It could take years of networking and relationship-building to create a client list that never fails you. You have a roster of businesses or individuals that want the services or goods that your company has to provide, and these same clients have consistently patronized your business for years.
It is only natural to want to protect that client list, as your competitors could potentially attract some of those clients away from you by offering lower prices or other perks. When you add new employees to your sales, accounting, marketing or executive teams, they may have access to your client list and frequent contact with those clients. You would obviously prefer to prevent them from stealing that list or using it for purposes that could damage your business.
California law prevents you from enforcing a non-compete agreement against a former employee. A non-solicitation agreement can be a viable workaround for protecting your client list.
How a non-solicitation agreement works
Like other restrictive covenants, a non-solicitation agreement imposes limitations on what a worker can do after leaving your company. In this case, the terms would include a prohibition on soliciting clients or customers that they know from their time at your company when they leave to work for a competitor or start a business of their own.
If they reach out to your clients to try to get them to stop patronizing your business, you could then potentially take them to court to enforce the non-solicitation agreement. The courts could both order your former employee to stop reaching out to businesses or people on your client list and could even award you punitive damages.
Employment contracts should protect you from the biggest risks
Each new employee that you hire adds to your company’s overall risk. You never know when that new intern might try to capitalize on what they learn at your company for personal gain with no regard for what it could do to your business.
The more careful you are about the terms that you include in your employment contracts, the harder it will be for employees to damage your company with impunity. Learning more about federal and California employment laws can help companies protect against the worst behaviors of their current and future employees.