Agent Contracts: Lost Business Reimbursement

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Most Common Employment Law Issues:

Are Promises that Require an Agent to Reimburse a Former Employer for Lost Business, due to Transferring Clients, Enforceable? 

Generally yes.  Unlike covenants not to compete, a promise to reimburse for lost business does not prevent an agent's freedom to seek other employment.  Therefore, most courts believe that this lack of free trade restriction makes it okay to enforce reimbursement promises.   However, there are a few exceptions.

What Types of Exceptions Make a Promise to Reimburse Unenforceable?

Although courts vary on how they choose to regulate reimbursement promises, two main exceptions generally apply:

What Other Factors Come Into Play Regarding Reimbursement Promises?

Other factors that may have bearing on a reimbursement promise's enforcement include:

How Can an Attorney Help Me?

If you are agency looking to include a reimbursement provision in your employment contracts, an experienced employment contracts attorney can help you achieve this goal.  A lawyer can not only determine whether a reimbursement provision is necessary for your business, but can help construct a foolproof provision enforceable in most states.

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Last Modified: 05-31-2012 03:55 PM PDT

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