Employment contracts frequently include restrictive covenants. Restrictive covenants are clauses or agreements attached to an employment contract that limit future behavior on the part of the employees.
Many people know a bit about noncompete agreements that prevent people from starting a business in the same industry or taking a job with a major competitor. They may also be familiar with nondisclosure agreements, also known as nondisparagement clauses or confidentiality agreements, which prevent the release of non-public information.
There is a third somewhat common form of restrictive covenant that employers sometimes add to their contracts called a nonsolicitation agreement. What does this kind of restrictive government mean for an employee?
The goal is to prevent professional poaching
Those who are familiar with how a company operates can impact the business’s future success by seeking to do business with the same parties. Nonsolicitation agreements prevent former employees from retaining a client or customer list and trying to sell directly to those parties. They also prevent people from trying to lure away employees to a new company.
Hawaii has restricted the use of nonsolicitation agreements, at least in the technology sector. Many employees who signed these agreements may be unable to use the relationships built during employment for personal gain after leaving the company.
However, some restrictive covenants are overly-broad, making them unenforceable. Others may be part of an unconscionable contract, meaning the courts may not enforce the agreement.
Learning more about common employment contract inclusions can be beneficial for workers who question whether they have to limit their future economic activities. Employers can potentially enforce nonsolicitation agreements in some cases, but certain situations can protect workers from litigation.