Non compete lawsuit

[volstrike3]

If there is one thing I have learned from observing and hearing about these situations over the years and that nobody wins. If you are going to leave an agency for another agency or start up your own, be strait up about it. Either buy your book of business and take it with you or leave it alone. Your never going to be able to just take away the majority of your book on BOR's without spending a lot of time and money battling it out in court. Even if you win, you lose because your reputation is soiled. The time, money and aggrivation you will have to deal with far outweighs any benefit.

If you are a decent producer, it is better to just move on to new business.

[cj]

For me it is a simple matter of ethics. Let's not qibble over the nuances of the validity or enforceability of various agreements. As an agency owner I pay you to produce accounts on behalf of the company. You leave, take an expiration list, contact my clients and file broker of record letters. That is basic unethical behavior.

[NYagent301]

Your agency was merged into a much larger agency. A part of the larger agency some of your old partners decide to leave and buy their business out. You have accounts that you have cultivated for 20 years and NOT due to any marketing efforts of the new larger agency. The new agency makes a decision to not pay producer commissions for certain types and sizes of accounts essentially cutting your income in half. Now it comes time for your decision to submit resignation and are up front in wanting to buy your book for 1.5 up front cash just like others have done. The large agency says NO the accounts are not yours and any attempts to do otherwise will be met with full legal force and you are reminded that they have more to spend on lawyers then you do. It's several years later and your old clients are still calling you to place their business. Tell me ethical agency owners what would you do?

[MWI]

My advise is...Shame on you! Leave the man's accounts alone and get a good lawyer!

[mica.cooper]

Isn't cutting somones wages like that an actionable item under employment law?

Your just not allowed to go around cutting peoples wages by half so you don't have to pay unemployment (when they quit).

This seems to be basically 'terminating' the employees so you can milk the business and let it rot.

[wlunday]

Well, I'm back from a week of sunning myself in Central Washington (Chelan)... and I see that Cooper009 is indeed getting some ribbing from the "owners" side of things.

I like the idea of you hiring an attorney and offering to settle ASAP. This should include "buying" those accounts you were able to obscond with.

As far as NYagent 301's question... it depends on how many years have gone by (as dictated in the NC contract) and other specifics. The general rule of thumb to follow... do unto others as you would like them to do unto you... where have we all heard that one from... Oh, yeah, Thanks, MOM!

Follow the golden rule. You'll sleep better at night!

Swymmer

[TXAgent]

I own an independent agency and I hired a girl with the intent that she be an CSR. She had no knowledge of the insurance industry and we trained her from the ground up. We asked her to go get a CSR license. Without telling us, she got the Agent license. At this point we told her we did not want another agent but b/c she already got it, she can sign the agreement to non-compete. She has refused to sign it.

Firing her would mean that I have to train another CSR which will take time. We are a small office of 3 people. What do you think I should do? Should I just forget about the non-compete and rely on trade secret to protect me?

[mica.cooper]

I think that her refusal to sign a noncompete says it all. She is letting you train her and pay her way, then she will go out on her own. As someone has already said here, go see an attorney immediately.

I think you need to ask her to leave and not contact any of your clients. In the future, I would think about spelling out the terms of your noncompete very clearly and having employees sign them BEFORE they start working for you.

You should also consider writing an employment contract stating that if you pay for their training and they leave within say one year, that they will reimburse you for your expenses training them.

I have personally heard two people say they wanted to start their own agency and that they were going to get a CSR job with an agency to learn the ropes and get started (in the last year). I think this is ok and a time honored tradition of learning in the USA, but, the employer needs to know this up front and those persons should probably foot the bill for all of the classes.

[independent guy]

I own an independent agency and I hired a girl with the intent that she be an CSR. She had no knowledge of the insurance industry and we trained her from the ground up. We asked her to go get a CSR license. Without telling us, she got the Agent license. At this point we told her we did not want another agent but b/c she already got it, she can sign the agreement to non-compete. She has refused to sign it.

Firing her would mean that I have to train another CSR which will take time. We are a small office of 3 people. What do you think I should do? Should I just forget about the non-compete and rely on trade secret to protect me?

I've got 2 words for her: "You're fired". As mica.cooper has said, she's made her intent clear to suck you dry and move on. Of course we all know she'd probably fail, but either way, she wouldn't be in your office for your benefit anyway. Don't bother training her.

... I say the above, from experience... The pig left to be an agent for American Family and tried to solicit our clients as she took client lists. We didn't bother with a non-compete because she was only a half-competent CSR anyway that we weren't sorry to have go. But our clients called up angry that she was soliciting them, like we had any control over it. We lost one cheap client to her, no big deal. We've taken many, and I'm always sure to have her replacement call her with the client to cancel their old insurance with her, just so she knows who has taken them from her.

