In previous issues of A Potpourri, we have often written about the enforceability of restrictive covenants in employment contracts. In this issue, we discuss the enforceability of Aa non-solicitation provision, i.e., a provision which prevents an employee who leaves his/her employment from soliciting fellow employees to come to work for a new employer.
In most jurisdictions, contractual provisions which restrict an employee solicitation are not viewed with the same level of scrutiny as a restrictive covenant. Many courts have held that an employee non-solicitation provision is not a restraint on trade because it does not prohibit an employee from pursuing his or her chosen profession. As a result, many courts analyze claims to enforce an employee non-solicitation provision under a breach of contract analysis. Thus, so long as the provision is part of a contract supported by adequate consideration, a non-solicitation provision will be enforceable.
Illinois courts, however, have not taken this approach. In Illinois, the courts have found that non-solicitation provisions are a restraint on trade. Thus, like a restrictive covenant, the provision must be ancillary to a valid contract and must be supported by valid consideration. Additionally, the provision must be reasonable in geographic and temporal scope and must be necessary to protect a legitimate business interest, such as improper or unfair competition. If the provision cannot meet these criteria, it is unenforceable.
While most Illinois case law in this area has arisen out of disputes between employers involving non-competition provisions in contracts, at least one federal court has applied the analysis to a non-solicitation provision in an employment contract. In the September 2005 case of Hay Group, Inc. v. Bassick, a federal trial judge found that a non-solicitation provision was unenforceable as an unreasonable restraint on trade.
In Hay Group, the non-solicitation provision prevented the former employee from Asoliciting or otherwise directly or indirectly attempting to induce any employee of the Hay Group, Inc. or its affiliates to terminate his or her employment. The court found such a non-solicitation provision to be extremely broad since it prevented the solicitation of any Hay employee worldwide without a showing of the appropriate connection to a legitimate business interest. Thus, the court held a blanket prohibition was an unenforceable restraint on trade.
Given the recent ruling in Hay Group, employers should review their employment contracts to determine whether they contain a blanket non-solicitation provision and, if they do, employers should contact our office to discuss crafting a restriction that is supported by a legitimate business interest.
Finally, as another reminder, there is a substantial amount of new case law relating to non-competition (including non-solicitation) agreements. Employers and employees should contract us to review the enforceability of those provisions in existing agreements. This is particularly necessary where employment crosses state lines.