Update on Non-Solicitation Clause: BE SPECIFIC
Non-solicitation clauses: it’s something we help Dentists with on a regular basis. If you have associates working for you, or are yourself an associate, you likely have already agreed to a non-solicitation clause.
You have probably read our other blog posts about non-solicitation clauses…
But there is a brand new case out which provides further guidance for Dentists. In the case out of Alberta* (it’s not binding in Ontario but is still relevant across the country), the Court had to evaluate a non-solicitation clause that tried to limit the outgoing employee from soliciting and “doing business” with “any customer or client… with any other organization” that does business with the employer for 6 months after termination, in a radius of 100km around the City of Calgary.
The employee signed an employment agreement in March 2014 and a follow-up agreement in October 2015 containing the clause. However, in November 2015, the employer found out that the employee had begun working for a competitor (after a current client asked which new person would be handling its files).
The Judge reviewed the clause and ultimately found in favour of the employee in this case. The Judge did not have a problem with the geographic or time limitations in the non-solicitation clause, but he found that the language referring to whom the solicitation applied was too broad and unreasonable.
Justice Tilleman stated “[w]hile it may have been [the employer’s] intention to protect its client base and interests, the language used, namely “any customer or client” and “any other organization”, encompasses too many possibilities and amounts to an unjustified restraint of trade.” The Judge also referred to a case from Ontario where a similar restriction was found also to be overly broad.
In other words, if your contracts are too vague, overly broad, and try protecting an interest that can’t be justified in protecting, then they may not be worth the paper they’re written on! This is something we help Dentists with all the time: protecting their business interests and educating them about the law.
The main takeaway from this case of a poorly written non-solicitation clause is to BE SPECIFIC. Provide as much detail as necessary. The terms “customer” or “client” need to be defined in a way that can be measured or quantified. Your practice may require you to restrict patients on a geographic basis (50 km). Or you may require a restriction based on a certain time period (any active patient in the past 2 years).
As always, contact us by phone or email and we would be happy to review your contracts and advise you on how best to protect your practice. Please note the information provided in this blog is not legal advice but is provided for information and educational purposes only. If you require legal advice or representation, please contact DM C
*Specialized Property Evaluation Control Services Ltd v Les Evaluations Marc Bourret Appraisals Inc, 2016 ABQB 85.