Minnesota-based private wealth manager Kurt Altrichter was on the phone when it happened. He was handed a set of documents—and he just assumed they were the standard papers he’d been required to sign every year at the wealth management firm where he worked at the time.
“It got shoved at me when I was on the phone, and I just signed it without thinking about it,” he says. But about a year later—when he was planning to leave the firm—a chat with a friend led him to discover that what he’d signed included a non-solicitation agreement. He consulted an attorney and started researching.
Once he finally quit, the clause barred him from contacting any clients he’d built up at the firm. And he didn’t. But that didn’t stop the company from filing a cease-and-desist order against him, simply because he still had some client contact info on his personal phone. That was enough for him to rack up thousands of dollars in legal fees before eventually settling out of court in what he feels was an ego battle with his old firm.
The next time Altrichter was asked to sign a non-solicitation at a different firm, he was way more careful. He negotiated. Asked questions. And before signing any contracts, he hired an attorney who helped review them with a “fine-tooth comb.”
“Once they offer you a job, it’s OK to ask questions about everything,” says Altrichter, who’s since decided to leave behind employer restrictions and launch his own wealth management company. “Always expect you can get fired in five minutes, and what are you going to do?”
Legal experts echo what Altrichter learned the hard way. “The most helpful thing is to just simply be aware,” says Adam Augustine Carter, an attorney and principal at The Employment Law Group, P.C. Understanding those details before signing a document or switching jobs is key, Carter says. Plus, what state you live in can also impact just how enforceable these kinds of restrictions really are.
If you’ve encountered a non-solicitation agreement or clause, don’t freak out. To help you parse through the legalese, we’ve broken down what you should know and what steps you could take next.
Before you read on, an important note: While we interviewed lawyers for this story, we are not lawyers ourselves, and every case is different. So please consider this a general resource to help you get started and, if you need it, seek personalized advice specific to your situation from an actual lawyer!
What is a non-solicitation clause or agreement?
A non-solicitation agreement is a contract between an employee and an employer restricting the worker from recruiting either workers or customers over to a new organization after leaving the company. Typically, the contract covers a certain period of time and a particular geographic area.
“Solicitation” may include using an employers’ contact or client list for your own business opportunities, according to Najah Farley, a senior staff attorney with the National Employment Law Project. But there’s no specific definition of solicitation on a national level, so the exact meaning might vary depending on the agreement.
For example, if you’re a doctor hoping to launch your own practice, you may be restricted from recruiting your existing patients for several months after you leave your previous clinic. Or if you sell farming equipment or tractor-trailers in the state of Pennsylvania, your company might prevent you from selling to your customers in that state for a year. A super restrictive non-solicitation clause could place you under these rules for a long time period across a wide region.
The ultimate goal for employers is typically to prevent a worker from taking away an existing customer base or productive employees. From your perspective, these agreements could limit what jobs are open to you and how you make money in the future. If you want to start your own business, for instance, they could make it harder to do so without client relationships you’ve built over years.
Barring a worker from soliciting former customers or colleagues is just one type of restriction employers might include in paperwork they ask you to sign—others include non-disclosure agreements, non-competes, and non-disparagement clauses.
When and how would you encounter a non-solicitation agreement?
You’d most likely see an agreement incorporated into an offer letter or employment contract that you’re expected to sign during the onboarding process. Or it may come up in a severance negotiation after getting laid off. But an employer could ask you to sign one at any time during your tenure, as was the case for Altrichter.
Employment attorney Robert Ottinger sees such clauses in nearly every role, even janitorial positions. But when it comes to client and customer poaching, non-solicitation is most relevant for salespeople. “They’re the ones that are out there digging around trying to find new customers all the time,” Ottinger says.
Non-solicitation agreements are also relatively common in the pharmaceutical industry, where many salespeople work, as well as among doctors, Carter says. Industries where workers are difficult to recruit and training requires a lot of time and money—like medicine, information technology, and banking—are where you’re more likely to see restrictions on recruiting former colleagues.
What does a non-solicitation clause or agreement look like?
Headings within onboarding, severance, or other documents requiring your signature may list such clauses specifically as non-solicitation agreements, Ottinger says. But “some people call them restrictive covenants—that’s the general heading for non-compete agreements and non-solicitation agreements.”
A non-solicit then typically includes language saying you can’t take customers who you’ve worked with while employed there for, say, 12 or 24 months, or something similar about poaching employees from the company. The wording could be along the lines of, “You’re prohibited from attempting to induce or cause current employees to leave our company and go to your new one,” Ottinger says.
