Posted by IN_Closer on 1/19/05 10:45pm
Msg #17411

Non-Compete Question - Indiana

Yes I know, don't sign them. Well I did.

Quit a job to work for a closing company exclusively. 3-4 months after taking the job I was given a non-compete and told if I wanted to continue working for them I had to sign it. So I did. No mention of this contact was given when I first took the job. I won't mention this company as I believe other closers read this board, and I am not sure how trust-worthy they are.

Problem is, they are slow on paying. To the tune of a couple thousand dollars over several months. They only pay when a loan funds (wasn't aware of this before taking the job either). Other closers for this company haven't had to sign a Non-compete.

I'm owed a couple thousand dollars in invoices, some of which are a year old. Despite the fact that I had to undergo their training, keep them updated with reports of business on a regular basis, and can't work for any other companies, I am 1099'd. If they don't pay the invoices within a timely manner, I can't charge late fees, and my closing fees are dictated to me, I don't have a say in what I charge for any distance travelled.

I'd have left if it wasn't for fear that the non-compete would keep me from getting any business anywhere for a fairly reasonable amount of time (contract states 2 years, or length of time employed) for me that would be a year.

Taxes wise, I think I should fall under the category of an employee, as I have to adhere to strict company policies, and meet I think 12-14 of the IRS guidelines for an employee, not a Independent Contractor. I'll probably file a SS-8 form, and have the IRS do an investigation. I think I'll win, but my concern is the non-compete. Anyone know if I have grounds to break it? due to non-payment, being unaware of the contract before taking the position, forced to sign it to keep my job, and/or being paid as a contractor, when I should be paid as an employee, and the fact that other employees, doing the exact same job, aren't required to sign one?

I know I should talk to an attorney, and I intend to. I wanted everyone's opinion here first.

Reply by Ted_MI on 1/19/05 11:00pm
Msg #17415

Ind- Closer,

First let me preface this by saying that I am not an Indiana attorney. However, let me state what I recollect as a general perspective. Non-compete agreements must be reasonable from two perspectives, one the length of the non-compete agreement and secondly the geographic reach of that non-compete agreement. The underlying principle which guides these considerations is everyone's right to earn a living and the perception that such right should not be unduly constrained.

There is an excellent overview of non compete agreements presented by "His Hughness" on this board. It is dated 6/27/04 (msg 3582) and entitled "Non-compete agreements". Admittedly it is oriented to the relationship of ss's and signing agents but still it is well worth reading.

Contacting an Indiana attorney probably would be a good idea too.

Reply by HisHughness on 1/19/05 11:21pm
Msg #17417

The general rule is that if one portion of a non-compete agreement is invalid because the terms are unreasonable, then the entire agreement is unenforceable. Though the period can vary with the industry, I think most any court would hold that a two-year non-compete restriction for signing agents is unreasonable, and thus the contract is unenforceable in all of its terms.

Reply by IN_Closer on 1/20/05 12:07am
Msg #17421

Well, my problem is, the contract states the non-compete period as 24 months immediately following termination/resignation. However, if employed for less than 2 years (which would be my case), that the non-compete period will be equal to the number of days that I was employed with the company, but not less than 6 months.

I noticed a possible out, the geographic range it states is Indiana, Ohio, Kentucky, Wisconsin, South Dakota, Florida, Minnesota, and any other area where the company is registered to do business.

If the general rule is followed, I would assume that geographic range is unreasonable, and would make the entire agreement unenforceable?

Reply by HisHughness on 1/20/05 12:22am
Msg #17422

Unless you are commissioned as a notary in "Indiana, Ohio, Kentucky, Wisconsin, South Dakota, Florida, Minnesota, and any other area where the company is registered to do business," then offhand I'd say the geographical restriction is unreasonable.

Reply by CaliNotary on 1/20/05 3:24am
Msg #17425

Out of curiosity, what compelled you to sign this agreement? After a few months you must have known that they were slow to pay and didn't pay if a loan didn't fund. I'm just having a hard time seeing what would make you think it was right to sign such a restrictive agreement in spite of all that.

Somebody correct me if I'm wrong, but isn't the agreement pretty much worthless unless they figure out you're working for other companies AND decide to pursue it leagally? What are the odds of that actually happening?

I've seen non-compete agreements that refer to the clients of the SS specifically, but have never seen one that forbids working for any company for up to 2 years. There's no way in hell I would sign anything like that as a self employed person. I'm no lawyer, but I don't see how that would ever stand up in court if it came to that. Unreasonably restrictive seems like an understatement to me.

Reply by IN_Closer on 1/20/05 7:55am
Msg #17433

I signed it because I was still pretty fresh in the business. Only a couple months. I knew they were slow at paying, but it seemed that the company we were closing for paid the self-employed closers just as slow.

As for figuring out I'd be working for other companies, they would know immediately. The company that we do the majority of the closings for, has asked me to leave the signing service company and work independently. The signing service has employed some other closers that the lender just doesn't feel comfortable with using, so they are using them less and less. Which means my business has dropped completely.

Not that it makes a difference, but its a 4 page agreement, and I only signed the last page. and didn't initial any other pages. I think at the time I thought I could use that to get out of it.

Reply by Sherri_IN on 1/20/05 12:15pm
Msg #17467

Which part of Indiana are you in? If you want you can e-mail me direct at

[e-mail address]

Reply by Notary_Girl on 1/20/05 9:12am
Msg #17437

That's what I was thinkng... There is no way I would sign such rediculous terms! I saw red flags in every sentence writen about this company! I would have dumped them a long time ago. I too am running a business and feel that my terms and conditions count as much if not more than the companies I contract with. Just based on the fact that they have not met their obligations by not paying, which I feel is also part of a contract, invalidates their position all together. I would think they would be hard pressed to make any case against you...
But what do I know really???

Linda

Reply by LawrenceOK on 1/20/05 12:29pm
Msg #17470

I would tell this company to KMB and start going to other companies.
Does their policy state that you will be paid within a certin time for the work that did fund. If so, then have you been paid within that time frame? if not, then they have broken the agreement.