Business leaders often shift from one company to the next. It’s not entirely uncommon for those leaders to poach clients from an old company so they can bring them to the new one, either. Perhaps you’ve seen the phenomenon portrayed on shows like The Good Wife. TV is one thing. Reality is another. This one-time standard practice is now sometimes illegal due to contractual obligations. But enforceable?
Those who have jobs in retail will understand what we’re talking about. Most hourly employers have contracts wherein specific “arbitration” clauses prohibit lawsuits that arise because of a disagreement with an employer. Instead, a legally binding outcome is decided upon by a third-party. That saves employers a lot of money on legal fees and courtroom battles even when they lose to arbitration.
Non-solicitation agreements are similarly binding. “Solicitation” means that one person has a left a company for another, during which time this person actively approaches clients from the old company in an effort to gain business for the new one. Non-solicitation agreements are part of many employment contracts in order to eliminate or reduce this kind of behavior.
Non-solicitation agreements also limit how an old employee can gain access to or use information obtained from the old post.
One Florida statute legalizes these agreements: “(1) Notwithstanding s. 542.18 and subsection (2), enforcement of contracts that restrict or prohibit competition during or after the term of restrictive covenants, so long as such contracts are reasonable in time, area, and line of business, is not prohibited.”
The statutes basically stipulate that these agreements must not be overly restrictive or unclear, and they must have a valid commercial purpose.
But one obvious question is this: How binding are these non-solicitation agreements? What are the consequences for blatantly breaking one, if any?
Many non-solicitation agreements are too broad in order to enforce. If you want your firm’s agreement to be enforceable under the law, then it needs to be extremely narrow in how it targets the behavior. Most successful agreements are made dependent on the type of business they protect. Others are often dismissed by the time they reach court. This was the result of a lawsuit seeking to prevent a former NuVasive employee from stealing clients.
Former employee Christopher LeDuff had been poaching former clients to take with him to Alphatec Spine, one of NuVasive’s competitors. The non-solicitation agreement that bound Christopher LeDuff from this behavior failed to compel Judge Sheri Polster Chappell that NuVasive’s business interests required the protections formalized in the agreement, and so the case was dismissed.
NuVasive will likely appeal. Today is the deadline for both parties to do so.