I have recently left an P & C and L & H company where I was an agent with no "ownership" of the company or the business. I, like most others, had a non-compete clause. My clause stipulated that my restricted area was only 20-25 mile radius from the current office. I am not from that area, I am approximately 27 miles (my home) and 30 miles (my office). I have family and close friends that have, of course, insurance with me through the other company. I have no intent of taking any of the personal insurance business, I am even leaving my own there for that matter! However, I have a commercial client that is insisting his trucking company be taken care of by me due to the fact that my mother, his CPA and payroll and office manager (all in the same office with me now) is not going to stay with a company or agent he does not know. We live in a very rural area where there aren't many choices for agents and companies with a personal touch. I am working full-time for a life insurance company selling work-site employee benefits so there is no competition there either. What do I do? I have been told the prior insurance company is pursuing me. I only wish they had paid that much attention to me while I worked there and asked for help! Please advise as I am very concerned about where my future stands. The trucking company owner refuses to leave the insurance with that company. What do I tell him and what do I need to have ready? What are my rights?
Non-Compete Clauses
- Thread starter Boomer
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I recently worked for a prop/cas/life/health company in which I held no ownership (and much less pay than expected). I am now working full-time with a life/health work-site benefits company and our district office is 2 1/2 hours from the prior office. My prior non-compete stipulates 20 or 25 mile radius from the office. I have no intention of moving business from this company, I am even leaving my personal business with this company, and all my extended friends and family's business. I have a commercial trucking company client that insists on moving his business with me due to the fact that we have a long history (professional and non-professional) together. My mother is a CPA and handles all of his payroll/filings/office manager/etc. I am located in the same office working off-site very often (this office is also located outside the 25 mile radius as well). He is refusing to leave his business at the prior company with an agent he doesn't know and we are not in an area where there are a lot of choices with a personal agent. I have been told that the prior company is looking into enforcing the non-compete clause. I need to do something with his business as he is adding new drivers and making changes. I need to know what to tell this client. I don't understand how a company can keep me from business if I didn't solicit the business and the client insisted that it stay with me? How can they tell the insured who they can place their business with? I am just very confused. My third manager in two years (who has also left the company) stated that as long as I wasn't selling within that distance, I was okay. Any suggestions? Worried!
I've had similar circumstances before when I worked managing the life & health department of a large P&C agency and then went independent. I've also left other captive agencies and had non competes. Some were reasonable and some outright ridiculous. I was lucky even though I had a non compete my previous employer bought my block of business from me for 6 months commission providing I would not go after those clients for 3 years. I agreed since legally he didn't have to pay me anything for them and I thought it was reasonable. I'd recommend a couple of things.
1. Seek legal counsel. Let an attorney review the non compete clause and also check it against the state and local laws and get their professional opinion as to what you can and cannot do. Just because you sign an agreement doesn't always mean it's binding if a court would rule it unreasonable. Not touching their clients for say 6, 12, or 18 months may be reasonable. However, saying that you can't sell insurance in a certain radius to anyone who is not their client seems unreasonable. But again seek professional legal advice. Once you have done that then......
2. Talk to the owner of the place you're leaving. Let them know you understand their concern and your intention is not to take any clients from them, however, anyone who is not a client will be free game regardless of the radius. Let them know the situation with the client who demands to move their business to you. Offer to buy that piece of business from your previous employer. Approach them saying look, they're going to move their business anyway. How about I pay you 6 months commission on them, or do a 50/50 split for one year. Tell them the client is initiating this and not you and that you explained to the client the non compete situation, but the client will leave no matter what.
So again, legal advice and have a sit down with your previous owner and discuss it. Some people are reasonable. Others may not be. If they want to play hard ball make sure you have the law on your side and play hardball back.
