Importance of Employee Non-Solicitation Agreements
A few weeks ago I attended a conference relating to venture capital in Iowa. During the talk several of the panelists commented that they would not sign a non-disclosure agreement prohibiting them from discussing a potential business idea they learned about from someone seeking capital. The venture capitalists did not want potential liability for ideas that they might hear several times in a week. Almost every single panelist indicated that sliding a non-disclosure agreement over the table at the beginning of the meeting was a deal killer.
That discussion led into a great discussion involving non-compete agreements and employee non-solicitation agreements. The participants had mixed feelings about non-compete agreements. It is often tough for entrepreneurial types to admit that restricting another person from competition is a good idea. However, all were committed in the importance of employee non-solicitation agreements. An employee non-solicitation agreement prevents one of your employees from hiring one or more of your employees for a set time period, generally about 1 year.
In the end the panelists believed that the human capital was critical to the success of the business, perhaps even more so than the clients themselves. An interesting take indeed.
Litigation over non-compete and non-solicitation agreements sometimes take on a unreal quality. The plaintiff's often add claims of theft of trade secrets, some kind of breach of loyalty, and some theory of conspiracy. The problem for the employer is that the attempt to enforce any such agreement is expensive and diverts a lot of resources to the effort. For the employee there is the risk of getting charged with theft of trade secrets that the emploee didn't know was protects information (the employers fault.) Gavin Craig