What Is a Non-Solicitation Clause?
A non-solicitation clause in a service agreement restricts one or both parties from recruiting or soliciting the other party's employees, contractors, or clients during and after the engagement. It is a protective measure that prevents the business relationship from becoming a pipeline for poaching talent or diverting business.
Non-solicitation clauses are distinct from non-compete clauses. A non-compete restricts a party from competing in a specific market or industry. A non-solicitation clause is narrower — it only restricts the act of actively recruiting or soliciting specific people or clients. The restricted party can still compete; they just cannot target the other party's people or customers to do so.
Why Non-Solicitation Matters in Service Agreements
The Employee Poaching Problem
When a service provider places skilled professionals at a client's site — or works closely with the client's team — the client gets an extended "audition" of the provider's talent. Without a non-solicitation clause, the client might hire the provider's best people directly, avoiding the recruitment costs and eliminating the service fees.
This is a significant risk for staffing agencies, consulting firms, managed service providers, and any business where individual team members interact directly with clients.
The Client Diversion Problem
Conversely, a service provider's employees who work closely with the client may develop relationships that enable them to take the client with them if they leave the provider's company. A non-solicitation clause protects the provider's client relationships from being diverted by departing employees or subcontractors.
The Talent Pipeline Problem
Service providers invest in recruiting, training, and developing their teams. When a client hires a provider's employee, the provider loses not only a team member but also the investment in developing that person. The disruption to other client engagements can be significant.
Non-solicitation clauses protect the investment both parties make in building their teams and client relationships. They maintain the stability of the service relationship and prevent opportunistic poaching.
Types of Non-Solicitation Provisions
Employee Non-Solicitation
Neither party will directly or indirectly solicit, recruit, or hire the other party's employees or contractors who were involved in or had knowledge of the service engagement. This is the most common form of non-solicitation in service agreements.
Key elements:
- Covered individuals — Typically limited to employees who worked on the engagement or who the soliciting party had contact with during the engagement
- Restricted activities — "Solicit" usually means actively recruiting or making an employment offer. It does not typically cover responding to unsolicited applications from individuals who found job postings through general channels.
- Duration — Usually applies during the agreement term and for 12 to 24 months after termination
- Exceptions — General job postings that are not targeted at specific individuals are often exempted
Client Non-Solicitation
The provider's employees and subcontractors are restricted from soliciting the client's business independently of the provider. If a provider's consultant leaves the firm, they cannot contact the client and offer to continue the work as an independent contractor.
This provision protects the provider's client relationships from being diverted by departing team members.
Mutual Non-Solicitation
Both parties agree not to solicit the other's employees. This is the fairest approach, as the risk of poaching runs in both directions — the client might hire the provider's people, and the provider might recruit the client's staff.
Hire-Away Fees
Some service agreements include a hire-away fee (also called a conversion fee or placement fee) as an alternative to a strict prohibition. If one party hires the other's employee, they pay a fee to compensate for the loss.
Typical hire-away fees range from 15% to 30% of the hired employee's first-year compensation. The fee reflects the cost of recruiting and training a replacement and provides a financial disincentive against poaching while still allowing it to happen when both parties agree.
Hire-away fees are often more practical than strict prohibitions. They acknowledge that talented people will sometimes change employers and provide a fair mechanism for compensating the affected party.
Enforceability Considerations
Non-solicitation clauses are generally more enforceable than non-compete clauses, but they are not automatically valid. Courts evaluate several factors:
Reasonableness
The clause must be reasonable in scope, duration, and geographic reach. An 18-month non-solicitation period covering employees who worked on the engagement is generally reasonable. A 5-year prohibition covering all of the other party's employees worldwide is likely unenforceable.
Specificity
The clause should clearly define who is covered, what activities are restricted, and for how long. Vague or overly broad language invites challenges.
Legitimate Business Interest
The party enforcing the clause must have a legitimate business interest to protect. Preventing the poaching of employees who were specifically involved in the engagement is a legitimate interest. Preventing any employee from ever changing jobs is not.
State Law Variations
Enforceability varies significantly by state and country. Some jurisdictions are more friendly to restrictive covenants than others, and a few states have enacted laws specifically limiting non-solicitation provisions. Draft your clause with the applicable jurisdiction's standards in mind.
Drafting Best Practices
- Limit the scope to individuals directly involved in the engagement
- Set a reasonable duration — 12 to 24 months is standard
- Distinguish active solicitation from passive hiring — responding to a general job posting should not trigger the clause
- Include a hire-away fee option as an alternative to strict prohibition
- Make it mutual — both parties should be subject to the same restrictions
- Specify the remedy — injunctive relief, liquidated damages, or both
Adding Non-Solicitation to Your Service Agreement
Non-solicitation clauses protect the stability of your team and your client relationships. When drafted fairly and proportionally, they are a standard and accepted part of professional service agreements.
PactDraft helps you build service agreements with non-solicitation provisions tailored to your engagement type. Define the scope, duration, and enforcement mechanisms through a guided process, and generate a professional agreement that protects your most valuable assets — your people and your clients.