By: AgencyEquity.com
An Idaho insurance agency sued when some of its accounts followed an employee who left for another agency.
The employee began working at the agency as a receptionist in 2015 but quickly obtained a producer’s license. She signed a producer agreement with the agency that included a non-solicitation agreement. It prohibited her from directly or indirectly soliciting the agency’s clients for 18 months after the end of her employment.
Five years later, she was an hourly employee being paid $17.40 per hour when she resigned her position. Upon resigning, she deleted all but one of her agency client contacts from her phone (the other one was a personal friend.) She also took no agency client information with her. Another agency hired her in a client support role that did not involve sales to new clients. Before starting her new job, she gave the agency a copy of the non-solicitation agreement she had signed.
Current and former clients of her old agency started contacting her. Some were unaware that she had moved on, and she referred them back to her former employer. Others wanted to do business with her at the new agency because they were Spanish-speaking and she was fluent in that language. Wanting to avoid any appearance of violating the non-solicitation agreement, she and her new agency consulted with an attorney. These discussions resulted in a set process: She would not solicit these clients; if the clients contacted her, she would tell them to call her new office phone number so that the agency management system would capture all conversations and notes.
By September, six of her old agency’s clients had followed her to her new agency. All had contacted her on their own and she had followed the process set in place. Nevertheless, the prior agency sent her a letter ordering her to cease soliciting its accounts. They then filed a complaint in court and requested a preliminary injunction to stop her and the other agency from soliciting their clients. In December, the court granted the injunction and prohibited her from directly or indirectly soliciting the agency’s clients for 13 months. It also prohibited her and her agency from writing additional policies for the clients who had followed her.
One of those clients still had a commercial auto policy with the prior agency. Around the same time that the court acted, that client repeatedly contacted her about taking over the auto policy. However, she and her agency told him they were unable to help.
He continued the requests in early 2022 and asked questions about the policies he had with the new agency. She interpreted this as meaning that he might move those policies if they didn’t help him with the auto policy. She and her supervisor checked with the attorney and concluded that they could write the auto policy without violating the injunction. However, he bought an auto policy from a third agency before they could follow up.
Subsequently, he contacted her about the insurance requirements for a construction project, and she helped him comply by cancelling and rewriting the new auto policy and writing a commercial umbrella policy. The project owner accidentally sent an email to her at her prior agency address. Her prior agency moved to hold her and her agency in contempt of court. The court dismissed the case against the agency but ultimately held her in contempt, albeit with no penalties. She subsequently appealed the contempt finding and challenged the validity of the injunction.
In July 2025, the state supreme court ruled that the trial court overstepped its authority in holding her in contempt. It also ruled that she had not “solicited” the accounts in question; she had accepted clients who contacted her. Lastly, they held that the trial court should not have issued the injunction.
If a former employee takes care to honor her legal obligations and an agency’s clients want to keep their business with her, there is little the agency can do to stop them. She fulfilled her obligations under an agreement that appears to be extreme for an employee earning $17 per hour. Because of this, the agency’s attempt to stop her from accepting those clients was unsuccessful.