[TXAgent]

Well I told her that she had to sign the non-compete or resign. She choose to resign. Then she said she's going to claim we fired her and file for unemployment. I told her she can try and good luck.

She's been in the US for 1 and 1/2 years. Worked for 1 year and already wants to file for unemployment benefits. No wonder people from her country think the US is a "heaven".

I've learned a valuable lesson though. Get that non-compete up front and in writing before we invest any time into a person.

[SouthernCalAgent]

The large agency says NO the accounts are not yours and any attempts to do otherwise will be met with full legal force and you are reminded that they have more to spend on lawyers then you do. It's several years later and your old clients are still calling you to place their business.

If clients are calling you then a non-compete doesn't apply, at least in California. If it is several years after you left your non-compete has probably expired.

TX EMPLOYMENT LAW - A non-compete agreement generally is enforceable only if executed when the worker is initially hired or at a time when the employee receives a raise, broader sales territory, or new or expanded responsibilities. JUST FYI for your future hires.

For the employer of the TX girl who resigned because you required her to sign a non-compete. You may wish to look up TX law on non-competes. From my understanding they are pretty close to CA. I have always been told the two states that are the most employee centric are TX and CA. In CA you cannot terminate an employee for refusing to sign a document that isn't enforeable. According to my labor law attorney 89% of non-competes signed in CA are unenforeable.

In these recent California cases, the courts have concluded that an employer may be held liable for monetary damages for firing an at-will employee due to the employee's refusal to sign a non-compete that the court ultimately deems was overbroad.

[mhutch69]

My advice is to tell her she has to pay her portion of the expenses. Begin deducting from her check, advertising, errors and omissions insurance, office expenses, rent, etc.etc.etc.

She will sign immediately.

If not, get the hell out! Who needs people telling you ahead of time they intend to steal from you???

I do not. I would train another monkey.

[gregcw]

I own an independent agency and I hired a girl with the intent that she be an CSR. She had no knowledge of the insurance industry and we trained her from the ground up. We asked her to go get a CSR license. Without telling us, she got the Agent license. At this point we told her we did not want another agent but b/c she already got it, she can sign the agreement to non-compete. She has refused to sign it.

Firing her would mean that I have to train another CSR which will take time. We are a small office of 3 people. What do you think I should do? Should I just forget about the non-compete and rely on trade secret to protect me?

TXAgent,
My understanding of one of the elements for a non-compete agreement to be enforceable is that consideration must take place, i.e a raise, promotion or cash payment.

Since that has not transpired, and you do not want to lose your investment in the training of the CSR, I think that the Trade Secret is what you HAVE to rely on, if you do not pay the CSR for signing a non-compete. Not being an attorney but having read business law, you can probably reinforce the Trade Secret value of your book of business by drafting a letter of 'understanding' that outlines what constitutes a 'Trade Secret' and having the CSR sign that letter for your files.

You may even want to go to the trouble of having it notarized as a way of stressing to the CSR the firmness of your position. You might even want to consider having ALL of your employees signing a Confidintiality Agreement that paralells a non-compete agreement

[Sundance]

Now do not get me wrong I am not siding with the CSR per se' ... however, being a long time TX Agent myself...she did not "sneak" and get an agents license. About 3 (maybe 4) years ago, ALL licenses changed to an AGENTS license. No more solicitors, no more ISR's, no more LRA's, in TX if you hold a P&C license you are an AGENT.

Her not signing, well, I have a feeling that you "perhaps" approached her with a "you sneak, how could you do that" type of attitdue that then put her on the defensive. Seems to me, the relationship has been broken, she doesn't like your agency and you don't like her and assumed her ethics were not (well) ethical. It's a shame as I would venture to guess she was bilingual and would have been an asset to your agency, instead, even if she stayed, you'd be watching her every move, wondering constatnly and she'd be looking to move as soon as possible!

Also, as a principal myself, sadly, the risk we take owning our own agency is spending so much effort, time and money training people, praying they don't move on. It is the chance we take. Perhaps if they are offered a bonus, an incentive, a raise in pay, once they are licensed and stay say 6 months to a year (and then get the bonus) we wouldn't worry about this as much. Almost every employee thinks the grass is greener, not only in our (the principals) yard but at another agency.

Again, truly not trying to side or offend, just stating fact as to the TX license comment and then as to the emotions of how (IMHO) employers and employees relate to each other.

I wish you well

[abiins]

You stole someone else's property.

This was NOT your property.

It would be no different than if you kept the keys to the company car and then stole it after you quit.

sorry.