An agency owner dreads the scenario that an employee leaves the agency and takes customers, prospects, employees and proprietary information with him or her to a new job. When this happens, the agency loses more than its investment in the employee. It loses other valuable assets, such as staff, marketing ideas, prospects and competitive advantages. Similar situations can occur when a partner is bought out and when books of business are bought and sold. This is why non-compete agreements are so important. These agreements are designed to protect businesses from this type of loss.
Before continuing further, I must first add a disclaimer: I am not an attorney, so nothing in this article should be considered legal advice or an exhaustive discussion on these types of agreements. This article is simply a layman's opinion based on years of insurance agency experience.
Although many attorneys advise that non-compete agreements will not hold in court, keep in mind non-compete agreements come in many shapes and forms. The validity of a non-compete depends on the type of agreement and the scenario in which it is being used.
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