Non-Compete Clause vs Non-Solicitation Clause
The main difference between a non-compete clause and a non-solicitation clause is how much activity each one blocks. A non-compete clause stops a person or business from working for or running a competing business for a set time and area. A non-solicitation clause allows that work but bars actively approaching the former employer's customers or employees. Because it is narrower, a non-solicitation clause is generally more likely to be enforced.
Non-Compete Clause vs Non-Solicitation Clause at a glance
| Non-Compete Clause | Non-Solicitation Clause | |
|---|---|---|
| What it restricts | Working for, starting or owning a competing business. | Actively approaching the protected party's customers, clients or employees. |
| Effect on a career | Can keep a person out of their field for the restricted period. | Allows working anywhere, including for a direct competitor. |
| Scope limits | Must usually be reasonable in duration, geography and type of work. | Often limited to contacts the person actually dealt with. |
| Enforceability | Varies widely; some states, such as California, void most employee non-competes. | More widely enforced, though some states also limit these clauses. |
| What a breach looks like | Taking a job or launching a business in the restricted market. | Emailing former clients or recruiting former colleagues to a new employer. |
| Common use | Executives, key technical staff and sellers of a business. | Sales staff, account managers and other employees with client contact. |
When non-compete clause applies
A business uses a non-compete when someone could do real harm simply by working for a rival, such as a senior executive with strategy knowledge or the seller of a business who could reopen next door. Courts look more favorably on non-competes tied to the sale of a business than on those imposed on ordinary employees. For example, the buyer of a local bakery may require the seller not to open a competing bakery nearby for a set period.
When non-solicitation clause applies
A business uses a non-solicitation clause when the main risk is losing clients or staff, not losing the person to a competitor. It is common for sales staff, consultants and contractors who build client relationships. For example, an agency may let a departing account manager join a rival but bar them from pitching the agency's clients for a limited time.
Dates and deadlines to watch
Both clauses run for a restricted period that usually starts when employment or the business relationship ends, and the length is set by the contract and limited by state law. Some states require advance notice or other conditions for a non-compete to be valid, and the rules change often, so check current state law. Depending on the state, courts may shorten, rewrite or refuse an overly long period.
Frequently asked questions
It depends on the state. Some states, such as California, refuse to enforce most non-competes for employees, while others enforce them if they are reasonable in time, geography and scope and protect a legitimate business interest such as trade secrets. Non-competes tied to the sale of a business are more widely enforced.
Usually yes. A non-solicitation clause generally does not stop someone from joining a competitor, but it bars them from actively seeking out the former employer's customers or employees for the stated period. Whether simply accepting business from a former client counts as soliciting depends on the clause wording and state law.
It can, if the clause includes an employee non-solicit, sometimes called a no-poach provision. These terms stop a departing person from recruiting colleagues to leave with them. Coverage depends on the wording, because some clauses protect only customers, some only employees, and some both.