What is a non-solicitation agreement for independent contractors?

Picture this: A top-performing sales contractor leaves your company, and your clients start drifting away as a result. 

This scenario, which is all too common in the corporate world, underscores the importance of creating a non-solicitation agreement for independent contractors. 

Non-solicitation agreements are the unseen armor that protects your business’s interests. But how do they function across different industries and countries? 

Our article dives into the importance of these agreements, key considerations when drafting them, and the practicalities of enforcing them in the global workforce. 

What is a non-solicitation agreement for independent contractors? 

A non-solicitation agreement for independent contractors is designed to protect a company’s assets. It’s especially crucial when contractors have access to sensitive information or key business relationships. 

This agreement is a legal contract that restricts independent contractors from directly approaching or soliciting business from a company’s clients, customers, and vendors after their contract ends. The duration of this prohibition is usually clearly defined, often extending for a reasonable period post-contract termination. 

What should a template for a non-solicitation agreement for independent contractors include?  

A standard non-solicitation agreement for independent contractors template should include the following key elements: 

• ​​Scope of restrictions: clearly define what solicitation is and the roles covered under the agreement (clients, employees, etc.).

• Duration: specify how long the non-solicitation conditions will last after the contract ends.

• Geographical limitations: if applicable, outline any geographical areas where the restrictions are in force. For remote workers in international arrangements, specify if the agreement applies globally or is limited to certain countries or regions where the business operates. 

• Legal consequences: detail the legal repercussions or penalties for breaching the agreement. This could include legal proceedings for damages or an injunction to stop the prohibited activities.

• Acknowledgment of understanding: this typically involves signatures from the contractor and company confirming that they both have read, understood, and agreed to the terms of the agreement. 

Non-solicitation vs. non-compete agreements

Non-solicitation and non-compete clauses are both used to protect a company’s interests, but they serve different purposes and have distinct implications. 

Non-solicitation clauses restrict independent contractors from approaching or “poaching” the company’s clients, customers, and employees. They focus on protecting existing business relationships and preventing the loss of assets to competitors.

Non-compete agreements are broader, restricting former contractors or employees from working in competing businesses or starting a similar venture. The purpose is to safeguard a company’s market position and trade secrets and ensure that the contractor’s knowledge gained doesn’t become an advantage for competitors. 

In short, while non-solicitation clauses focus on protecting relationships, non-compete clauses aim to prevent direct competition in the same industry or market.

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Non-solicitation independent contractor agreements serve as a preventive measure against potential conflicts of interest and competitive threats.

To protect client-employee relationships

Non-solicitation agreements deter contractors from “poaching” clients and skilled team members. They help prevent sudden disruptions in business operations and relationships.

Moreover, they reinforce trust and reliability in business relationships. 

To secure intellectual property

With non-solicitation agreements, you can secure your company’s intellectual property, including proprietary information and trade secrets. Restricting contractors from using or sharing sensitive information after an employment contract ends is a strong deterrent against potential exploitation.

They ensure that the innovative ideas and strategies developed within your company remain confidential and exclusive. Additionally, implementing these confidentiality agreements fosters respect for intellectual property within the workforce. 

To maintain a competitive edge 

Because it prevents contractors from soliciting business, a non-solicitation agreement ensures that a company’s strategic position in the market and business alliances remain secure.

Former contractors won’t hurt your company’s advantages and partnerships using their insider knowledge or relationships for your competition.

To ensure legal compliance 

Non-solicitation agreements are essential to avoiding legal disputes and promoting ethical practices, as they provide a clear framework to guide contractor interactions. They’re especially crucial in industries where contractor roles are closely regulated, such as the technology, finance, and healthcare sectors. 

Proactively establishing non-solicitation agreements not only helps mitigate legal risks but also demonstrates your company’s commitment to maintaining legal integrity and upholding ethical standards in your business practices.

Are non-solicitation agreements enforceable?

Whether non-solicitation agreements are enforceable or not largely depends on their drafting and the legal jurisdiction in which they’re implemented. 

To be enforceable, an agreement must be reasonable in terms of its scope, duration, and geographic area. For example, companies can’t restrict a contractor from working in an entire industry or region indefinitely, as this would be considered broad and‌ unenforceable.

Non-solicitation agreements should protect legitimate business interests without overly restricting an individual’s right to work. Courts often scrutinize these agreements for fairness to make sure they don’t impose undue hardship on the contractor while serving a valid business purpose.

Examples of contractor solicitation

Here are some contractor solicitation example scenarios: 

• A freelance marketing consultant directly approaches a company’s clients, offering similar services at a lower rate.

• An IT contractor contacts a company’s employees they collaborated with, encouraging them to join a competitor or their own new venture.

• A design contractor uses client contact information obtained during a project to solicit design work independently.

• A former project manager tries to recruit team members from a company for a rival project.

• A software developer offers custom software solutions to a company’s clients that are similar to those they developed while under contract.

• An event planner contacts the company’s long-standing event clients, offering to organize similar events at a better price.

When to use a non-solicitation agreement and why

Understanding when and why to implement non-solicitation agreements will protect your assets and help your business maintain a competitive edge. These agreements are especially beneficial in the following instances:

During contractor onboarding

Implementing non-solicitation agreements during the onboarding phase for contractors, particularly in roles with access to sensitive data, sets clear boundaries from the get-go. 

