Josh Christie is the VP of Marketing & Recruiting at D&L Transport
The Federal Trade Commission has recently announced its intent to ban non-compete agreements. It’s estimated that the impact would be to pre-empt laws in every state except North Dakota and Oklahoma, which already prohibit noncompete agreements. It would also direct changes to an estimated 30 million contracts.
That’s the headline. But from the perspective of a Freight Agent, what exactly is a non-compete agreement? This article provides that insight and addresses its partner, the non-solicitation agreement. It also explains why D&L Transport never imposes either of these restrictions on our Agents.
What is a Non-Compete Agreement?
A non-compete agreement, which can also be a clause within a comprehensive employment agreement, specifies that an employee cannot compete with the employer after the employment is over. This usually extends to working for a competitor, starting a company that offers the same products or services, and developing competing products or services.
Most contracts specify the time the employee is prohibited from working for a competitor, the geographic location, and the market or industry. In addition, often, the agreement will specify the damages the employer is entitled to for any breach by the employee.
State laws determine the legal status of a non-compete agreement. As noted above, North Dakota and Oklahoma have banned non-compete agreements. Hawaii has banned non-compete agreements for high-tech companies. Utah limits new non-compete agreements to one year. California does not recognize non-compete agreements and allows employees to sue employers who attempt to uphold a non-compete after the employment is over.
Non-compete clauses are often included in a Freight Agent agreement. What that means in practice is that once an Agent has signed the agreement, their full customer list becomes the property of the Parent Freight Brokerage Company. Plus, as new customers are added, they, too, become the property of the Parent Broker.
That may be fine as long as the employee-employer relationship works. But if the Freight Agent seeks to leave for whatever reason, their full customer list remains with the Freight Agency. It’s just like Hotel California: you can check in, but you can’t check out (at least with your belongings, that is).
What is a Non-Solicitation Agreement?
A related agreement or employment contract clause is a non-solicitation agreement. This specifies that an employee will not solicit a company’s customers after leaving. It can also include soliciting other employees. As with a non-compete agreement, a non-solicitation agreement covers a specific time frame, the industry, and often a geographic area.
You can see how a Freight Agent can be hamstrung just as easily by a non-solicitation agreement as by a non-compete agreement. The customers you move to a new Freight Broker are no longer yours. Plus, you can’t solicit them after moving to a new Broker or starting your own Agency.
D&L Transport Freight Agent Agreements —Non-Compete. Non- Solicitation. Not Included. Ever.
As you can tell, non-compete and non-solicitation agreements are designed to protect the employer or Freight Broker. They expect to invest time and money in helping a new Freight Agent get up to speed and grow their list of customers. In return, they expect to keep those customers even after the Freight Agent has left the company.
D&L Transport looks at it differently. We recognize that those customers belong to the Freight Agent. They’ve built their customer list before joining D&L and, for sure, built their customer list after joining D&L. Of course, D&L provided the tools and support to make all that happen, as well as the commission. But we clearly recognize that the Freight Agent is making the customer relationship work.
For these reasons, going back to our founding in 2005 as Freight Agents just like you, D&L refuses to include non-compete and non-solicitation clauses within Agent agreements. You built that customer list and nurtured those relationships. You’ve put in the sweat equity. D&L always has and always will respect the entrepreneurial spirit of our Agents. Whether you work for D&L or decide to move on, you own that list.
D&L does not include non-compete or non-solicitation clauses in its agreements — ever. Our agreements are written more for the protection of our Agents than ours.
Ready to Move Your Freight Agency?
That’s one more reason for moving your Freight Agency to D&L Transport.
But if you need further insight into our Freight Agent program, check out our BETTERLIFE™ with D&L video series. We talk to our Agents and select subject matter experts to help you navigate the challenging world of the Freight Agent.
For still more, look at our Agent Opportunities page. You can also hear directly from our successful Agents. BTW. You can even take a test drive. Try using us for a few loads a week with no strings attached. Then, get in touch, and we can get started.
Call toll-free: 866.559.0203. Or complete the form at D&L Agent Requirements.
D&L Transport. Your Family in Freight.