5 Year Non Compete Agreement?

[Capybara90]

I just received my life and health insurance license and I was recruited by a small agency in my town. I really wanted to work for them, but the non compete agreement really scares me and it seems like I could be blocked from the insurance industry if things don't work out. It doesn't sound like it is enforceable since it is too broad, but I don't want any legal troubles regardless. I spoke to the owner about it and the only thing he would say is that he could add a clause to review the contract on an annual basis, but I'm not sure if that is a good idea either. I'm not sure if I am overreacting if this is a normal part of business or if the contract really is something I should avoid.

This is the verbiage from the contract. I just changed the names of the parties involved for privacy.

1. NON-COMPETE

Throughout the duration of this AGREEMENT the RECIPIENT shall not, in any manner,
represent, provide services or engage in any aspects of business that would be deemed similar in nature to the business of Insurance Company specifically with respect to its business expertise for system improvements, modifications without mutual agreement including contacts, without the written consent of the Insurance Company.

The RECIPIENT warrants and guarantees that through the duration of this AGREEMENT and
for a period of five (5) years following the culmination, completion or termination of
this AGREEMENT, that RECIPIENT shall not directly or indirectly engage in any business
that would be considered similar in nature to the business engaged in by Insurance Company, its subsidiaries, and any current or former clients and/or customers, including books written, marketing
specifics, or key business affiliations.

 

[DHK]

I wouldn't sign that unless there's a nice big check attached to it.

Most non-competes are for buying you out of your business and you cannot practice your profession within a given radius of the location and a given time frame.

Non-solicitations are more standard and relates primarily to their staffing and current clients for a given period of time.

If you still want to pursue employment with them, I'd contact a labor law attorney for the state of Illinois.

That clause is NUTS and that's my highly considered yet non-legally binding opinion.

Never heard of one for FIVE YEARS??? I think they're insecure.

 

[Capybara90]

Thanks so much for responding. I really appreciate your help.

You confirmed exactly what I thought about initially and I think you are right. I will have to find another agency to work with unfortunately. The only reason why I liked this agency in the first place is because they were local and offered hands on training unlike most of the companies I have found that are all virtual.

Are there any agencies that you can recommend that offer good training for new agents?

 

[Claudia Schaffer]

That looks like something made up. I don't believe that any lawyer would write something poorly. You must have a lawyer review and put in your requirements. How about asking for 5 million for each year you can't work. And an additional 20 million if after not working in your industry for 5 years you can't find a job.

 

[Capybara90]

Yes, the owner told me that he wrote the policy himself. He is not a lawyer.

 

[somarco]

Yes, the owner told me that he wrote the policy himself. He is not a lawyer.

Run, don't walk, to the next "opportunity", unless you are willing to let the part-time owner, part-time lawyer, own you for the next 5 years.

A 5 yr NC is BS.

Negotiate or walk.

 

[scagnt83]

I would reconsider working for someone like that in the first place. If they are that unreasonable about the non-compete... its likely they are unreasonable about many other issues.

Btw, industry standard on the life/health side is a "non-solicit" agreement, not a non-compete.

 

[adjusterjack]

I agree. Run away from this deal as fast as you can. It's probably unenforceable but saying it's unenforceable doesn't prevent the lawsuit that will cost you tens of thousands of dollars to defend.

 

[DHK]

Yes, the owner told me that he wrote the policy himself. He is not a lawyer.

That's a red flag all by itself, not to mention the notion that you can't work for 5 years if you leave him as an employer?

You don't need someone that insecure and stupid.

 

[Rearden]

A judge would laugh his ass off at such a farce of a contract.

It's one thing to restrict access to clients or employees, but to restrict your capability of making a living for half a decade?