Suing a Former Employee Who Took Your Clients: Non-Solicit Agreements and Client Theft in Ontario

A key employee resigns, and within weeks your best clients start cancelling. You find out the employee has joined a competitor — or started their own shop — and reached out to your client list before they even cleaned out their desk. This scenario is one of the most painful and financially damaging business disputes in Ontario, and it happens more often than most employers expect.

This article explains your legal options when a former employee takes your clients or breaches a non-solicit agreement, what the courts will enforce, and how to act quickly.

The Two Legal Paths

When an employee departs and takes clients, you may have claims based on:

1. Breach of a contractual non-solicitation clause (if they signed one)
2. Common law duties of good faith and fidelity (even without a signed agreement)

These paths overlap. Even without a written non-solicit, employees owe obligations during their employment. After they leave, the picture depends heavily on whether they signed a restrictive covenant.

Non-Solicitation Agreements in Ontario: What Makes Them Enforceable?

Ontario courts will enforce a non-solicitation clause only if it is reasonable — in terms of:

• Duration — how long does the restriction last? Courts are more comfortable with 6–12 months than 3–5 years. As of writing, reasonableness depends on the nature of the business, the employee's role, and how long client relationships typically take to develop.
• Geographic scope — is it limited to clients the employee actually dealt with, or does it try to prevent all solicitation everywhere?
• Breadth of restriction — "do not solicit clients you personally serviced" is more likely enforced than "do not contact anyone who was ever a client of the company"

The Blue-Pencil Rule (And Its Limits)

Ontario courts can sever or narrow an overbroad clause in some circumstances (the "blue pencil" approach), but they cannot rewrite a fundamentally unreasonable clause. If your non-solicit is too broadly drafted, a court may refuse to enforce any of it. Draft tightly.

Non-Compete vs. Non-Solicit: A Critical Distinction

• A non-compete prevents the employee from working in the same industry or for competitors — courts almost never enforce these for regular employees in Ontario.
• A non-solicit prevents the former employee from approaching your clients — courts are much more willing to enforce a properly drafted non-solicit.

Trying to disguise a non-compete as a non-solicit rarely works. Courts look at substance, not labels.

Common Law Duties: What Applies Even Without a Signed Agreement?

Even without a written non-solicit clause, employees owe their employer a duty of good faith and fidelity during employment. This means an employee cannot:

• Actively solicit your clients while still employed
• Take or copy confidential client lists, pricing, or business records
• Set up a competing business using your time, resources, or information while on your payroll

After employment ends, the duty of fidelity ends too — but obligations of confidentiality regarding genuinely confidential information may persist regardless of whether a clause was signed.

What Counts as "Confidential Information"?

To be legally protectable as confidential, information generally must:

• Not be publicly available
• Have been treated as confidential by the employer
• Have genuine commercial value

A client list that the employee built themselves, or that is widely known in the industry, may not meet this standard. A list with detailed client preferences, pricing, purchase history, and contact information is much more likely to be protectable.

How to Respond: Acting Quickly

Preserve Evidence

Before you send a demand letter, preserve what you have: internal communications, the employee's recent file access logs, email records, the signed employment agreement and non-solicit clause, and records of which clients have left and when.

Send a Demand Letter

A lawyer's demand letter notifying the former employee of their obligations can prompt compliance without litigation. It also puts them on notice, which matters for any later injunction.

Seek an Injunction

If the employee is actively soliciting clients right now, every day matters. A court injunction can immediately stop the solicitation while the merits are decided. To get an emergency injunction, you need to show:

1. There is a serious question to be tried
2. You would suffer irreparable harm (monetary damages alone cannot fully compensate you)
3. The balance of convenience favours granting the order

Courts grant injunctions in genuine non-solicit cases where the breach is clear and immediate.

Calculating Your Damages

If clients were wrongly solicited and business was lost, your damages claim can include:

• Lost profits from the diverted clients, over a reasonable period
• Costs incurred to recover or replace the client relationships
• In egregious cases, punitive damages may be available if the employee's conduct was malicious or high-handed

Courts assess damages with some flexibility — you are not required to prove every dollar with perfect precision, but you need credible evidence of actual loss.

Frequently asked questions