Question About Non Compete Agreements

[LDG]

How iron clad are non-compete agreements?

I have a friend who signed a no compete after working as a sales producer for an agent for 10 years.

She never signed one in the past and was somewhat surprised with the owner asked all employees to sign the non compete at the beginning of the year.

She now wants to leave the agency but doesn't know how iron clad the agreement is.

Does anyone have experience in this situation?

 

[DHK]

Non-compete or non-solicit?

Non-competes say that you cannot engage in your profession within a certain radius of your location and/or for a certain number of years.

Non-solicit agreements are where you agree not to contact any of the clients you brought in for a certain period of time. It also usually applies to trying to recruit agents away from that office as well.

Non-solicit agreements are enforceable... but non-competes, generally are not.

This really is a legal question and I'm not an attorney who can advise you (or your friend) on this.

 

[ModernInsurance]

Have your friend look up the case law for her particular state. If a legal precedent has been set, that will likely govern whether or not the agreement is enforceable. Here in DE, the courts have ruled non-competes are valid.

 

[pfg1]

She worked there 10yrs and then he made her sign a non-compete? (and worse yet, she signed it?)

HUGE red flag - to me at least. Maybe I'm reading your post wrong.

 

[AboutThatLife]

She worked there 10yrs and then he made her sign a non-compete? (and worse yet, she signed it?)

HUGE red flag - to me at least. Maybe I'm reading your post wrong.

So she should have left and poached all her clients?

 

[pfg1]

So she should have left and poached all her clients?

That's what you got out of my post?

 

[TFMSINC]

What DHK said. Non-solicit is enforceable. Non compete is generally not enforceable.

 

[Winter_123]

Have your friend look up the case law for her particular state. .

Ahhh, that is helpful within reason as long as a person understands that -in addition to he legal issue- the person must also bring a similar set of facts to the determination. Keeping in mind that courts rule both on legal issues and factual issues.

Some states that will enforce non-competes will nevertheless still require the employer to reasonably demonstrate that the employee represents a significant and credible competitive threat to the employer. Versus a common situation where an employer hires ten sales people (example) in September and eight are gone by January but they all signed non-competes so the employer just wants to keep them out of the business.

Then there are states where the non-compete is enforced but it may become invalid if the employer terminated the employee.

Then there are issues about what happens if the employee works at an agency that has changed hands since he was first hired. Did the non-compete clause have an assignment clause too or not?

And then there are states that might enforce a non-compete clause but require the employer to show that they have consistently enforced it and have not just singled out one employee for one of the many reasons that can arise.

Things like dat. Just sayin that you have to understand the case law but then you have to get your specific facts to line up with the case law.

As others have noted, in general, even the states that enforce non-competes are reluctant to let an employer just try to deprive you of your livelihood if your actions are not a direct threat to the employer but may nevertheless be somewhat of a threat. Example, non-compete may prevent you from selling the same products or same carriers but a non-compete that just says you cannot sell insurance is dicey. Does the non-compete cover the town where the agent works or the whole state. Things like that become areas where black and white answers are not really appopriate. An attorney needs to put it under the microscope.

 

[somarco]

You are asking the wrong question.

The only one that matters is this. Does your friend have the funds to defend herself should her former employer pursue action against her?

 

[salesgirl]

They can hold you to it. Most companies don't have the time or resources to pursue legal action but they are completely within their legal rights to do so. I've never understood noncompetes. If you are able to find a better opportunity elsewhere, why shouldn't you be allowed??