Legality of holding a bond account

Jan 29, 2019

  1. Dix86
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    Dix86 Super Genius

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    I'm not sure the title is accurate, as I am not sure how to word this issue. I have an agent who has recently come under my hierarchy who left a captive agency. They held 25% of all of his pay in a bond account for charge backs. His bond account has roughly a $2600 balance in it and they are claiming they will hold all of this money until 1 year is up. My question is about the legality of this. Can they legally hold his money after he has terminated from their contract? I've never had this issue before but told him I would look into it. Wondering if anyone could offer any ideas.

    Thanks
     
    Dix86, Jan 29, 2019
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  2. fed up
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    fed up Guru

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    I would be curious what interest rate they will pay on the 2600 if nothing is paid to a chargeback. Depending on the reasons for the separation, I think a letter from an attorney could clear that up real soon.
     
    fed up, Jan 29, 2019
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  3. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    What does the agent's contract say?

    Quite frankly, it was the only thing about Met Life's compensation structure that I liked and didn't like. I believe they put 100% of one's pay into a "commission account" and paid out 10% of that amount each week. Helped with charge-backs and ensuring that agents were sticking to a budget. But leaving the firm... I don't know how that would all work out.
     
    DHK, Jan 29, 2019
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  4. adjusterjack
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    adjusterjack Guru

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    He has terminated from there employ. Not necessarily from the contract. There could be terms and conditions that extend beyond the termination of employment.

    Non-compete agreements come to mind as an example.

    My question, too.

    If the contract says that the money gets held for a year after leaving, then there is nothing illegal about it. It's something the agent agreed to by signing the contract at the beginning.

    If the contract doesn't specify that interest gets paid, then interest doesn't get paid.

    An attorney should be reading the contract before sending that letter.
     
  5. VolAgent
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    VolAgent Guru

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    There are many a contract out there that are illegal and thus invalid, regardless of if signed or not.

    The agent has two choices, wait the 12 months or hire an attorney to review the contract and see if it is invalid and should be fought.

    Its probably cheaper to wait 12 months for the $2600.
     
    VolAgent, Jan 29, 2019
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  6. Dix86
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    Dix86 Super Genius

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    I wanted to circle back and provide some updates as my agent is becoming increasingly frustrated with his former agency.

    The original request being denied-
    "I am sorry but I did not receive approval to release your bond. Per Frank, the procedure for releasing bond has been updated."

    So with that, we sought some further clarification from legal as there is no specific wording in the contract regarding this issue.
    Here is the initial response-
    "You state that, “I have reviewed my contract and cannot locate any article that mentions this.” With the understanding that “this” is referring to ********* rule regarding “your bond balance that is being held”, I would direct your attention to the following sections of your ******** Independent Agent Agreement: Section 4, which states in part, “You shall be free to exercise your own …, subject to any rules and regulations that we, …., adopt from time to time ….”; Section 14, which states in part, “You shall conform to the rules and regulations of the Agency … now or hereafter to become in force.” ; and Declaration, which states in part, “I NAME HERE, the undersigned, do hereby declare: … that I will comply with the rules and regulations of the Company…”.


    So from here he requested for the specific rule as it relates to the bond account and the date it was enforced.
    Here is the response to that.
    "Per your original request I have provided to you the language in your contract that obligates you to ******** rules and regulations.

    Because you are no longer contracted with ********, I am not inclined to share with you any of our company’s rules and regulations; as these items are considered confidential and proprietary. That being said, this rule has been in place for more than five years, as I’m sure you are aware, and if you have any further questions regarding this please feel free to reach out to your former GM"


    Sorry for the long post, just looking for a second opinion here.
     
    Dix86, Feb 13, 2019
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  7. VolAgent
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    VolAgent Guru

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    I refer you to my previous response. At this point I would say they know they are in the wrong and are daring you to do anything about it. Adding to a contract without notifying you will never fly, at minimum you need to be notified with an opportunity to avoid the new terms, generally by terminating the contract. Also, it appears he is saying they amended the rules years ago, but did not incorporate it into the contract you signed. That will never fly as you had no knowledge.

    And in the end, it will probably cost you more than $2600 to recover $2600.
     
    VolAgent, Feb 13, 2019
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