What can an insurance company do to enforce a non-compete clause in a contract with an agent when an agent leaves?

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What can an insurance company do to enforce a non-compete clause in a contract with an agent when an agent leaves?

Can a life/health insurance company enforce anything to an agent who has left the company telling them not to speak with former clients and former prospective clients? If a former client or prospective calls the agent and requests that the agent do business with them is that legal?

Asked on February 21, 2012 under Employment Labor Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If the agent left employment voluntarily (i.e. was not laid off or terminated), then if there is a non-cometition clause in his or her agreement, and the agent violates it, the company could--

1) Seek monetary compensation (i.e. sue him or her more damages)

2) Seek a court order (injunction) barring the former agent from doing whatever it is that breaches or violates the agreement.

As to what would happen if a former client initiates contact, that depends on exactly what the non-competition clause says--does it bar the agent from doing any work for former clients, or simply from contacting them, for example? To understand what is or is not allowed, the non-competition agreement/clause must be referenced; like other contracts, it is enforceable as per its plain terms.


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