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What is a Non-Solicit Agreement?

President Joe Biden recently signed an executive order encouraging the Federal Trade Commission to limit or ban the use of non-compete agreements. In addition, there is a bill in Michigan’s legislature which, if signed into law, would create restrictions for utilizing non-compete agreements.

Business owners use non-compete agreements in Michigan to protect trade secrets and retain top talent. A non-compete also prevents employees from sharing confidential information, starting a competing business, soliciting customers, and more.

With the proposed changes at both the federal and state levels affecting the use of non-compete agreements, some employers may wish to protect their business interests in other ways. In some cases, a non-solicitation agreement may be a viable option.

What is a non-solicitation agreement?

A non-solicitation agreement is a covenant between an employer and employee that prohibits workers from utilizing a company’s customers, clients, and contact lists for personal gain after leaving the company. A non-solicitation agreement may be part of an employee’s onboarding documents.

A non-solicitation agreement:

  1. Does not prohibit an employee from engaging in employment or a line of business after termination;
  2. Offers protection for the businesses in that it prohibits employees from stealing valuable contacts, customers, and client lists; and
  3. Is more likely to be enforced in court because it would be unjust to allow a worker who established client relationships with your company’s resources and time to call on those same customers on behalf of the new employer.

Help is available

The business attorneys at O’Reilly Rancilio review, negotiate, and draft employment, non-solicitation, confidentiality, consulting, and independent contractor agreements. Our attorneys also consult with clients and prepare employee handbooks and other documents related to employment policies and employment or independent contractor agreements. For more information, please call 586-726-1000 or visit our website at www.orlaw.com.

Categories: Business

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