Ok here it is plain and simple. You are paid a salary (w-2) you don not own those clients. You are paid as a contractor (1099) go for it. I've never seen a company go after these people except for money owed in advances to them (which they have a right to do) even then they only really want to be paid the money they advanced to you.
Talking to Your Customers After You Quit the Company
- Thread starter packer01
- Start date
- 8,707
Ok, let me jump in because I think this may help someone out there.
Just last week I met with my attorney (whom I have on a monthly retainer) and we discussed Non-Competes for about 20 minutes.
Norwayguy, regarding your friend's case and your case, my attorney told me that an agency owner can put anything they like on the Non-Compete, but the real question is will it hold up in court?
For example, the Non-Compete I was having my guys sign said that they could not work (period) within 50 miles of one of my locations! When my attorney read that he looked at me and started laughing and said "a Judge would never go along with this because how is the person signing this going to survive/make ends meet....".
So we removed that clause from the agreement.
What I've learned from him so far is that Non-Competes are intended to keep your existing clients (whom you invested your own money to obtain) from being poached on by vulturesand not intended to drive people into poverty.
You know I think you and I both agree much more than we would ever disagree...If the contract says not to poach the customers then that is what you should do...Non-Competes can be used to keep people from competing in a defined geographic area...each state is very different on what they will allow...50 Miles can translate depending on where you are to 40 minutes to probably 2 hours from that persons home which can deprive them of their livelyhood...But if you have paid an employee to market widgets in City A they shouldn't be able to turn around and sell widgets in that same city. But they should be able to sell widgets in town B...The same thing about non-solicitation agreements. I don't think it harms the agent if they can't poach clients for 18 months...It allows them to still go out and write new business.
I long ago quit trying to understand how someone could have a flatline response to a quote from the Torah or the Koran or Howard Stern or Dave Ramsey but the same guy reacts to a Bible quote as if he just had acid thrown in his face. The rest of your post doesn't even deserve a response.
- 7,790
Nothing like adding religion, biblical quotes, or politics into a discussion about how to conduct a business. I would say just abide by the golden rule (I am not referring to the insurance company that hijacked that name).
- 582
I'm just playing Devil's advocate... This discussion was so black and white before I got in the mix... Everyone was preaching from the pulpit about the right thing to do... The bottom line is that life is full of grey.
Non Compete clauses are for CEO's. Why do you think they get a golden parachute? It's a tit for tat. If you're going to strip my right to work for a competitor after I'm fired or resign, then I'm going to need a large severance so I can support my family. Its not that these CEO's are being greedy, its that the company doesn't want their most valuable trade secrets going to a competitor and for that, they are willing to pay out these golden parachutes.
Non Compete clauses in an agent contract are unenforcable, illegal in most states, and used to INTIMIDATE the agent. That is the sole purpose.
Is an illegal, unenforcable clause simply used for intimidation ethical?
Would it be unethical to violate an unethical clause that was just used to scare you?
Is the insurance carrier going to compensate you after you leave so you won't go to a competitor? Or are they just going to strip you of your right to earn a living and support your family and not give you anything in return? Is that ethical?
Larry, I don't have an issue with the bible, my problem lies in people's black and white approach to life. Your post is a prime example.
Let me paraphrase what you said, "Focus said something about the bible, you shouldn't even read the rest of his post. That's it. Period. End of discussion."
You sound like a mindless zealot. Why don't you actually think about something meaningful and contribute to the discussion. You can start by answering the questions I raised and say something more than yes or no.
Non Compete clauses are for CEO's. Why do you think they get a golden parachute? It's a tit for tat. If you're going to strip my right to work for a competitor after I'm fired or resign, then I'm going to need a large severance so I can support my family. Its not that these CEO's are being greedy, its that the company doesn't want their most valuable trade secrets going to a competitor and for that, they are willing to pay out these golden parachutes.
Non Compete clauses in an agent contract are unenforcable, illegal in most states, and used to INTIMIDATE the agent. That is the sole purpose.
Is an illegal, unenforcable clause simply used for intimidation ethical?
Would it be unethical to violate an unethical clause that was just used to scare you?
Is the insurance carrier going to compensate you after you leave so you won't go to a competitor? Or are they just going to strip you of your right to earn a living and support your family and not give you anything in return? Is that ethical?
Larry, I don't have an issue with the bible, my problem lies in people's black and white approach to life. Your post is a prime example.
Let me paraphrase what you said, "Focus said something about the bible, you shouldn't even read the rest of his post. That's it. Period. End of discussion."
You sound like a mindless zealot. Why don't you actually think about something meaningful and contribute to the discussion. You can start by answering the questions I raised and say something more than yes or no.
So, let's say I come work for you as an employee.
You pay me a salary/commission, you give me back office support, access to your carriers, and the other benefits.
Two years later I decided to leave your agency and go to work for your competitor down the street. And three months after that you started noticing that your business was losing clients left and right, or worst yet, some clients were doing AORs to your competitor whom you know has hired me (your ex employee).
1. How would you feel?
2. What would you do?
And by the way, don't ever think for a second that Non-Compete lawsuits don't happen, because they do. In my last 15 years in the P&C business, I've personally seen 3 SUCCESSFUL lawsuits brought on by agency owners and here is one case recently on the news:
CRC Attempt To Block Former Employees At Ryan Specialty Fails - Agent/Broker - Property and Casualty Insurance News
What qualifies you to have a problem with anyone else's approach to life other than your own? Your paraphrase was unnecessary since my actual words were right there for all to see. Your assesment of me is your opinion and is largely unimportant. So does this mean I'm not getting an invitation to Thanksgiving dinner?