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Thank you so much for the information. I will see about checking in with an attorney quickly. However, the previous employer is being a pivotal pain in the behind. As I said before, I was on my 4th manager in 2 years and the last manager had been there 12 years and left for the same reasons I did. I was hired on at what was supposed to be a $600/mo higher pay, my quarterly validation requirements and contracting expectations all have gotten more constricting in the last two years as well. No more money, of course and I had repeatedly requested to move the office location as it was in a RESIDENTIAL area that no one could find....even after we gave them directions.....we were connected to SOMEONE ELSES HOME! Those requests were ignored all on top of the fact that I brought in 120K in commission on one account and found that I was paid nothing for the $65000 W/C policy. The state manager is VERY controlling and was not expecting me to leave. There have been two managers, myself as an agent, and another agent leave in the last 6 months, with more to follow quickly I'm afraid. I hate it and respect the company, but this district is not run well at all and it shows. When I did the math, even on a chance that I would be contracted, I still wasn't going to make any money. If I didn't bonus, I didn't eat. None of the expenses were brought up during hiring and I was unaware of the proper questions to ask. For example, I will NEVER own any of that business. There is no retirement. I would barely break even including qualifying for 2 of 4 bonuses each year. I have friends in other companies and now know the differences in pay structure and guidelines and requirements. I just want to do my life/health for employee benefits and maybe a school system or two which I have never been involved in and maintain this piece of commercial business for this client. He is older and doesn't trust anyone so that is an issue.
Thanks for all the input, I just hate that it has all come to this. Who knew I would become worth so much time and energy after they weren't paying me any more?
Thanks for all the input, I just hate that it has all come to this. Who knew I would become worth so much time and energy after they weren't paying me any more?
Have a lawyer review your contract. It shouldn't cost you much and it's worth every penny to know where you stand legally then go from there. A lawyer will take all the emotion out and just look at facts. Then you'll know your options and the stress will go away. Worst case if you can't move the client, explain to him why and refer him to another agent you trust. How long is the non compete for anyway? Does it say you can't move any of their clients? You can't compete in a certain mile radius only? Or both? A lot of non competes are poorly written or violate state or local guidelines and have loopholes in them and won't stand up in court. If that's your case your lawyer can send a letter to your company. Once they know you're lawyered up they'll either back off because they think they may lose in court, or push it and take it to court. Worst case you get sued for commission and lawyer fees. Best case you get one over on your company and piss them off.
Another option is to have your client contact the company and let them know he wants to keep you as an agent and if they give you any crap over it, he'll tell 12 of his friends who also do business with them to go elsewhere because if they'll screw their own agents over they'll screw the customer over too.
Personally I'd do both options. But that's just the way I am. It's all about power. Without a lawyer they see you as being weak. Having a lawyer gives you power. I don't like to be an ass to people, but when people become unreasonable I have an attorney that can be a total a-hole for me.
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Boy, that is a tough situation. Did the non-compete mention a timeframe that you cannot work this area? I think they are more likely to be enforced when they are specific not only to geography, but a given timeframe of 1 year, 2 years, etc.
Regardless, if your willing to go the distance for this client, I would find and retain an attorney ASAP...it sounds like you will need one!
Regardless, if your willing to go the distance for this client, I would find and retain an attorney ASAP...it sounds like you will need one!
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You can also have your client sign a "non-solicitation letter" indicating that you in NO way solicited their business; but acted on their own, and wanted you.
Call the insurance company as they probably have one on file. I hope this helps.
P.S. Were you given anything in exchange for this "NON-compete?"
If not, to make them valid a considerable sum is necessary in most cases to make them valid. I would check your state's labor laws.
Call the insurance company as they probably have one on file. I hope this helps.
P.S. Were you given anything in exchange for this "NON-compete?"
If not, to make them valid a considerable sum is necessary in most cases to make them valid. I would check your state's labor laws.
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You need to speak with an Attorney. Different states have different rules about noncompetes. Some enforce them and some may not..
Excellent points. Another thing to consider too is most states will tend to side with the employee instead of the employer.
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