Many employers include a “non-solicitation” clause in agreements that they require employees to sign. These non-solicitation clauses usually prohibit an employee from, directly or indirectly, soliciting the business of the company’s customers to soliciting employees to leave the company.
That seems straightforward, but it rarely is. What happens when an employee leaves a company, and a customer tracks the employee down and wants to do business? Is that o.k.? Is that a solicitation by the employee?
What kind of contact can a departing employee have with a former customer?
The simple answer: it depends. The exact language used in the non-solicitation agreement will be critical here. Sometimes, a non-solicitation is very clear that a former employee cannot solicit or do business with a customer that the employee worked with.
Other times, the non-solicitation clause does not address it. When the language is not clear, a Dallas federal judge recently helped define the parameters of what it means to “solicit.” The case is Sunbelt Rentals, Inc. v. Holley, 2022 WL 049468 (N.D. Tex. April 7, 2022).
This clause said that the employee would not “solicit the provision of products or services similar to those provided by the Corporation to any person or entity who purchased or leased products or services from the Corporation at any time during the 12 calendar months” before the employee’s last day.
So, would this clause prohibit an employee from doing business with a former customer if the former customer reached out to the employee?
As the judge said, a full spectrum of acts needs to be reviewed in the context of a non-solicit clause. The judge describes this as “falling on a spectrum from active communication directed by the employee and designed to culminate in new business, at the one end, to requests instigated entirely at the will of the former client at the other end. In between lie various factual scenarios involving indirect solicitation or some act undertaken in the hopes of inducing a former client to “initiate contact.”
The court recognized that reasonably constructing a non-solicitation clause must include more conduct than simply falling at the most reasonable end of the spectrum.
In this particular case, the former employee testified he did contact his former customers after he resigned from his job and accepted a job with a competitor. He used his personal cellphone to contact the former customers. However, he testified that he told the customer the contact information for the person at his former employer who would be handling the account. He specifically denied telling the customers his new employer’s name or explaining what he would be doing.
Under these facts, while it was a close call, the court refused to consider a “solicitation” violation of the non-solicitation clause. It denied the former employer’s request for an injunction.
So, it seems that to violate the non-solicit, an employee will need to do something more than have contact with the former customer—particularly if that contact is limited to telling the customer who will be handling its account. Had this employee gone further and told the former customer where he now worked or taken any concrete steps to ask for the business, the court may have found a solicitation.
Any contact with former customers can be tricky. If you have a non-solicitation clause and leave one job to work for a competitor, get some guidance about staying on the right side of the line.