No compete clause
Moderators: Josh, independent guy
No compete clause
Just read an article in the newspaper about the State Supreme Court allowing Californians the right to move from one company to another or start their own business and can't be prohibited by their employer from working for a competitor in their next job. No compete clauses are illegal here in California........ Great news
Re: No compete clause
It's been that way for a long time. However, keep in mind that there are things you can't do. i.e. make copies of client lists, policies, etc. That's theft of proprietary information.
That being said, I worked for one agent that used to play hardball on the non-competes, even though he knew they weren't enforcable. He used it more as a scare/intimidation tactic.
That being said, I worked for one agent that used to play hardball on the non-competes, even though he knew they weren't enforcable. He used it more as a scare/intimidation tactic.
Re: No compete clause
What ever happened to the integrity we are all so proud of...
If an opportunity to advance a career presents itself, great. But when you work for an agency that has been paying your bills, paying you to produce for them... don't steal from them when you leave.
On the other hand, I don't think they should have a right to stop you from renting the office down the street and advancing your career! I agree that non-competes are wrong... just like stealing from a former employer is wrong.
My two cents...
Wayne Lunday, LUTCF, CLU, ChFC
If an opportunity to advance a career presents itself, great. But when you work for an agency that has been paying your bills, paying you to produce for them... don't steal from them when you leave.
On the other hand, I don't think they should have a right to stop you from renting the office down the street and advancing your career! I agree that non-competes are wrong... just like stealing from a former employer is wrong.
My two cents...
Wayne Lunday, LUTCF, CLU, ChFC
Re: No compete clause
Integrity and insurance - what a concept... 
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LadyBroker
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- Location: Southern California
Re: No compete clause
California has always allowed you the right to make a living, but you still can be bound by certain parts of your non-compete agreement., i.e, the No Contact provision. Keep in mind, too, that if your former employer wants to tie you up in court over your employment agreement, it could make you unemployable during that time.
With that being said, here's the thing --if you leave one brokerage for another, do it with integrity. Don't email yourself copies of your client lists, or expiration lists, or sneak out with your Rolodex. All the information that you know in your head is yours. ANything that is proprietary (expiration lists, copies of polices) is not, and don't kid yourself that if you steal this information and you get caught, your former employer can certainly make your life miserable.
Just act with integrity, do what you know is right, and you'll be fine. I have moved 2ce in my career, and each time I did so cleanly. I should add my retail clients all followed, in part, I think, because I have demonstrated my integrity to them, and on their behalf.
Have a wonderful day!
With that being said, here's the thing --if you leave one brokerage for another, do it with integrity. Don't email yourself copies of your client lists, or expiration lists, or sneak out with your Rolodex. All the information that you know in your head is yours. ANything that is proprietary (expiration lists, copies of polices) is not, and don't kid yourself that if you steal this information and you get caught, your former employer can certainly make your life miserable.
Just act with integrity, do what you know is right, and you'll be fine. I have moved 2ce in my career, and each time I did so cleanly. I should add my retail clients all followed, in part, I think, because I have demonstrated my integrity to them, and on their behalf.
Have a wonderful day!
"It's a typical day, on the road to Utopia.."
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volstrike3
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- Location: Northern CA
Re: No compete clause
Clients often have a personal relationship with their agent/broker. I think that if an agent leaves and advises his clients where he has landed... there is nothing unethical or unprofessional about that. Once the clients know where you are, the ball is in their court. In my opinion it would be unprofessional to do business with a company/individual for years and then drop off the face of the earth without a word. Many agencies do not handle the transition of a book of business very well and many of the clients don't feel the same level of attention from the AE assigned to service them... so they leave.
Re: No compete clause
No compete clause can be effective if it does not restrict you from going in business next door but does restrict you from writing accounts that are currently on your employer's books. Why not just work for a "house" that allows you to retain your business?
Theft of Intellectual Property
Taking names, addresses, phone numbers, policy numbers, expiration dates, etc. when you leave an agency is intellectual property theft. That information belongs to the owner of the agency, not the producer or CSR. If you remove this information by any means, ie, rolodex, client lists, birthday lists, e-mail, fax, etc., you are committing a felony under the California Criminal Code for theft of intellectual property. If you contact your past clients using this information, and solicit their business, you can and should be prosecuted in both civil and criminal court for that theft by your past employer.
