\u201cNDAs, Confidentiality, Non-Solicitation, and Non-Competition Agreements\u201d<\/p>\n
PART TWO \u2013 Non-Competition and Non-Solicitation Agreements: What\u2019s the Difference Anyway?<\/em><\/p>\n Welcome to Part 2 of our new series here on \u201cWords of the Law,\u201d the Online Legal Translations blog.<\/p>\n As we mentioned in the last installment of this series, terms such as \u201cnon-solicitation\u201d and \u201cnon-competition\u201d have no fixed legal meanings, as do terms such as \u201cburglary\u201d or \u201cfraud,\u201d which are defined in statues and further clarified by common law.\u00a0 These terms are used to describe sections of agreements or entire agreements (which are sometimes nicknamed \u201cnoncompetes\u201d and \u201cnonsolicits\u201d). Unless these terms are specifically defined within an agreement to which both parties agree, these words can mean just about anything<\/em>, legally speaking.<\/p>\n In this article, we \u00a0focus on the terms \u201cnon-solicitation and \u201cnon-competition\u201d as they exist under the laws and rules of the United States, but the general concepts surrounding these terms are similar in many other jurisdictions.<\/p>\n Non-Solicitation Agreements \u2013 \u201c<\/strong>Don\u2019t steal our people\u201d and \u201cDon\u2019t steal our clients.\u201d<\/p>\n \u00a0\u201cDon\u2019t steal our people.\u201d<\/strong> — Typically, a non-solicitation agreement will require a someone to promise not to recruit the other party\u2019s employees with whom that someone has come into contact solely by virtue of the business relationship.<\/p>\n The \u201cdon\u2019t steal our people\u201d section of an agreement might read: Vendor shall not interfere with Company’s relationship with, nor entice away from the Company, any person who, at any time during the effective period of the agreement, was an employee of the Company.<\/em><\/p>\n In terms of translation agreements, non-solicitation language is more likely to be found in agreements between translation agencies<\/em>, who often subcontract services to each other, wherein each agency does not want to lose its best project managers to the other agency.<\/p>\n It is unlikely that a freelance translator would encounter non-solicitation language in an agreement with an agency, however, it is possible.\u00a0 A translator could conceivably<\/em> entice an agency\u2019s project manager to join the translator and create a new agency, or could entice a project manager to work for another agency, cutting out the original agency who brought the translator and their project manager together.\u00a0 Therefore, an agency-translator contract provision forbidding solicitation is not, in and of itself, unreasonable.<\/p>\n By the very nature of the \u201cfreelancer\u201d status, as opposed to \u201cemployee\u201d or even \u201crepresentative,\u201d freelancers are allowed to work for multiple agencies. Also, in general, in a freelancer-agency relationship, the freelancer, being an individual person and not a company, does not have a substantial risk of an agency soliciting employees away from the freelancer, so there is no one for the translation agency to solicit away from the translator.\u00a0 Therefore, it is uncommon for a freelancer\u2019s contract with an agency to include a non-solicitation provision.<\/p>\n Note that the employee (project manager) in our examples, is fairly immune from lawsuits or contractual penalties in this scenario, as the law is generally opposed to restricting people from working (or not working) wherever (geographically) they want, but the party who lured the person away, and possibly the company that benefitted from that departure could be in BIG trouble–more on that in a moment.<\/p>\n \u201cDon\u2019t Steal Our Clients\u201d<\/strong>–The \u201cdon\u2019t steal our clients\u201d provision in an agreement might read: The Vendor will not, and will ensure that their employees and agents do not (i) enter into, engage in, consult, or otherwise participate in any business that competes with the Company within the Restricted Territory, (ii) sell any products or services in competition with the Company within the Restricted Territory, or (iii) divert, entice or otherwise take away any clients, prospective clients, business, patronage or sales orders.<\/em><\/p>\n Pretty simple, right? Don\u2019t steal our clients, don\u2019t compete with us, and don\u2019t let your workers do that either. But what if the party promising not to do all of these things, does<\/em> do one of them?<\/p>\n Penalties<\/strong><\/p>\n In an ordinary breach of contract case, where the case goes to court, money is usually paid by the breaching party to the other party, representing the losses caused by the breach.\u00a0 The amount of money paid by the breaching party in the event of breach of a non-competition provision, may be measured as the amount of money that was diverted<\/em> from the complaining company to the other company because of such diversion.<\/p>\n Another common \u201cor else\u201d provision for a non-solicitation violation is payment by the violator, of \u201cliquidated damages\u201d (a set amount) such as 150% of a “poached” worker\u2019s annual salary, a specific dollar amount for each violation of a non-competition agreement. The violator may also be subject to \u201cinjunctive relief,\u201d which refers to a court order (injunction) ordering the violator not<\/em> do something, like \u201cimmediately cease contacting the company’s salespeople and offering them jobs.\u201d<\/p>\n Penalty provisions written into the contract can be very broad as well. \u00a0A typical provision may say something like:\u00a0 If you breach any of these provisions, then the Company shall be entitled to injunctive relief, in addition to any other remedies available under the law<\/strong>.<\/em><\/p>\n This leaves the dollar amount of damages wide open in breach of contract cases, which can result in multi-million-dollar settlements<\/a>, so it is best not to get involved in any solicitation activities when forbidden by the contract you\u2019ve signed.<\/p>\n