet, it’s best to consult with an employment lawyer if you’re concerned about being constrained by a non-solicitation agreement.
If your employer has just presented you with one, an employment attorney can review the document with you and explain the language of the agreement.
Once you have a sense of how strict the terms are and/or how likely they are to apply to your situation, you’ll be in a better position to understand what you’re signing.
Alternatively, if you’re getting ready to leave your company and are concerned about an agreement you signed at the start of your employment, an attorney can evaluate the contract and help you understand your options for fighting it.
A legal expert who’s familiar with New York’s labor laws can advise you on how to avoid the risks of a dispute, as well as advocate for you if the matter goes to court.
Get in Contact with a New York Employment Lawyer Today
Ottinger Employment Lawyers has been helping workers escape from unfair and unenforceable employment contracts for over two decades.
If you work in New York and are concerned about a dispute in the workplace — whether it’s a non-solicitation agreement, non-compete agreement, harassment, or illegal retaliation — our team of experienced attorneys can help you navigate the legal system and get the restitution you deserve.
Contact our office today to speak to one of our advocates about your case.