Jones new employee contract

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Mar 8, 2007 4:15 pm

I was just hired on with jones about 6 months ago and now I want out but I have that contract hanging over my head. If I leave and don't have any client book to take with me, will they still come after me for training costs and the rest of the 75000 that I signed the contract for? What would happened if I get fired for lack of performance rather than leave voluntarily?

Mar 8, 2007 5:13 pm

No because it would violate labor laws.  They roll the $75k into the non-compete clause (which by the way is also very difficult to enforce for them for an employee).


This is where the "right to work" laws are from.  As an employee, you have to right to work and the right to walk.  An employer cannot say "we spent $15,000 training him on how to run a press and he left, he now owes us $15,000"  Even if you have the employee sign for a uniform, you cannot withhold their check and have to have a signed document to withhold their pay for the uniform. 


You need to find out how much a "book" is worth (real $$$$ at the handover/transfer) not opinions, actual signed contracts transfering over the books before factoring that into your decision making process.  I've been valuing my business for years and get the same response from all business valuation experts:


1-1.5x net + real property + goodwill/non compete


Up to 5-10x net + real property + goodwill if you have no participation in the business.


Just selling clients? 10-20% of yearly revenue.  Who's going to give somebody $250,000 for a book when the seller can turn around and resolicite the clients?  Guess what? now you have to come up with the cash to sue him LOL  Better question:  What bank is going to give you a loan for $250k+ when they KNOW the guy can just get the clients back and you're left with nothing?  How about sell the book to 5 different people at the same time and run with the money?


If you paid $250k for a book, couldn't you just spend 250k on advertising and get the same asset? or far less?  You can give people $1000's just to transfer into your company and still be ahead.


Mar 8, 2007 5:19 pm

Confused,


Did you already have your 7 before EDJ? Are you 6 months from your can sell date? Are you producing (yellow/green)? The 75K does not decrease (by $9375) until the end of month 15.  What are your plans if you quit/get fired?

Mar 8, 2007 5:25 pm

kerho,


Are you kidding? do you even know what is in the EDJ contract?


$75K training


1 year non-soliciate.....different from noncompete.



And yes, they will come after you.

Mar 8, 2007 5:29 pm

It will depend on what you leave to do.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


If you leave to go sell investments some place else, they'll come after you for their money. BTW, anybody who is looking to hire you ought to know that this is the case, if they don't then you are probably popping out of the cake at a prison bachelor party!


If you are going to go sell cars... well, they don't have much of a leg to stand on there.


If they fire you for non production, don't forget that that will follow you the rest of your career on your U4.


I don't know how long they will hang it over you vis a vis staying out of the business. They might not chase you if you are out for say a year, or they might come after you if you ask them to transfer your license 1 year and 364 days after you left. That I do not know.


Meanwhile "I was just hired on" makes it sound like you were drafted. You chose to go to work for Jones. You applied and they hired you.


I'm no fan of Jones, I think they have a business model that is the stoopidest in the industry. BUT, if you really want to be in this business, I'd tell you to suck it up and stick it out and MAKE it work.


There are things you can do, ask your RL for a list of all the accounts that went someplace else and call on them... Call another Jones office and see if you can work out a deal with the guy's b or c book (everybody has clients they don't want to talk to, even Jonesers) you'll split the revenue or you'll trade him hot leads that are too complex for you to handle right now... Spend all your time buttering up all of the local accountants, (a little touchy right now, but after tax season) Go see all of the area lawyers... Talk to all the preachermans for 100 miles around and tell them that you'd love to talk to their parishioners about charitable giving (not to mention that trust business is like gravy on the biscuits to lawyers, so he has a reason to direct you bidness if you send some his way)!


What's nice about Jones' adverts is that it put's in the mind of the centers of influence that they don't have to worry about you blowing up a client (it's wrong, but that's besides the point, perception is the reality). Use that to your advantage.


I don't know, I just feel sorry for these Jones guys. Not since Nero threw the Christians to the lions (keeping with the Lenten theme) have I seen so much "meat" thrown at the wall in hopes that some will stick! It's unconscionable. Either don't hire the guys because they don't have what it takes, or hire them and help them grow. House them in a central office with a collection of other amateurs and let them build a business before you land an office on top of them!


Jones ought to be sanctioned by the NASD and the Labor Dept for their actions! If you go get a job at an office and you aren't a superstar, you stay a peon, but you haven't destroyed your family in the mean time! How much debt do you think the average Jones (and probably the other firms too) didn'tmakeit runs up while flailing and failing (and then there is the onerous training costs hanging over you)? At the end, he has $20,000 on credit cards @ 35% interest, and no job! 


Mar 8, 2007 7:37 pm

i understand what you say about the book valuation but I haven't even been there long enough to build a book. So they hold my license for 2 years? I thought when I left they just released it or let it expire or whatever.

Mar 8, 2007 7:46 pm

Confused,


We understand you dont have a book.  Stop listening to Kerko..he hasn't been there, he hasn't done that.  Your license will expire 2 years after you quit/fired and stay out of the industry. But if you take another position that requires your 7, then you will get the nice bill from EDJ. So if you answer the questions in my previous post, maybe I can help

Mar 8, 2007 8:52 pm
Broker7:

kerho,


Are you kidding? do you even know what is in the EDJ contract?


$75K training


1 year non-soliciate.....different from noncompete.



And yes, they will come after you.




