When an ex-employee works for a competitor, the violation of a non-compete covenant is clear-cut. But few employment contracts define what it means to "solicit."
What is a non-solicitation agreement?
As a restrictive covenant, non-solicitation agreements prevent a departing employee from soliciting the old employer's customers or workforce to do business or work with a new employer. But, these clauses are less burdensome than non-compete agreements that prohibit any work for a competitor or bar any service to a former employer's customers.
Like its stricter cousins, a non-solicitation agreement is a restraint on competition. However, it must not tie the ex-employees hands too tightly. Non-solicitation clauses must include consideration. For example, some benefit to the employee to compensate for the post-employment restriction. And the agreement must be reasonably necessary for the employer's protection and reasonable in time, geographic scope, and scope of the prohibited activities. These are the minimum requirements for an ex-employer who seeks a court injunction against violation of a non-solicitation agreement.
These agreements can be confusing. So, if you are looking for an employment lawyer near you to review these documents, contact us at 610.275.0700.
What does it mean to "solicit" and violate a non-solicitation clause?
When an ex-employee works for a competitor, the violation of a non-compete covenant is clear-cut. But few employment contracts define what it means to "solicit."
As a result, courts have developed workable definitions of "solicit" on a case-by-case basis. In Meyer Chatfield v. Century Business Servicing, Inc., 732 F.Supp.2d 514, 520 (E.D. Pa. 2010), Judge Slomsky used Black's Law Dictionary's definition of "solicit":
To appeal for something; to apply to for obtaining something; to ask earnestly; to ask for the purpose of receiving; to endeavor to obtain by asking or pleading; to entreat, implore, or importune; to make petition to; to plead for; to try to obtain; and though the word implies a serious request, it requires no particular degree of importunity, entreaty, imploration, or supplication. To awake or incite to action by acts or conduct intended to and calculated to incite the act of giving. The term implies personal petition and importunity addressed to a particular individual to do some particular thing.
Under this definition, an ex-employee violates a non-solicitation agreement by contacting or inducing former contacts to bring business to the ex-employee. However, an ex-employee must be proactive in violating the agreement. For example, responding to a former customer who initiates contact with the ex-employee is not "solicitation."
In Harry Blackwood Associates v. Caputo, 434 A.2d 169 (Pa. Super. 1981), the Pennsylvania Superior Court held that a non-solicit clause did not prevent an ex-employee from doing business with a customer who had sought out the ex-employee.
What about other ways to inform the business community of new employment?
For example, is it a solicitation to post-employment announcements or send out business cards where some recipients are former contacts? A statement or mentioning a new employee's name in marketing materials does not constitute a solicitation. However, when targeted only to customers inviting them to move their business may be a solicitation. See PharMerica Corp. v. Sturgeon, 2018 WL 1367339, *8 (W.D. Pa. March 16, 2018)
Does a LinkedIn profile post about new employment violate a non-solicitation agreement?
Courts have held that a simple posting or invitation to connect on LinkedIn is not a solicitation. Bankers Life and Casualty Co. v. American Senior Benefits LLC, 83 N.E.3d 1085 (Ill. App. 2017).
But a posting that morphs into a sales pitch constitutes a solicitation. Mobile Mini, Inc. v. Vevea, 2017 WL 3172712 (D. Minn. 2017). For example, in an unpublished 2017 decision, the Pennsylvania Superior Court enjoined as unlawful solicitation a veterinarian's creation of a Facebook page for a new practice containing postings from former clients and other links about animal and pet care. Joseph v. O'Laughlin, 2017 Pa. Unpub. Lexis 3191, 175 A. 3d 1105 (Pa. Super. August 22, 2017). The moral of these cases is that actions beyond a plain vanilla new employment announcement can cross the line into solicitation.
Courts are less likely to crack down on violations of employee non-solicitation contracts than customer non-solicits. However, an ex-employer should be ready to show a court that the purpose of the solicitation is to "cripple and destroy" competition to stop an ex-employee from soliciting former co-workers. Generally, a court will not prohibit solicitation or recruitment of skilled or gifted employees. Nor will courts punish less aggressive contacts with former co-workers, such as telling former colleagues to look for a job posting.
Documentation is Essential
Like all restrictive covenant cases, non-solicitation disputes involve three key participants- the former employer, the ex-employee, and the new employer. Real-time factual documentation is essential for each player in a non-solicitation case. For instance, ex-employees should record all contacts with former customers and co-workers. The record should include information on:
- Who initiated the communication?
- Steps the ex-employee took in responding to the contact
- When they took those steps
- Whether and how the contact generated new business
A spreadsheet is an excellent way to preserve this information. First, the new employer should monitor the employee's actions. Next, the ex-employer can try to document the loss of business or employees. Finally, customers who don't want to do business with the ex-employee may be willing to provide information on improper conduct. But other customers may want a better deal and freely give business to breakaway employees.
Employers must also resist the temptation to be heavy-handed in dealing with customers and employees. Ex-employers and departing employees must avoid misleading customers or disparaging each other, or litigation for business disparagement or contractual interference may result. And overly adversarial behavior may lead customers to stop doing business with both the ex-employer and the ex-employee. In that case, everybody loses.