- 8,707
FLInsa, Do you have a problem with a former employee that goes to work with a competitor and competes on future business against you and does not come and poach clients? I ask because the you also benefitted from the work product of the former employee in the portion in bold.
The reason I ask is that a True Non-Compete and not just a Non-Solicitation agreement can cause someone to be unable to earn a living in their chosed profession within a certain geographical area. While a Non-Solicitation agreement which just restricts the former employee from courting your existing clients does not cause him to not be able to earn a living in his profession. Legally for the non-compete you have to give that agent something of value because they are giving up something as well, wether a salary which is compensation for the work they are doing is enough would be determined by a court.
As I have said before I believe we should honor our agreements and the same time I recommend everyone have their contracts reviewed by a competent legel professional because its crazy to subject yourself to harsher restrictions than what the contract states....
I've got a contract that had a Non-Compete for 18 months in it for the 403(b) market and I was pointing out to the lawyer how because I resigned and was not fired for cause the contract clearly stated that that part of the Non-Compete was not enforced. He slowly read the contract smiled and said your right but even if you had been fired for cause the provisions was poorly worded. The provisions said I could not compete in the following counties and listed then in the following states. I believe they had meant to stop me from working in the states listed which included my state of Maine but because of how it was worded the contract only restricted me from competing in the listed counties as it turns out Mass and Maine share one county in name Franklin County and that would have been the only place I could not compete with them had that portion be binding on me anyway (The company had no clients or business in Franklin County Maine anyway).
End of my story.
Just a side question, in your example after the employee leaves you notice clients AORing to the Competing Agency, I don't want to muddy the waters but what if the former employee did no advertising of his switch and did not do the AORs and these clients after 3 months without dealing with your former employee no longer wanted to deal with your agency start shopping and end up at the competitor and the Agency owner their (Who is not bound by your non-compete) signs up the clients? Now I think we all know in reality the vast majority of these people would probably be switching due to the former employee violating the non-compete/non-solicitation agreement, just food for thought.
Last edited:
- 436
what is the client thinking though?
This post has a lot of good thoughts and points of view.
We, as agents/advisors in the business critique our standards/values/and beliefs....which, is a very good thing for the end buyer and the client. The fact is though the clients put maybe 1/10 of the thought towards their life insurance as we do, and the only time they even think about their life coverage during a given year is when someone they know dies and when we call them.
With that said, from my experience clients value the relationship with their advisor and will side with relationship over a company. Take this example, agent works with MR. Jones for 5 years, meeting with the client at least once a year. The agent then decides to become independent and sits down with MR. Jones to explain his decision. More times than not MR Jones doesn't want to be assigned to some new rookie....especially if the relationship with the existing agent involved more than "just buying a policy". Assuming the new company the agent is now offering is an "as good as or better" fit for MR. Jones than the existing contract and his health is the same....the MR. Jones of the world will walk away from the original insurer the majority of the time.
When I left my large captive I had a couple of these conversations with clients. A big factor in my situation though was that the large mutual I left does not allow any brokerage business, so servicing my existing clients contracts now that I was leaving the company was not an option. So in talking with my clients they new that they would be assigned to a newbie.
So back to the thought/question others have brought up during this post...."whose client is it anyway?
A few who have responded to this post seem to really feel that these clients are the "company's clients" because they paid you a commission for the business. I disagree. I was never once given a lead from my former company....every relationship I have created I have went out and formed myself through a dedication to referral based marketing.
So contrary to what some have said about company's "paying a commission for the client".....for me and my practice I don't see or understand that. The insurance company's I offer to my clients pay me a commission for me to bring their product to my client.
Captive company's "own the file" but it is impossible for them to "own the relationship".
This post has a lot of good thoughts and points of view.
We, as agents/advisors in the business critique our standards/values/and beliefs....which, is a very good thing for the end buyer and the client. The fact is though the clients put maybe 1/10 of the thought towards their life insurance as we do, and the only time they even think about their life coverage during a given year is when someone they know dies and when we call them.
With that said, from my experience clients value the relationship with their advisor and will side with relationship over a company. Take this example, agent works with MR. Jones for 5 years, meeting with the client at least once a year. The agent then decides to become independent and sits down with MR. Jones to explain his decision. More times than not MR Jones doesn't want to be assigned to some new rookie....especially if the relationship with the existing agent involved more than "just buying a policy". Assuming the new company the agent is now offering is an "as good as or better" fit for MR. Jones than the existing contract and his health is the same....the MR. Jones of the world will walk away from the original insurer the majority of the time.
When I left my large captive I had a couple of these conversations with clients. A big factor in my situation though was that the large mutual I left does not allow any brokerage business, so servicing my existing clients contracts now that I was leaving the company was not an option. So in talking with my clients they new that they would be assigned to a newbie.
So back to the thought/question others have brought up during this post...."whose client is it anyway?
A few who have responded to this post seem to really feel that these clients are the "company's clients" because they paid you a commission for the business. I disagree. I was never once given a lead from my former company....every relationship I have created I have went out and formed myself through a dedication to referral based marketing.
So contrary to what some have said about company's "paying a commission for the client".....for me and my practice I don't see or understand that. The insurance company's I offer to my clients pay me a commission for me to bring their product to my client.
Captive company's "own the file" but it is impossible for them to "own the relationship".
Last edited:
Similar threads
