NORTH CAROLINA SIDES WITH EMPLOYEE
The employee worked as an account executive for an insurance broker. He signed a non-compete agreement which provided as follows:
For a period of two years following termination of employment, employee shall not:
(i) On behalf of himself, another insurance company and/or agency, directly or
indirectly, seek to induce, promote, facilitate, solicit, quote rates for, receive, write, bind, broker, transfer or accept replacement or renewal of insurance or otherwise provide insurance and/or insurance services on behalf of any person, firm or entity to whom the brokerage company has sold any product or service, or quoted any product or service, whether or not for compensation, in the one year prior to the time employee ceases to be employed by the brokerage company. Nor will employee induce or seek to induce the discontinuance or lapse of any insurance coverage or service provided or placed by the brokerage company in the one year prior to the time employee ceases to be employed. This restriction applies regardless of whether employee, directly or indirectly contacts the policyholder or prospect, or whether the policyholder or prospect contacts or seeks to contact the employee.
(ii) Employee covenants to refrain from performing or engaging in the activity prohibited …(1) Charlotte, North Carolina, or (2) in any other city, town, borough, township, village or other place in the State of North Carolina or the State of South Carolina in which city, borough, township, village or other place [Defendant] is engaged in rendering its services or selling its products.
Pretty tuff non-compete…wouldn’t you agree? The Court of Appeals in North Carolina found the scope so exhaustive as to be unenforceable. Most of the court’s analysis dealt with the observation the non-compete reached not only current and former customers of the brokerage company, but also included any person or entity to whom the brokerage company had merely quoted a product or service.
The Court found the brokerage company’s attempt to prevent the employee from obtaining clients where the brokerage company had failed to do so, was an impermissible restraint and rendered the agreement void. The decision is Hejl v. Hood Hargett & Associates.