Non-Solicitation Agreements in Michigan: Enforceability Rules

Federal law does not directly regulate non-solicitation agreements. The Federal Trade Commission has proposed rules that would ban most non-compete clauses, but these rules do not specifically address non-solicitation agreements and are subject to legal challenge. Some federal employment laws, such as the National Labor Relations Act (29 U.S.C. § 151 et seq.), may intersect with non-solicitation agreements if they are used to prevent employees from engaging in protected concerted activity or union organizing.

The Defend Trade Secrets Act (18 U.S.C. § 1836) provides federal protection for trade secrets and establishes a federal cause of action for trade secret misappropriation. Non-solicitation agreements may be enforceable as a reasonable measure to protect trade secrets under this federal standard. However, the DTSA does not create a standalone right to enforce non-solicitation clauses; it only provides a remedy for trade secret theft.

At the federal level, employers cannot use non-solicitation agreements to restrict employees' ability to communicate about wages, hours, or working conditions under the National Labor Relations Act. Any non-solicitation clause that prevents employees from discussing protected topics or engaging in protected activity is unenforceable under federal law, regardless of state law.

Michigan does not have a statute governing non-solicitation agreements. Instead, enforceability is determined entirely by Michigan common law and case precedent. Michigan courts apply a reasonableness test established in Habetz v. Condon, 224 Mich. 348 (1923), which requires that restrictive covenants—including non-solicitation agreements—be reasonable in scope, duration, and geographic area.

Under Michigan law, a non-solicitation agreement is enforceable only if the employer can demonstrate a legitimate business interest that the agreement protects. Legitimate business interests include: (1) protection of trade secrets or confidential business information, (2) protection of substantial relationships with specific prospective or existing customers, or (3) protection of substantial relationships with specific employees with whom the employee worked.

Michigan courts distinguish between non-solicitation agreements (which prohibit an employee from soliciting customers or employees) and non-compete agreements (which prohibit an employee from working for a competitor). Non-solicitation agreements are generally viewed more favorably by Michigan courts than non-compete agreements because they are narrower in scope and less restrictive of the employee's ability to work.

A non-solicitation agreement must be reasonable in duration. While Michigan law does not specify a maximum time period, courts have found agreements of 2 years or less to be reasonable, and agreements of 5 years or longer to be questionable. The geographic scope must also be reasonable—limited to areas where the employer actually conducts business or maintains customer relationships.

Under Michigan law, if an agreement is found to be unreasonable, a court may refuse to enforce it entirely or may "blue pencil" (modify) the agreement to make it reasonable. However, Michigan courts have limited willingness to blue-pencil agreements; some courts will strike down overbroad provisions entirely rather than modify them. Michigan employers covered by this law include all private employers; public sector employees may have different standards.

Non-solicitation agreements in Michigan are subject to significant legal exceptions and limitations. First, an agreement will not be enforced if the employer cannot prove a legitimate business interest. Courts will not enforce agreements that merely seek to prevent competition or reduce an employee's marketability; the agreement must protect a specific, identifiable business interest such as trade secrets, confidential customer lists, or established customer relationships.

Second, if an agreement is unreasonable in duration or geographic scope, Michigan courts may refuse to enforce it entirely. Unlike some states, Michigan courts have shown reluctance to "blue pencil" or modify agreements to make them reasonable; instead, they may strike down the entire clause. This means an employer cannot rely on a court to fix an overbroad agreement.

Third, agreements that prevent employees from soliciting other employees may be difficult to enforce unless the employer can show that the targeted employees had access to trade secrets or confidential information. Courts question whether preventing employee recruitment truly protects a legitimate business interest.

Fourth, if an agreement is found to be a penalty or restraint on trade rather than a reasonable protection of business interests, Michigan courts will reject it. Agreements that effectively prevent an employee from earning a livelihood in their profession may be struck down as against public policy.

Fifth, non-solicitation agreements may be unenforceable if they conflict with Michigan's public policy favoring employee mobility and free competition. Courts balance the employer's interest in protecting business information against the employee's interest in pursuing their career.

Sixth, the Michigan Uniform Trade Secrets Act (MCL 445.903) may limit non-solicitation agreements; the Act defines what constitutes a trade secret, and agreements that go beyond protecting actual trade secrets may not be enforceable. Finally, if a non-solicitation agreement is part of an at-will employment relationship and the employer breaches the employment relationship without cause, some Michigan courts may question the enforceability of the agreement.

