Enforcing Non-Competition and Non-Solicitation Agreements in the Beauty Industry

Joel SowalskyThe retail beauty industry is highly competitive.  Hairdressers, barbers, manicurists, cosmetologists and spas are everywhere.  As a business owner in this field, you rightfully want to make sure that the people you hire do not hurt your business if they leave.  To accomplish this, you may require your new hires to sign a non-competition agreement, to prohibit them from competing with you after they leave, and a non-solicitation agreement, to prohibit them from stealing your customers.  But, are these agreements worth the paper they are printed on?

In Massachusetts, they can be, but they must be very carefully written.  For a non-competition agreement to be enforceable, its geographical distance and duration must be reasonable, which is determined on a case-to-case basis.  Ask yourself:  What is the smallest geographical area and shortest duration that I absolutely need in order to protect myself from a departing employee who wants to steal my customers?  The shorter the duration, and the smaller the geographical prohibition, the more likely it will be enforced.  A 2-mile, 6-month non-competition agreement is much more likely to be enforced than a 10-mile, 2 year agreement.

When drafting a non-solicitation agreement, you should avoid using only the broad, general language of non-solicitation clauses.  Consider also how your customers are acquired and maintained through your social media outreach.  Do you use Facebook and LinkedIn to stay in touch with your customers?  Do you permit your employees to “friend” your customers on Facebook or link with them on LinkedIn?  Courts certainly will enforce the general language of non-solicitation agreements when a departing employee uses phone calls, meetings and mailings – and even emails – to steal your customers.  On the other hand, courts have not enforced general non-solicitation language when departing employees have used Facebook or LinkedIn to announce their new positions.  If you have any hope of prohibiting your departing employees from using social media to steal your customers, then you will need to have social media policies to prohibit them from “friending” and “linking” with customers, and this must be specifically addressed in the non-solicitation agreement, as well. 

Finally, for non-competition and non-solicitation agreements to be enforceable, they must protect only your legitimate business interests.  A business owner generally may not prohibit a departing employee from communicating with customers that he or she brought to your business or from contacting your “walk-ins who then became regular customers of the departing employee.  Those customers are considered the primary interest of your departing employee, not you.  If your non-competition and non-solicitation agreements are written so broadly as to include these categories of customers, they may not be enforceable.  But, if you limit the scope of these agreements to those people who were your customers before you hired the departing employee and to those customers who had no connection with the departing employee, you will have a far greater chance of enforcing it. 

General Counsel says:  Massachusetts courts will enforce non-competition agreements and non-solicitation agreements in the beauty industry to protect business owners.  But, they must be carefully drafted.  If you limit them to a short distance from your place of business, to a short duration of time, and to customers who preceded your hire of the employee and customers with whom your departing employee had little or no contact, they likely will be enforced and will limit the damage that your employee can cause to you when he or she leaves your business.

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