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

UPDATED: Feb 21, 2012

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 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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