In sectors like technology and consulting, where contractors have immediate access to important data and contacts, the early introduction of a non-solicitation agreement prevents future issues. It also ensures that contractors are clear about the company’s expectations for their interactions with clients and employees post-contract. 

In high-turnover or competitive industries

The nature of high-turnover and competitive industries calls for the creation of non-solicitation agreements. They protect businesses from the unexpected loss of key talent and clients. They also make sure your departing contractors cannot immediately leverage their insider knowledge or join any rival companies. 

Non-solicitation agreements can also help maintain the morale of your existing workforce. Implementing them demonstrates that you value your team and are committed to ensuring a stable working environment.

When expanding into new markets

Venturing into uncharted business territories is stressful enough. You don’t need the added burden of worrying about securing your business interests. 

With a non-solicitation agreement, you can protect your company’s newly established client relationships and sensitive market insights in these new areas. 

Non-solicitation agreements help ensure that the knowledge and connections gained during expansion are not used against the company by departing contractors. 

Before entering collaborative or joint ventures

Non-solicitation agreements outline clear boundaries, preventing both parties from losing clients or employees to the other during a collaboration. They also ensure the venture stays fair, preventing one partner from unfairly benefiting at the expense of the other. 

Ultimately, this fosters trust and cooperation, creating a more secure and mutually beneficial partnership.

What to consider when drafting a non-solicitation agreement

When drafting a non-solicitation agreement, several key components will help ensure its effectiveness and legality: 

Define clear and specific terms

A non-solicitation agreement should always precisely define what counts as a solicitation and the duration of the non-solicitation period. This helps to avoid any ambiguity that could lead to future disputes. 

For instance, clearly specify whether solicitation includes indirect forms of contact or social media interactions. Also, make sure that the time period is reasonable and specific, like six months or one year after contract termination.

Understand local and international legal requirements

Familiarize yourself with local and international legal requirements before drafting non-solicitation agreements. 

For global operations, it’s important to be aware of the legal nuances in different hiring jurisdictions. Doing so ensures that your agreements are both enforceable and compliant with the specific laws of each region. 

Understanding local legalities can prevent future legal challenges, particularly for teams that are spread across multiple countries. 

Balance fairness and business protection

Your agreement should strive to establish a balance between protecting your business interests and avoiding ‌unfair restrictions on the contractor’s future employment opportunities. This approach helps to maintain goodwill and avoid legal challenges to the agreement’s enforceability.

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What happens if you identify a violation of non-solicitation?

Here’s what to do if you identify a violation of a non-solicitation agreement:

1. Review the agreement and gather evidence: confirm the specific terms that have been violated and gather any evidence of the violation, such as emails or witness statements.

2. Consult with legal counsel: before taking any action, consult with your legal team to determine the best course of action and ensure compliance with legal procedures.

3. Issue a cease and desist letter: send a formal cease and desist letter to the former contractor through your lawyer. Outline the violation and demand an immediate stop to the prohibited actions.

4. Consider legal action: if the violation continues, assess the situation with your legal team to decide whether pursuing legal action, like an injunction or damages claim, would be appropriate.

Challenges of enforcing non-solicitation agreements

Enforcing non-solicitation agreements, especially in global operations, presents the following unique challenges:

Navigating legal variabilities across jurisdictions

Each country has its own legal standards and regulations. The challenge is in drafting agreements that are legally sound in each region in which a contractor operates. 

You may need to tailor your non-solicitation agreement to guarantee its enforceability. For example, in France, non-solicitation agreements often require a compensation clause to be enforceable. 

Remote’s contractor management platform provides access to localized contracts, ensuring compliance with the specific legal standards of different countries. Moreover, our in-house legal experts assist companies in customizing these agreements. With our professional support, you save time in drafting while simplifying multi-jurisdictional compliance.

Detecting and addressing breaches effectively

Because global teams operate across different time zones and legal jurisdictions, detecting and addressing breaches can be difficult. Companies need to have a robust system in place that vigilantly monitors and gathers evidence of non-solicitation breaches. 

Remote’s centralized contract management system tracks everything from contractor time-off and access to payroll and compliance. We keep detailed records of contractor interactions and communications, which are key to efficiently identifying and addressing any non-solicitation breaches. So, in the case of any potential breaches, you can quickly respond and take action, no matter where your contractors are located globally. 

Balancing firm enforcement with contractor relations

It’s tricky managing the balance between enforcing non-solicitation terms and maintaining positive, ongoing relationships with your departed contractors. Overly aggressive enforcement can tarnish your company’s reputation and make it less attractive to top talent. Yet, lenient enforcement puts your company at risk, as it may lead to continued solicitation by contractors.

Remote’s contractor management platform enables transparent and clear communication of contract terms, setting clear expectations from the beginning. We’re here to help you maintain amicable relationships with contractors, even while upholding contractual obligations.

Remote’s role in global independent contractor management

Remote simplifies global contractor management by offering one platform to allow businesses to hire, onboard, pay, and manage contractors, no matter where they are based.

You don’t have to hire expensive legal help to draft compliant contractor agreements. 

Remote’s legal team can help you create localized contracts suited to your business needs. With Remote, you can:

• Create, edit, and sign localized contracts that are fully compliant with local employment and tax laws

• Coordinate and manage contract signing responsibilities

• View, store, and manage all your contracts in one place.

Check out our contractor management platform to learn how we can help you manage your contractors and contracts quickly and compliantly! 

Sign up with Remote and start managing your global contractor workforce with Remote today!