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#965321 - 05/27/08 05:31 PM ex-employee using customer info at new bank
Chocaholic Offline
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Northwest
We have two ex-employees ( former bank A employees) who are sending letters to our customers ( bank A customers) on their new bank letter-head ( bank B letterhead as now Bank B employees) ... In this letter they advise of their move and asking for the customer business... anyone else dealt with this and are willing to share how..

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General Discussion
#965338 - 05/27/08 05:42 PM Re: ex-employee using customer info at new bank Chocaholic
#Just Jay Offline
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Cheeseheadland
Have them agree to and sign non-compete agreements before they leave.

We try to pre-empt the former employee by sending out communication to their customers/book of business within a couple of days of that employee leaving

We mail them a piece saying that so-and-so is no longer with us, but so-and-so will be now be their point of contact, and have so-and-so contact them immediately, or a general message about their importance to us and reiterate why they may have chosen us in the first place, how we embrace change, yada, yada, yada...

It is cimply a reality of today's business. I would suggest working with Marketing (gasp!) to come up with a contact strategies and pieces ready to use when certain key sales people move on.
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#965704 - 05/28/08 04:51 PM Re: ex-employee using customer info at new bank #Just Jay
Milby Offline
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Originally Posted By: Just Jay
Have them agree to and sign non-compete agreements before they leave.
And if they refuse to sign such an agreement, what are you going to do? The only reason I would ever recommend someone signing such an agreement is if there was a significant cash incentive and they are retiring, i.e. if you sign this agreement, we will pay $xx,xxx.xx into your retirement account.

I would always try to get departing employees to sign such an agreement, but don't think that you will have a large number of people agree to it; and why would they? Why limit the number of potential customers available to them, especially when they have just been hired to bring a portfolio to their new bank?

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#965711 - 05/28/08 04:57 PM Re: ex-employee using customer info at new bank Milby
#Just Jay Offline
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Milby, relax. The comment was meant more tongue in cheek.

Read beyond the first sentence, that is where the meat of the response is.
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#966020 - 05/29/08 01:08 PM Re: ex-employee using customer info at new bank #Just Jay
waldensouth Offline
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FINALLY ABOVE the gnat line
Unless they have taken customer info (documents) out of you bank to the new bank, then there's not much you can do. They have this info in their head and there's no reason for them not to use it. It does sometimes work in your bank's favor - for example a loan officer left us and took what HE thought was his best customer with him - we thought that customer was one of our worst and were glad to see him go be a charge off at someone else's bank!
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#968575 - 06/03/08 08:11 PM Re: ex-employee using customer info at new bank #Just Jay
Milby Offline
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Tejas
Originally Posted By: Just Jay
Milby, relax. The comment was meant more tongue in cheek.
Completly relaxed, bub. Just making sure the original poster understood that non-competes are worth less than the paper they are printed on.

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#969180 - 06/04/08 03:49 PM Re: ex-employee using customer info at new bank Milby
Mint Julep Offline
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Tennessee
Milby,

Not sure where you got that idea, but not all non-compete clauses are for exiting employees. A recent employer was being bought out and as part of the purchase contract the successor bank required the current loan officers to sign employment contracts that included clauses limiting their competition if they should leave the bank within a certain about of time. Some contracts stated they could not/would not work for a competitor as a loan officer for 6 months after quitting, some said 12 months after quitting. Several have quit and found other employment, two "retired" to open their own land development company (many suspect they will "un-retire" as soon as their 12 months is up), some have taken non-lending positions at other banks.

Non-competes are effective and enforceable.
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#969251 - 06/04/08 04:48 PM Re: ex-employee using customer info at new bank Mint Julep
rlcarey Online
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Galveston, TX
"Non-competes are effective and enforceable. "

That is a pretty broad statement. Depending on the specific agreement and the jurisdiction, I would not hang my hat on one.
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#969331 - 06/04/08 05:47 PM Re: ex-employee using customer info at new bank Mint Julep
Milby Offline
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Tejas
Originally Posted By: Mint Julep
...but not all non-compete clauses are for exiting employees.
But in this post, it was in reference to employees that are exiting.

As Randy states, even agreements signed as a pre-employment or continued employment conditions can be hard to enforce. Especially in right-to-work states, such as Texas, the law typically favors the rights of the individual to make a living over the rights of the business to monopolize a portfolio.

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#969441 - 06/04/08 07:25 PM Re: ex-employee using customer info at new bank Milby
buggs Offline
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We've sucessfully enforced 'em before for our own former employees and fired our own employees for violating them with their former employers after they came to us.

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#969479 - 06/04/08 08:05 PM Re: ex-employee using customer info at new bank buggs
Mint Julep Offline
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Tennessee
We are a right to work state, also, and no one wanted to test the contract. After I left that bank, I went to work for a law firm and some of the loan officers approached our firm about reviewing the contracts to find loopholes and the legal advice was to adhere to the terms or be sued.

A non-compete clause is sort of like a waiver of liability. As long as you think it is enforceable and are willing to go along with that, it works. Testing the enforceability requires fortitude and financial capacity most people aren't capable of providing, so the thing works.
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#969498 - 06/04/08 08:19 PM Re: ex-employee using customer info at new bank Mint Julep
rlcarey Online
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Galveston, TX
In Texas, if the employee is an "at will" employee, the courts consider this "illusory" consideration. Therefore, without an employment contract, non-competes don't hold water and it doesn't take a whole lot of fortitude and financial capacity to get them voided.
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#970184 - 06/05/08 07:11 PM Re: ex-employee using customer info at new bank buggs
Chocaholic Offline
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Northwest
Thanks for all your thoughts... rather than a non-compete we are considering (on a go forward basis) having departing employees sign as part of exit package, a reminder of the banks Privacy Policy which they also acknowledge on an annual basis ( i.e. that customer information is private and confidential and should not be used for other than a bank related purpose)... this way if we find they are soliciting our bank customers.. we have something to challenge... not cast iron.. but perhaps a deterrent.

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#970234 - 06/05/08 07:43 PM Re: ex-employee using customer info at new bank Chocaholic
#Just Jay Offline
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Cheeseheadland
I would also strongly recommend having a marketing plan in place as well, in order to get the lead jump on that exiting employee.
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#975699 - 06/16/08 03:21 PM Re: ex-employee using customer info at new bank #Just Jay
The OG Zaibatsu Offline
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Texas
I know this thread isn't about non-compete clauses, but I just want to add something about them:

Having someone sign a non-compete on the way out the door is not only ineffective, it is likely uneforceable (***check your state's law on the subject***).

To have a contract, you have to have consideration. What consideration are you giving the exiting employee for signing the non-compete? If you want an enforceable non-compete, have the employee sign it when he comes to work for you, not when he leaves.

And you definitely need it drafted by a good attorney who understands what they can and can't do in a noncompete. It has to be fairly narrowly tailored to be enforceable. The departing employee still has to be able to make a living in his chosen profession. The noncompete has to be reasonable in term and geography (and probably other realms). I am no expert in this(particularly in your state's laws).
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