Non-Solicitation Agreements in Missouri
We have extensive experience working with clients on various issues concerning or related to non-solicitation agreements, including but not limited to their scope and enforceability in many different industries and contexts. We have obtained favorable results on behalf of our clients in challenging and complex cases involving non-solicitation agreements. The attorneys with our Firm possess the knowledge and experience to assist you with any legal issue regarding a non-solicitation agreement.
What is a Non-solicitation Agreement?
A non-solicitation agreements is a particular form of a restrictive covenant that aims to prevent a former employee from soliciting other former employees to leave the former employer and join a competing enterprise. Non-solicitation agreements may also be drafted to prevent a former employee from soliciting the former employer’s customers to do business with a competing enterprise for which the former employee now works or conducts business. This latter form of non-solicitation agreements is very similar, if not identical to, a non-compete agreement. Such non-solicitation agreements are allowed under Missouri law because an employer may have a legitimate protectable interest in customer contacts. Healthcare Svcs. of the Ozarks v. Copeland, 198 S.W.3d 604, 611 (Mo. banc 2006).
The Scope of Non-Solicitation Agreements
In Missouri, non-solicitation agreements are expressly authorized by statute. § 431.202 RSMo. This statute provides, among other things, a non-solicitation covenant between an employer and employee is presumed reasonable when it seeks to protect a protectable interest and “its postemployment duration is no more than one year.” Id. It notes that protectable interests include confidential or trade secret business information, or customer or supplier relationships, goodwill or loyalty. § 431.202.1(3)(a)-(b) RSMo. The statute further indicates that, even if a non-solicitation covenant seeks to protect interests not identified in the statute, it will be presumed reasonable if its postemployment duration is for a period of one year or less. § 431.202.2, RSMo. A covenant that exceeds one year in duration may still be reasonable based on the facts and circumstances of a particular case. § 431.202.2 RSMo.; see also Whelan Sec. Co. v. Kennebrew, 379 S.W.3d 835, 845 (Mo. banc 2012).
The question of whether a non-solicitation agreement is reasonable and enforceable varies case-to-case. A court may uphold certain restrictions in a non-solicitation agreement while refusing to give effect to other overbroad restrictions. See, e.g., Whelan, 379 S.W.3d at 844. In Whelan, the employees at issue had non-solicitation provisions aimed at protecting the employer from solicitation of both its customers and employees by the former employees. Whelan, 379 S.W.3d at 842-46. The customer-based non-solicitation provisions prohibited the employees from soliciting any prospective customers whose business was sought by the employer during the last 12 months of their employment. Id. at 842. This restriction was for two years after the employees’ employment ended. Id.
The Missouri Supreme Court held the customer non-solicitation provisions were overbroad in terms of their prohibition on any “prospective” customers of the employer—“[t]he provisions of the customer non-solicitation clauses that prohibit [the employees] from soliciting any existing . . . customer or any prospective customer from the last 12 months, throughout the nation, are unreasonably broad under the circumstances.” Id. at 844. The clauses were found to be overbroad because they broadly restricted all solicitation of the employer’s prospective customers regardless of how tenuous the relationship was between the employer and the prospective customer. Id. The Court, however, did not refuse to enforce the customer non-solicitation clauses altogether; rather, the Court modified the customer non-solicitation clauses to apply only to those customers with whom the employees dealt during their employment. Id. at 845.
The Whelan case is a good reminder that a court may still enforce a non-solicitation clause in part despite its overbroad language and scope. Varying circumstances in employment and the precise wording of a non-solicitation clause will play significant roles in determining the likelihood of its enforceability, in whole or in part. Importantly, if a non-solicitation clause is one or more year in length and is not drafted in a manner that evinces a narrowly tailored attempt to protect confidential or trade secret business information or customer or supplier goodwill, then it may be found to be unreasonable and unenforceable. When analyzing the enforceability of a non-solicitation agreement, it is always important to keep in mind the employee’s job duties and relationships with customers. The scope of the employee’s customer contacts may be the difference between an enforceable and unenforceable non-solicitation agreement.