It is common for an employment agreement to include a clause prohibiting the solicitation of employees. Generally, an employee non-solicitation agreement prohibits one party, usually an employee, from attempting to solicit, hire, or divert other employees of a business. However, an employee non-solicitation agreement can also be between two businesses.
A common scenario is when an employee decides to leave an employer and start their own business. In some instances, an employee non-solicitation agreement can prevent that employee from hiring their former co-workers to work for their new business.
Enforceability of Employee Non-Solicitation Agreements
An agreement not to solicit employees can be distinguished from an agreement not to solicit clients. An agreement not to solicit clients is simply a type of non-compete agreement and is prohibited except in certain circumstances by Colorado’s non-compete statute(Co. Rev. Stat. Sec. 8-2-113).
However, these limitations do not extend to solicitation of employees. Courts in Colorado have held that employee non-solicitation agreements do not impair a former employee’s ability to earn a living and are enforceable, even if they are in the same employment agreement as an unenforceable non-compete clause. Phoenix Capital, Inc. v. Dowell, 176 P.3d 835 (Colo. Ct. App. 2007)
Although there are no reported decisions in Colorado involving an employee non-solicitation agreement being struck down because it is unreasonable, many other states have imposed the same reasonableness requirements on employee non-solicitation agreements that apply to other non-compete agreements.
These requirements require that an agreement be for:
- A reasonable period of time;
- A reasonable geographic scope; and
- A reasonable scope of business activities.
Courts in Colorado have distinguished between agreements restricting only active solicitation of employees and agreements restricting both active and passive solicitation. In Atmel Corp. v. Vitesse Semiconductor Corp.30 P.3d 789 (Colo. Ct. App. 2001.), the Colorado Court of Appeals construed an employee non-solicitation agreement narrowly and held that it only restricted “active” solicitation.
What is active solicitation? Active solicitation includes, but is not limited to:
- Recruiting employees;
- Extending an employment offer to employees;
- Requesting that employees leave an employer; or
- Trying to persuade employees to quit.
This can be distinguished from other types of solicitation – for example, where the contact is initiated by the employee or where a hiring advertisement is not directed toward the employee.
Colorado Employee Non-Solicitation Attorney
Colorado law regarding employee non-solicitation agreements can be complex, and disagreements may involve the distinction between active and non-active solicitation and the reasonableness of an agreement. At HKM Employment Attorneys LLP, we represent both employees and employers in a wide variety of employment disputes, including those involving non-solicitation agreements.
If you have questions about a non-solicitation agreement or are involved in a dispute over a non-solicitation agreement, contact HKM Employment Attorneys LLP today. You can contact us online or call us at 303-991-3075 for a private consultation.