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Social Media and Non-solicitation Clauses

Thursday, 13 December 2012

Social media is playing an increasingly important role in business relationships. Although social networks like Facebook and Twitter were treated with initial trepidation by employers wary of losing precious work time to the ether of the Internet, many businesses now embrace them as powerful marketing tools. Meanwhile, networking through LinkedIn has become a virtual must in industries such as recruitment.

There are many facets of social media that bring both benefits and pitfalls to the business environment. Business development practices are not excepted from this double-edged sword. Enabling employees to foster relationships with customers online as well as offline can make it very difficult to restrict those relationships if employees decide to move on to a competitor. Can non-solicitation causes keep up?

Non-solicitation Clauses

Non-solicitation clauses are commonly used as restrictive covenants in employment contracts so a considerable amount of case law has been generated over time. Generally, non-solicitation clauses prevent former employees from directly or indirectly ‘requesting, persuading or encouraging’ customers of their former employer to transfer their business to the new employer.

This does not mean that former employees will be in breach simply because customers follow them to a new employer; there must be an element of pro-active contact by the former employee.

Non-solicitation Clauses and Social Media

In the age of telephone calls and email, demonstrating that a former employee had approached former customers to solicit business for their new employer was a comparatively simpler exercise. Contact details were also relatively easier for businesses to control, with client phone lists and employee email accounts remaining the property of the employer. With the advent of social media, the operation of non-solicitation clauses has become more complex.

The very nature of social networks means that individual accounts are usually the property of the individual users even if their contacts might not be. The update functions that exist make it very simple for employees to inform their network passively or actively that they have moved employers. Furthermore, in the case of LinkedIn, each profile has an inherent inducement to viewers to contact that person for ‘new business deals’, ‘getting back in touch’ etc.

So Where Do Non-solicitation Clauses Stand Now?

The requirement for ‘requesting, persuading or encouraging’ former customers remains. It seems likely therefore that general social network updates, as opposed to individual approaches, are unlikely to breach non-solicitation clauses. Employers seeking to place restrictions on former employees’ will need to be much more comprehensive in their employment contracts. Ownership and use of customer information stored on social networks during and after employment will need to be explicitly managed in the employment contract. Non-solicitation clauses alone are not enough.

If you need advice regarding restrictive covenants for social media or other Employment matters, Rollingsons has experienced lawyers who can advise you. Please contact Aneil Balgobin via e-mail or by telephone on 0207 611 4848.