There are millions of prospects out there, go after them, just like you did when you started.
There are millions of prospects out there, go after them, just like you did when you started.
Re: No compete clause
Typical CA. allowing employees to screw big bad employers. I have employees sign that they will not steal customers nor solicit other employees to leave either. If one of my employees opened up next door, I will test the non-compete agreement and wipe them out with legal fees if nothing else. (especially outside CA.)
Trade secrets, methods of sales and other intimate company information should be protected from competing with a former person opening a store next to yours. AZ. has historically honored properly written non-competes with adequate consideration for a period of time within 10 miles or less. That is not unreasonable.
Liberal courts redistributing the wealth...?
Trade secrets, methods of sales and other intimate company information should be protected from competing with a former person opening a store next to yours. AZ. has historically honored properly written non-competes with adequate consideration for a period of time within 10 miles or less. That is not unreasonable.
Liberal courts redistributing the wealth...?
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volstrike3
- Insurance Journal Addict
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- Location: Northern CA
Re: No compete clause
Not a whole lot you can do to bury them with legal fees when there is so much California case law in their favor. If you push it too far you will be paying their legal fees.
Re: Theft of Intellectual Property
For the agency owners out there, there exists considerable case law against employees stealing client lists, phone numbers, policy numbers, expriratation dates, etc. Check out the California Uniform Trade Secrets Act - California Civil Code 3426.1 - 3426.10. Section 2860 of California Labor Code provides that everything an employee acquires by virtue of his employement, other than his wages, belongs to his employer, or during or after the period of employment.
If you have a ex-employee that took information, go after him/her.
If you live in a state that does not have a code similar to this, work with your legislature to get one. Agency owners need this protection.
If you have a ex-employee that took information, go after him/her.
If you live in a state that does not have a code similar to this, work with your legislature to get one. Agency owners need this protection.
Re: No compete clause
As far as burying them with legal fees, a start up would not be able to withstand ONE properly worded lawsuit.
I can allege and most likely prove the prior employee has taken trade secrets etc. where the case law exists to keep the case going for a while.
The legal defense costs would stop them from staying in business very long.
I assure you.
I can allege and most likely prove the prior employee has taken trade secrets etc. where the case law exists to keep the case going for a while.
The legal defense costs would stop them from staying in business very long.
I assure you.
Re: No compete clause
To put a bit of a spin on this topic...
I have a relatively small agency, and we tend to treat each other as family. When ever I have hired a producer with or without a prior Non-Compete in place, I,as the new employer, make it a test of their integrity as to how they conduct themselves... both in how they contact prior clients and also how they speak of the former employer in public.
I've always gone out of my way to publicly advertise the fact that they have joined my business. Pictures in advertisments in the local papers. News releases about their attributes and experience, even a local radio spot... all the public, positive things I can do to let the public (their prior clients) know where they are. It's all part of the marketing expenses of this agency. Then, I'll stand back to see how they work. If they hit the ground running, bringing in business that is new to them, not just churning old clients, then I know I have an employee with integrity. If they focus on the prior employer's book I'll cut them loose ASAP. Often times I'm friends through NAIFA or "The Big I" with the prior boss, and even if I'm not I wouldn't want this person treating me the same at a later date. And they would.
As CSP says... "there are millions of prospects out there... Find them!" Just ask for the opportunity to do business!
Swymmer
I have a relatively small agency, and we tend to treat each other as family. When ever I have hired a producer with or without a prior Non-Compete in place, I,as the new employer, make it a test of their integrity as to how they conduct themselves... both in how they contact prior clients and also how they speak of the former employer in public.
I've always gone out of my way to publicly advertise the fact that they have joined my business. Pictures in advertisments in the local papers. News releases about their attributes and experience, even a local radio spot... all the public, positive things I can do to let the public (their prior clients) know where they are. It's all part of the marketing expenses of this agency. Then, I'll stand back to see how they work. If they hit the ground running, bringing in business that is new to them, not just churning old clients, then I know I have an employee with integrity. If they focus on the prior employer's book I'll cut them loose ASAP. Often times I'm friends through NAIFA or "The Big I" with the prior boss, and even if I'm not I wouldn't want this person treating me the same at a later date. And they would.
