Non-Solicitation Agreements Are A Good Defense

If you’re an employer and have invested in an employee for a long time, the last thing you want to happen is have that worker jump to a competitor.

After all, that employee has good insider knowledge and could help the competition swipe away some of your customers, employees, market share – and even trade secrets.

Usually, a non-competition agreement would take care of such problems by barring the former employee from working for competitors for a certain period of time. Yet there’s a big problem with that when it comes to California. The Golden State considers non-competition agreements unenforceable in just about every instance, according to a 2008 ruling by the state supreme court. Other states have some restrictions, but California is one of the first to take such a hardline stance on the matter.

So what is an employer to do in order to safeguard his or her business? Experts say the next best thing is to address this issue from the get-go by requiring a well-worded non-solicitation agreement be signed at the time of hiring. A non-solicitation agreement, in conjunction with a confidentiality agreement, will go a long way in protecting your bottom line and market share.

This step will restrict an employee from soliciting customers while they are with your company and, once they leave, from using trade secrets to solicit customers.

“It can be difficult to prove solicitation,” said Anthony Spotora, a Los Angeles-based business lawyer, “but a non-solicitation agreement can be your best offense in California when seeking to defend your business and your bottom line.”

It is important to note that the trade secrets component is the only enforceable component of a non-solicitation agreement. The same 2008 Supreme Court decision that found non-compete agreements to be unenforceable also found that non-solicitation agreements are only enforceable when they are limited to trade secrets, or intellectual property. This distinction must be clear in the employee agreement.

Trade secrets can encompass a wide range of information such as customer lists, technical information and computer programs, software, techniques and licensing.

As per California’s 2008 Edwards vs. Arthur Andersen decision affecting non-solicitation and non-compete contracts, this extends to employers both in and out of state.

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