According to Law Insider, a clause might look like this:
“During the Executive’s employment with the Company and during the twelve-month period following his or her cessation of employment, the Executive shall not directly or indirectly, personally or through others, solicit or attempt to solicit the employment of any employee or consultant of the Company or any of the Company’s affiliates, whether on the Executive’s own behalf or on behalf of any other person or entity. The Executive and the Company agree that this provision is reasonably enforced as to any geographic area in which the Company conducts its business.”
The details in the clause—or lack thereof—may complicate matters, Farley warns. “What’s tricky is the language may not be clear,” she says. Does the clause cover recruiting your coworkers before you quit? What if you grab beers with your coworkers outside of a professional setting? Is there a specific time period the clause is relevant? Any restrictions to a certain city, state, or region? “Those are the main things that people, when they’re reading it, want to pay attention to.”
Is a non-solicitation agreement enforceable? What happens if you break it?
In short, yes, they are enforceable. But it depends on the state you work in—and there are some major exceptions.
In California, for instance, such clauses are typicallyy unenforceable. And in North Dakota, customer non-solicitation agreements are not enforceable, according to a 50-state guide from Seyfarth law firm. Though Seyfarth’s guide is targeted at businesses, it can be useful if you’re looking to see what the rules are in your state for non-solicitation clauses as well as other employee restrictions.
Ottinger notes enforcement also isn’t common in New York. Generally, the state sides with workers to allow people the freedom to work where they want to. The New York Court of Appeals determined in the 1999 case BDO Seidman v. Hirshberg that non-solicitations are only enforceable if the restriction is:
- Reasonable in how long it is and where it applies
- Necessary to protect the legitimate business interests of an organization
- Doesn’t pose undue hardship on the employee
- Doesn’t harm the public
Generally speaking, even in places where non-solicitation agreements are enforceable, your company would ultimately have to prove you’ve specifically recruited or solicited people. And the agreement can’t be too restrictive in the time period or geography—like requiring the clause to cover five or 10 years across the entire country or even planet. The phrasing of the contract would need to be over a reasonable time period, such as one year, and contained to a specific city or region. It could even include a mileage radius as the geographic requirement. What’s “reasonable” would either be decided by precedents set by previous local court decisions or by a judge.
If you break a non-solicitation agreement, your former employer could issue a cease-and-desist order to try to stop you from violating the clause. They could also sue you and attempt to keep you from working at your new company, according to Carter. You could end up having to pay legal fees for yourself and the organization suing you and, in some cases, damages on top of that.
So should you sign a non-solicitation agreement?
It mostly depends what state you live in and whether the agreement would keep you from working in your current field (if you’d like to stay in it, that is). Carter says you should consider your ability to make money and whether you’d be hampered in providing for yourself or loved ones.
On the flip side, there are also consequences in choosing not to sign. If a non-solicit comes up during the offer or onboarding process, a company could decide not to hire you after all if you don’t sign. If you encounter an agreement at your current gig, you could be fired (so consider whether you’re an at-will employee or have firing protections through a union contract). And if that non-solicitation clause is tucked into a severance agreement, refusing to sign might cost you whatever severance pay or benefits your employer is offering.
If you’re having trouble deciphering the language of a specific non-solicitation clause or understanding its implications in your particular situation, consider seeking a local attorney who represents workers. Since laws and enforcement of these restrictions vary so much across states, it’s important to get localized information. The National Employment Law Association and the organization Workplace Fairness have search tools to find a lawyer who reps workers in your area.
And remember that you don’t need to think of this (or any) agreement as a binary: sign or don’t sign. You could also look for a middle ground by negotiating with your employer. “Maybe it’s negotiable. Maybe it’s not,” Carter says. But you won’t know if you don’t try it—respectfully and professionally, of course.
If you’re being laid off, for instance, and are presented with paperwork to sign that includes a non-solicitation clause, you could ask for more severance pay to cover the time you’re under restrictions, rather than asking for the clause to be removed outright. “If you want to put me on the beach for a year, then you have to pay me to sit on a beach,” says Carter. Farley says another strategy could be reducing the time period a clause covers—like negotiating down from 12 months to six.
You may find negotiating is especially fruitful when the job market favors workers. During the Great Resignation, for instance, workers have seen newfound leverage over pay and benefits as companies face fierce competition to hire for open roles.
“This might be a good time to try and push back,” Farley says.