NDA With a Non-Solicit Hidden Inside: How to Spot It

Why restrictions end up in NDAs

NDAs are signed early, quickly and often without legal review. That makes them an attractive place to add protections one side wants. In deals and partnerships, some restrictions are legitimate. A seller reasonably wants a buyer not to poach its staff after due diligence. But when the same clauses appear in a vendor NDA, a candidate NDA or a partnership exploration, they may reach much further than the relationship justifies.

Where to look

• Headings such as "Non-Solicitation," "No Hire," "Non-Interference," "Additional Obligations" or "Restrictive Covenants."
• Definitions sections, where "Restricted Party" or "Business" may be defined broadly.
• Clauses about "use" of information that prohibit competing with the discloser.
• The survival clause, which may keep restrictions alive for years after the NDA ends.

Words that signal a restriction

Search the document for these words: solicit, hire, employ, engage, induce, interfere, divert, compete, customer, supplier, partner. Each one suggests the NDA restricts conduct as well as disclosure. Then read the whole sentence, because the scope depends on who is covered and for how long.

Types of hidden restrictions

• Employee non-solicit: you may not recruit the other side's employees.
• No-hire: you may not hire them even if they approach you.
• Customer non-solicit: you may not approach their customers.
• Non-interference: you may not disrupt their relationships with suppliers or partners.
• Non-compete by use: you may not use information "to compete," which in practice can mean you cannot compete.

How to judge whether it is fair

Ask what the restriction protects and whether it matches the relationship. In a sale where you will meet the seller's team, a mutual 12-month employee non-solicit, with an exception for general job advertising and for people who approach you, is common. In a short vendor evaluation, a two-year no-hire covering all employees of the other company and its affiliates is not. Check whether the restriction is mutual, what it covers, how long it lasts and whether affiliates are included.

Enforceability varies

State law treats these clauses differently. Employee non-solicits and no-hires are enforced in many states when reasonable, but some states are more restrictive, and no-hire agreements between companies can raise antitrust concerns in some contexts. California generally voids restraints on engaging in a lawful business, which can affect customer non-solicits. Do not rely on unenforceability; negotiate.

What to ask for

• Remove restrictions that are not needed for the relationship.
• Limit employee restrictions to people you actually dealt with.
• Exclude general job advertisements and people who approach you first.
• Replace no-hire with non-solicit.
• Limit the period to 6 to 12 months and make it mutual.
• Remove affiliates unless they are actually involved.

A worked example

A software company signs a vendor's NDA before a product demo. Clause 14, "Additional Covenants," bars it from hiring any of the vendor's employees for two years. Eight months later, a vendor engineer applies for a job through a public posting. The company hesitates to hire them because of the clause. A narrower non-solicit, limited to employees involved in the evaluation with a general advertising exception, would have left it free to hire.

Sample wording you can propose

"For 12 months after the date of this Agreement, neither party will directly solicit for employment any employee of the other party with whom it had material contact in connection with the Purpose. This does not restrict general solicitations not targeted at the other party's employees, or hiring any person who responds to them or approaches the hiring party on their own initiative."

Common mistakes

• Assuming every NDA is a standard confidentiality document.
• Reading only the first few pages.
• Missing restrictions in the definitions or survival clause.
• Accepting no-hire when non-solicit would do.
• Agreeing to restrictions that bind all affiliates.

Quick checklist

• Does the NDA restrict hiring, soliciting or competing?
• Who is covered: all employees, or only those you dealt with?
• Is it mutual?
• How long does it last, and does it survive termination?
• Are general advertising and inbound approaches excluded?
• Are affiliates included?

Key terms explained

These terms usually indicate a restriction beyond confidentiality.

• Non-solicitation: a promise not to actively recruit or approach someone.
• No-hire: a promise not to hire, whoever initiates contact.
• Non-interference: a promise not to disrupt business relationships.
• Affiliate: a company controlling, controlled by or under common control with a party.
• Restrictive covenant: any clause limiting a party's future conduct.

Mutual restrictions are easier to accept

If the other side insists on a non-solicit, ask for it to be mutual. A clause that only binds you suggests the other party wants protection it is not willing to give. Mutuality also tends to produce more reasonable drafting, because both sides live with the result.

No-hire clauses and employees' interests

No-hire clauses between companies affect people who never signed them: the employees who find they cannot move to a company that wants to hire them. Some states limit these arrangements, and US competition authorities have scrutinised no-poach agreements between employers. That is another reason to prefer a narrow non-solicit, which protects against targeted poaching without blocking ordinary job moves.

Sample email

"Thanks for the NDA. Clause 14 includes a two-year no-hire covering all your employees and affiliates, which goes beyond what we need for an evaluation. We are happy to agree a mutual 12-month non-solicit limited to people we work with directly, with the usual exception for general job postings and inbound applicants. Could we update clause 14 on that basis?"

Check how breach is handled

Hidden restrictions sometimes come with their own remedies: liquidated damages equal to a year's salary of the person hired, or a placement fee. Check for these and remove them or reduce them to a reasonable level. A recruitment fee equivalent to a typical agency fee is sometimes offered as a compromise.

Restrictions in employee and candidate NDAs

Candidates and new hires sometimes receive NDAs that include non-solicits of the employer's customers and staff, or even non-competes, described as confidentiality terms. For employees these clauses are governed by state non-compete and non-solicit rules, which vary widely: some states ban non-competes for most workers, and others restrict them below certain earnings thresholds. Read any candidate NDA for these words before your interview, and check whether the restriction would apply even if you never join. A candidate NDA that restricts you for a year after a single interview goes well beyond what the employer needs.

Questions to ask yourself

Will you meet the other side's staff or customers at all? Could you realistically want to hire from them? Would the restriction bind your whole company or group? The answers show whether the clause is harmless or needs narrowing.

Read the whole NDA

The riskiest NDA clause is often the one you did not expect to find. Upload the NDA to have any non-solicit, no-hire or non-compete wording highlighted before you sign.