Non compete lawsuit

[TXAgent]

Thank you for all the replies.

I recently read that non-compete agreements are enforceable in TX even if it is offered after the employee was hired, as long as the employer offers some consideration. Promises of future training and benefits are valid consideration as long as the employer fulfils those promises. I think the law used to be that promises of future training or access to confidential information was not enough.

There is a difference between a PC licence and CSR license. There are two separate tests and different applications. We specifically asked all our employees to take the CSR tests when we hire them. This was the first time that an employee did not follow our instructions.

She did try to claim unemployment but was denied because the workforce commission determined that I had just cause to fire her for insurbordination.

Thanks again for the replies.

[Shadow121]

My husband got his 215 license in Florida and came on board at the company I worked for about a year ago (I am not licensed, did the marketing for the company). They had him sign a non-compete that said he is not permitted to solicit "new" clients within 25 miles of any office location of the company should he leave. There is no time frame for the non compete and he did not receive any pay as an agent other than commission of 3 deals over the course of a year. He was given a handful of the lowest quality leads that no one else would be willing to sit and then after one a year of being the errand boy in the office and not making any money and not having any marketing budget of his own he decided to leave and go out on his own. His training consisted of attending two free conventions (he paid for his own airfare) and being able to sit in and observe the owner in the sales process. They also paid for his 1st years E & O insurance. Now the company wants to enforce the non compete unless he agrees to stay with the same FMO which the company receives a 1% override on all his business from. Is this even legal? Incidentally, this came about because I also left the company and I think the owner is afraid that we will open our own company and compete with him (although I have no license and my husband has very little experience in the business at all). He only got his license because he lost his previous job and was unable to find work elsewhere.

[OldIndyAgent]

See an attorney. 25 miles is a little bogus but so is the fact he only 3 commissions...it would be better if he had got no compensation, then the non-compete would be null and void. You have to have quid-pro-quo (compensation) for a contract to be valid. If you move 5 miles, and agree to not solicit any business from this guy's book, that should be reasonable...

Should have thought it through and attorney reviewed before he signed.

[sacman]

Shadow,

Not sure it you've seen an attorney or not yet, but you need to do so ASAP if your husband
is planning on staying in the business.

Non-compete laws vary from state to state. Not sure on Florida.
However, all states have sevearl parameters that the non-compete clause must conform to in order
to be valid. From what I understand a specific, reasonable time frame is a mandatory component
in order for the non-compete to be valid. I would venture a guess that the open ended time frame
is not valid in FL,the question now becomes does it void it entirely or just limit it.

[Rainmaker]

I've moved three books as a producer from a small agency, to a regional, to a global. I've also run practice groups and was a Regional CEO for a top 10 public broker who had to manage both ends of this equation, ie producers leaving and producers coming on board with books.

I see a lot of emotion on this string - and I understand it.

Here's the cookie: the industry would be a lot better off accounting for 'natural events' in it's producer contracts rather than these destructive 'mano-a-mano' fights that occur that do nothing more than disenfranchise client relationships and line the pockets of attorneys. It is stupid....

Set up your contracts for the following:

1) the producer 'outgrows' your agency - ie they want to pursue larger accounts which you as the agency owner may not be aligned for and don't want to make the investments to enable that sort of alignment;

2) the producer uses you as their own 'business incubator' - I've seen this and yes it does 'sting' and I won't comment on how I feel about the ethics/morality of this - however we all let a 'barbarian through the gate' occasionally so why not have protective covenants, ie they buy the book from you if that's what is really going on there?

3) you are unable to run your agency responsibly! yes I said it - if that's really what occurred (no resources, no training, hostile work environment, too much turnover with CSR's and AM's, etc)...hey, what responsible agent WOULDN'T leave you to find an agency that enables them to deliver on the promises they made to their clients....and, remember, many of these clients started out as relationships/friendships ... or evolved into important relationships personally for them over time. So these relationship are important to them - and they are going to protect them!

Folks, don't kid yourselves.....the relationship between the producer and their client GOVERNS. If you build into your contracts with them ALL of the natural AND un-natural (ie ethics, using you as a business incubator, etc) into the agreement initially - you will win. Specifically, integrating a 'buy out' clause is your best bet in my opinion.

Remember, agency owners reading this string: your client is NOT the client of your producers....your client is the PRODUCER. You must EARN their business, create a good work environment, teach them or provide resources that can teach them to be a better producer and win more business, focus on increasing their level of prosperity through helping them realize greater achievements year over year....etc.

Under those circumstances...wouldn't producers tend to stay with you?

If you try to affix administrative remedy to the natural order you will lose. The lesson is: yes chaos will occur with producers - why not account for it contractually so you are not left holding the bag???

Cheers