Non-solicitation agreements, like non-compete agreements, are becoming increasingly common. We have addressed the basics of non-compete agreements in a previous blog post: Introduction to Non-Compete Agreements in Kansas and Missouri. This post focuses on non-solicitation agreements—what they are and when they are enforceable.
What is a Non-Solicitation Agreement?
Non-solicitation agreements prohibit individuals or companies from trying to go after someone or something. Typically, a non-solicitation agreement will prohibit an employee from soliciting an employer’s employees and clients. These agreements are sometimes referred to as “anti-raiding” agreements.
How is a Non-Compete Agreement Different than a Non-Solicitation?
The Missouri Supreme Court uses the term “non-compete agreement” to describe both non-competition agreements and non-solicitation agreements. Whelan Sec. Co. v. Kennebrew, 379 S.W.3d. 835 (Mo. 2012) (“the term ‘non-compete agreement’ refers to all restrictive covenants entered into between the employer and employees that restrict post-employment activities of the employees, including non-competition and non-solicitation clauses.”). But, for purposes of this blog, non-compete agreements refers to an agreement that prevent employees from working for competing companies—an agreement that a car salesman will not work for another dealership within 40 miles for a period of one year, for instance.
Non-solicitation agreements, on the other hand, are agreements that prevent departing employees from taking other employees or clients with them. Imagine a sales manager who is offered a job with a competitor. At his current employment, the manager oversees a staff of six sales professionals. A non-compete would govern whether, and when, he can leave to work for the competitor. A non-solicitation would govern whether he can take the sales professionals and clients with him to the new competitor. In our experience, most employees who are asked to sign a non-compete agreement are also asked to sign a non-solicitation agreement.
Are Non-Solicitation Agreements Enforceable
A. Missouri
In Missouri, non-solicitation agreements are generally enforceable if they are “no more restrictive than is necessary to protect the legitimate interests of the employer.”
The Missouri Supreme Court has summarized the competing interests at play with restrictive covenants as follows:
On one hand, employers have a legitimate interest in engaging a highly trained workforce without the risk of losing customers and business secrets after an employee leaves his or her employment. On the other hand, employees have a legitimate interest in having mobility between employers to provide for their families and advance their careers.
Missouri has enacted a law that addresses the enforceability of non-solicitation agreements as to employees. Notably, these kind of anti-raiding agreements are enforceable even if they do not protect a legitimate business interest, so long as the agreement is limited to one year or less. The statute can be found here:https://law.justia.com/codes/missouri/2005/t28/4310000202.html
B. Kansas
In Kansas, restrictive covenants must be reasonable and not adverse to the public welfare. Idbeis v. Wichita Surgical Specialists, 112 P.3d 81, 279 Kan. 755 (Kan., 2005). “Agreements prohibiting competition in Kansas are strictly construed against the employer.” Weber v. Tillman, 259 Kan. 457, 462 (Kan. 1996).
Kansas courts look at four factors when deciding whether a non-solicitation agreement is enforceable: (1) whether the agreement protects a legitimate interest of the employer; (2) whether the agreement creates an undue burden on the employee; (3) whether the agreement is injurious to the general public; and (4) whether the time and territorial limitations of the agreement are reasonable. Weber v. Tillman, 259 Kan. 457, 464 (1996).
What qualifies as a legitimate business interest? In some cases, client relationships suffice. The Kansas Supreme Court has created a two-part test in evaluating the employer’s legitimate interest: (1) the employer must have a near-permanent relationship with its customers; and (2) the employee would not have come into contact with the customers were it not for his employment. Weber v. Tillman, 259 Kan. 457, 467 (1996). This second factor is important, because it would exclude relationships the employee brought with him or her to the employment.
What if a Non-Solicitation is too Broad?
Typically, courts are bound by the terms in a contract that the parties agreed to. Courts generally lack the ability to rewrite the parties’ agreement. But with non-compete and non-solicitation agreements, the Court is not stuck with the terms the parties agreed to. If a term in the agreement is unreasonable, courts can modify the term rather than invalidating the entire agreement. In Whelan, for example, the Missouri Supreme Court modified a non-solicitation agreement so that it did not apply to “prospective customers” or customers of the employer with whom the departing employees had no contact.
The Court has no duty to modify the agreement, however. It can simply choose not to enforce a wholly unreasonable agreement. Payroll Advance, Inc., 270 S.W.3d at 437 (“We are not convinced, however, that a trial court is compelled to take action to modify an agreement it finds broader than necessary.”).
Beyond Missouri’s limited anti-raiding statute, there is no bright line on enforceability of non-solicitation agreements. The inquiry is always fact specific.
Seeking Guidance?
As non-solicitation agreements become more common, understanding your obligations on the front end of an agreement—whether you are an employee or employer—can make all the difference. We recommend you consult with our Kansas City attorneys before moving forward. Please contact Mike Pospisil (816.895.9105) or Matt Swift (816.895.9107) to discuss your specific situation.
The information contained on this website is informational only and not intended to be, and does not constitute, legal advice. While we attempt to update our site regularly, the information does not necessarily reflect the most current legal developments. You should not act or refrain from acting based upon information provided on this site without first consulting legal counsel.
