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?
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. These clauses are less burdensome than non-competes 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 and must not tie the ex-employee’s hands too tightly. Non-solicitation clauses must include consideration- namely, 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. 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” in violation of 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 clause by contacting or inducing former contacts to bring business to the ex-employee. To run afoul of the agreement, an ex-employee must be proactive. 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 solicitation to post employment announcements or send out business cards, where some of the recipients are former contacts? A standard announcement or the mention of a new employee’s name in marketing materials does not constitute solicitation; however, an announcement targeted only to customers and inviting customers to move business may be 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 clause?
No again; courts have held that a simple posting or invitation to connect on LinkedIn is not 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 will constitute solicitation. Mobile Mini, Inc. v. Vevea, 2017 WL 3172712 (D. Minn. 2017). In an unpublished 2017 decision, the Pennsylvania Superior Court enjoined as wrongful 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. Aug. 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. In order to stop an ex-employee from soliciting former co-workers, an ex-employer should be ready to show a court that the purpose of the solicitation is to “cripple and destroy” competition. A court will not usually 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 out for a job posting.
Like all employee mobility 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 of these players in a non-solicitation case. The ex-employee should keep a record of all contacts with former customers and co-workers. The record should include information on who initiated the contact, the steps taken to respond to the contact, when these steps were taken, and whether and how the contact generated new business. A spreadsheet is an excellent way to preserve this information. The new employer should monitor the employee’s actions. The ex-employer can try to document the loss of business or employees. 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 just want a better deal and will freely give business to breakaway employees.
Employers also need to resist the temptation to be heavy-handed in dealing with both customers and employees. Ex-employers and the 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.