As CSP says... "there are millions of prospects out there... Find them!" Just ask for the opportunity to do business!
Swymmer
Re: No compete clause
I think a lot of you are missing the boat. Why not allow a former producer to open up next door as long as he / she does not steal current clients. You are not restricting anyone from making a living and everyone is happy. How come you, as an agency owner, cannot understand someone else wanting to be an agency owner?
Re: No compete clause
OMG I just posted an article I read in the paper. Why do the majority of posters assume intellectual property theft and unethical behavior...
I worked for an agent for 8 yrs as office manager and leading producer. In that time I received 0 vacation time, 0 days off. I had to quit once just to get a raise. When I finally left, the elder agent was forced to put the agency up for sale. In other words without my hard work the agent was unable to handle the book of business and wouldn't have received 8 yrs of income if I had not been there to help. There was no future for me there, no incentive to stay, and frankly I felt I was working to make the principal rich while I barely lived month to month. My decision to leave was out of neccessity and the feeling that I could do a better job than many agents that I have observed over the yrs. There is more to this story but I don't feel like writing a book....
I did not take anything with me when I left. I do not go out of my way to contact old clients other than those I normally see on a regular basis anyway. I understand an employee taking clients to their new job is unethical and wrong.
Also understand that some producers are more impressionable and competent than the principal agent. I have also seen agents who have a feeling of entitlement who feel producers and support staff are lowly peons who do not deserve anything. Why is it ok to pay a competent employee minimum wage for doing the same job as the principal who makes over $150,000 a year net. In my case I have had customers track me down, calling my home phone asking what happened to me and if I was still in insurance. Is that stealing intellectual property? I also know of a few agents in my area who hire sales people who will write all their friends and family and then are laid off.. hoping the clients stay... Is that ethical?
There are good employers and bad ones as there are also good employees and bad employees... I don't make assumptions of people and I would wish you would do the same. If a producer wants to take a shot at the big leagues, what is so wrong with that..Why are agents so afraid of competition. As long as the ex employee follows good ethical behavior, I do not see what the problem is...and if the Agent is doing his/her job properly it would be hard for an ex employee to take a client anyway...Customers primarily switch for 2 reasons 1) money 2) unhappy with service, company, or agent
That is all........
I worked for an agent for 8 yrs as office manager and leading producer. In that time I received 0 vacation time, 0 days off. I had to quit once just to get a raise. When I finally left, the elder agent was forced to put the agency up for sale. In other words without my hard work the agent was unable to handle the book of business and wouldn't have received 8 yrs of income if I had not been there to help. There was no future for me there, no incentive to stay, and frankly I felt I was working to make the principal rich while I barely lived month to month. My decision to leave was out of neccessity and the feeling that I could do a better job than many agents that I have observed over the yrs. There is more to this story but I don't feel like writing a book....
I did not take anything with me when I left. I do not go out of my way to contact old clients other than those I normally see on a regular basis anyway. I understand an employee taking clients to their new job is unethical and wrong.
Also understand that some producers are more impressionable and competent than the principal agent. I have also seen agents who have a feeling of entitlement who feel producers and support staff are lowly peons who do not deserve anything. Why is it ok to pay a competent employee minimum wage for doing the same job as the principal who makes over $150,000 a year net. In my case I have had customers track me down, calling my home phone asking what happened to me and if I was still in insurance. Is that stealing intellectual property? I also know of a few agents in my area who hire sales people who will write all their friends and family and then are laid off.. hoping the clients stay... Is that ethical?
There are good employers and bad ones as there are also good employees and bad employees... I don't make assumptions of people and I would wish you would do the same. If a producer wants to take a shot at the big leagues, what is so wrong with that..Why are agents so afraid of competition. As long as the ex employee follows good ethical behavior, I do not see what the problem is...and if the Agent is doing his/her job properly it would be hard for an ex employee to take a client anyway...Customers primarily switch for 2 reasons 1) money 2) unhappy with service, company, or agent
That is all........