Step 1: Document the Non-Solicitation Breach

Immediately document any evidence that a former employee is violating a non-solicitation agreement. This includes: emails, phone call logs, or messages showing solicitation of customers or employees; customer complaints or statements that the former employee contacted them; evidence of customer switching from the employer to the former employee's new employer; internal communications from employees stating they were solicited to leave; dates, times, and content of any solicitations; and copies of the non-solicitation agreement itself with the employee's signature.

Keep all documentation in a secure file and do not discuss the matter with other employees beyond what is necessary for your investigation. Take screenshots of emails or messages and preserve them in a secure format. If possible, obtain written statements from customers or employees who were solicited, describing what happened and when.

Step 2: Review the Non-Solicitation Agreement and Assess Enforceability

Carefully review the non-solicitation agreement to determine whether it is likely enforceable under Michigan law. Consider: whether the agreement is in writing and signed by the employee; whether the employer can identify a legitimate business interest the agreement protects (trade secrets, confidential information, or established customer relationships); whether the agreement is reasonable in duration (generally 2 years or less is presumptively reasonable); whether the agreement is reasonable in geographic scope (limited to areas where the employer conducts business); and whether the agreement specifically identifies who or what cannot be solicited (customers, employees, or both).

If the agreement is vague, overly broad in duration or geography, or fails to identify a legitimate business interest, it may be unenforceable. Do not proceed with legal action if the agreement is likely unenforceable; instead, consult an employment attorney first. Consider whether the breach is material and has caused measurable harm.

Step 3: Send a Cease-and-Desist Letter

Before filing a lawsuit, send a written cease-and-desist letter to the former employee and their new employer (if applicable). The letter should be sent via certified mail with return receipt requested and should include: the specific facts showing the alleged breach (dates, names of solicited customers or employees, and how they were solicited); reference to the non-solicitation agreement with its key terms; a clear demand that the employee cease all solicitation immediately; a statement that continued violation may result in legal action and claims for damages; and a reasonable deadline (typically 10-14 days) for the employee to respond or comply.

The letter should be professional and factual, not accusatory. Send the letter from your attorney if possible, as this carries more weight and signals that you are serious about enforcement. Keep a copy of the letter and proof of delivery for your records. Do not communicate with the former employee outside of this formal letter; do not threaten or harass them.

Step 4: File a Lawsuit if Necessary

If the former employee does not cease the solicitation within the deadline, file a lawsuit in Michigan circuit court. The complaint should allege breach of contract and request injunctive relief (a court order stopping the solicitation) and damages (monetary compensation for lost business, customer relationships, or lost employees).

Before filing, your attorney should conduct a conflict check to identify the correct county for filing (typically the county where the employee worked or where the employer's principal place of business is located). The lawsuit should include documentary evidence of the breach, witness statements, and evidence of damages. Michigan courts may grant preliminary injunctions (temporary orders stopping the conduct while the lawsuit proceeds) if you can show a likelihood of success on the merits and irreparable harm.

Step 5: Expect Discovery and Potential Settlement

Once the lawsuit is filed, the parties will engage in discovery—exchanging documents and taking depositions (sworn questioning) of witnesses. The former employee will likely challenge the enforceability of the agreement, arguing it is unreasonable in scope or duration. Be prepared to defend the reasonableness of the agreement and provide evidence of the legitimate business interest it protects.

Many non-solicitation disputes settle during discovery. Settlement may involve an agreement to stop the solicitation, a monetary payment, or both. Your attorney may negotiate a settlement that protects your interests while avoiding the cost and uncertainty of trial. If settlement is not possible, the case will proceed to trial, where a judge will determine whether the agreement is enforceable and whether a breach has occurred.

Step 6: Consult an Employment Attorney Early

Michigan non-solicitation law is complex and highly fact-dependent. You should consult an employment law attorney as soon as you suspect a breach. An attorney can review your agreement for enforceability, assess the strength of your claim, advise on the best enforcement strategy, and represent you in negotiations or litigation.

Do not attempt to enforce a non-solicitation agreement without legal counsel, as improper enforcement could expose you to counterclaims for tortious interference, defamation, or unfair competition. An attorney can also advise on preventive measures, such as drafting more enforceable agreements in the future or implementing confidentiality and non-disclosure agreements to supplement or strengthen non-solicitation protections.