Q: We contracted with an agency that provides virtual staff. One of the persons we worked with left the company, and a few months later approached us to see if we would hire her. We did not see any wrong in doing so, and she has been working with us (remotely) for a month. We just got a letter from her prior employer who said because we hired her, we are breaching the non-solicitation clause in the signed contract, and they will sue us unless we pay them “liquidated damage of $30,000.” Are we liable?
B.J., Redondo Beach
A: A non-solicitation agreement typically is one in which an employee agrees that if he or she leaves the company, the employee will not offer employment to the company’s other employees and/or solicit the company’s customers.
Here, on the other hand, you contracted with a company, so the non-solicitation provision likely sets forth that for a period of time you are not permitted to hire someone from that company who has since left its employ, nor are you to “poach” that person from the company during or when the contract ends. Since the damages are uncertain, you probably agreed to a liquidated sum for their time and effort to train that person (I am thinking this is where the $30,000 demand comes from).
In California, however, non-solicitation agreements are disfavored. Business & Professions Code Section 16600 reads: Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void. California wants to encourage employment, not hinder it.
There are some exceptions in which California courts have upheld well-worded employee non-solicitation agreements: (a) There is “no negative impact”, which means the employee was not prevented from getting work, just that the third party (you, the company hiring her) could not contact the employee first; or (b) The non-solicitation clause is necessary to protect the company’s trade…
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