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Employment Blog

Agreement Prohibiting Solicitation of Employees by Former Employee may be Unenforceable

A recent decision from the Wisconsin Court of Appeals has raised serious questions regarding non-solicitation agreements that are often included as part of an employment agreement or severance agreement.  A non-solicitation agreement typically prohibits a departing employee from soliciting to hire other employees of your company to go to work for a competitor or for the business the departing employee is engaged in.  Non-solicitation agreements are often included in a non-compete agreement and have been broadly crafted to prevent a departing employee from soliciting other employees to leave your company and go to work elsewhere. 

In the court of appeals decision issued on August 17, 2016, the court determined that the non-solicitation language must be reviewed in the same manner as a non-compete agreement.  The agreement will only be valid if the language is reasonably necessary to protect the employer from unfair competition by a former employee.  Under this ruling, courts will review non-solicitation provisions with the same scrutiny as a non-compete clause and consider the geographical area that is covered and the length of time the provision is in effect.  In other words, the non-solicitation clause will only be considered valid and applicable to the departing employee if the provisions are reasonable and necessary for protecting your company from unfair competition.  This means the duration of the non-solicitation prohibition and perhaps a geographical limitation will be subject to review and scrutiny by the court as to whether it is reasonable under the circumstances.

In the case in question, the non-solicitation clause was written too broadly because it prohibited the departing employee from soliciting or encouraging company employees “to terminate their employment” or to “accept employment with any competitor, supplier or customer.”  The court held that this language was too broad and provided an unreasonable restriction on the rights of the departing employee to communicate with other company employees about possible employment with another company.

This is a court of appeals opinion that may or may not be reviewed by the Wisconsin Supreme Court.  It does require employers to assess their non-solicitation clause in employment agreements to provide some reasonable limitations on the applicability of such a clause to a departing employee.