The specifics of the contract don't matter, the law is clear:  You cannot hold the employee responsible for the money a business spends on training them, period. 


People have to remember this is not a business to business contract, it is an employer to employee contract and employees in this country have mountains of laws protecting them.


However, as an employer you can have whatever you want in an employment agreement as long as there is no DIRECT VIOLATION OF THE LAW.  Saying you have to give your uniforms back upon employment termination isn't illegal, withholding money from an employees check, holding the employee's check, or in any way holding them responsible for paying for the uniforms (outside of sueing them and/or without prior consent) is illegal.  Follow me so far?


The most money EJ can take from you is the amount of your last paycheck, if that is stated in the employment agreement AND you agree to it.  This $75k number is nothing, it might as well say $1.50 or $50,000,000 because they can do NOTHING to collect that money.


Ok next step.  So what action can they take?  Sue for breech of contact?  Nope can't do that, illegal, it's an EMPLOYMENT CONTRACT subject to the pletheora of labor laws.  Covanent not to compete?  It's our only shot.


Only problem, courts are changing the way they are looking at non-compete clauses (common law).  Court's position is a person has a right to make a living and merely teaching the skills to do a job, then continuing to do a job some place else isn't hurting the company since it's commonplace today.  People switch jobs every 3 years on average.


So what gives this clause meat?  The threat of a lawsuit.  For you to even have a judge/arbitrator rule on this will cost a cool $25-35k for EACH SIDE.  Remember, no show at the hearing results in a default judgement for whoever shows up.


But also remember, it depends on the judge, he might rule in 5 seconds in favor of the plantiff because he has gas and wants to leave.  Welcome to our CIVIL court system!!  And if you go in front of an arbitrator there is NO APPEAL.


What about soliciting customers?  Really really really hard to prove for them.  As stated before, get a billboard and you can say the customers found you.


So what good is a non-compete clause?  It protects the company against:


1.  People who obtain the ENTIRE or near entire company customer list and sells the list


2.  People who know the inter workings of a business and leave to publish a book and profit off of the knowledge they learned at the company (not to make a living doing the job but only off the information they learned while working there)


3.  Protect company secrets


To put in other terms, EJ just fishes in the ocean, as most companies do.  Just because you teach somebody else to fish, and that person leaves and fishes himself AND throws his net next to yours is not damaging you, it's the ocean, it's big, get over it.


Also, judges look at it like:  If he/she knew so much about your company, why did he/she leave?  If the answer is "to PROFIT directly from knowledge he learned from the company" then they win.  If the answer is "because he/she thought the company sucked and merely got another job, or made another job doing what he did at the company" you win.   The company also has to show there is damage to the company because of your actions.


Here's the skinny, odds are on the employee everytime, problem is, the employee usually doesn't have much to bet.


I won't even mention non-solicitation clauses because they aren't worth the paper they're printed on, if they can't win on non-compete they won't have a prayer on the non-solicit.

Mar 8, 2007 8:57 pm
Broker7:

Confused,


We understand you dont have a book.  Stop listening to Kerko..he hasn't been there, he hasn't done that.  Your license will expire 2 years after you quit/fired and stay out of the industry. But if you take another position that requires your 7, then you will get the nice bill from EDJ. So if you answer the questions in my previous post, maybe I can help



I can send you a bill for $1,000,000, doesn't mean squat.

Mar 8, 2007 8:57 pm

uh oh...


OH BILL!!! MR. SINGER!!!  PAGING BILL SINGER!!!

Mar 8, 2007 8:58 pm

kerho, have you ever heard of a TRO?



Rest assured that the Edward Jones attorneys have.

Mar 8, 2007 9:01 pm

broker, didn't have 7 before jones, not producing much at all which is why I think they might be looking at firing me and I want a backup plan. And I will probably have to find another industry altogether but would like to have the option to go to another firm if they will accept me considering I've been fired for lack of performance. lemme know

Mar 8, 2007 9:03 pm

omg this is so confusing...what's a TRO

Mar 8, 2007 9:04 pm

I also want to add that this is only about Employer to Employee contacts, it's got nothing to do with business to business contracts.  That's a whole different ballgame.  Most of the horror stories we've all heard are business to business (franchising!!!!) where labor laws don't apply.  If this was a franchise, they can take everything you own and everything you will own. 

Mar 8, 2007 9:07 pm
Philo Kvetch:

kerho, have you ever heard of a TRO?

Rest assured that the Edward Jones attorneys have.


I'm not familiar with the term, nor do I claim to be an attorney or anything close.  I'm just telling him what I know from going through a similiar situation that was business to business. 

Mar 8, 2007 9:12 pm

Kerko,


Your ignorance is painful. You directing the poster of this thread in a blind manner.  You have no knowledge about this situation.


Do you or have you worked for Jones? Have you even seen the contract in question? Do you realize you sign a document stating you will be responsible for training expenses?(I will presume the answer is no by reading your previous posts)


Third, if the law is so clear, how then how has edward jones collected millions of dollars in training cost from brokers that left during the contract period/ violated the non-soliciate clause.  According to you, it is not possible by law.


Civil court??? It goes to the NASD arbitrator. (no appeal) Why don't you do a search on this forum before you post another reply.

Mar 8, 2007 9:16 pm
kerho:
Philo Kvetch:

kerho, have you ever heard of a TRO?

Rest assured that the Edward Jones attorneys have.


I'm not familiar with the term, nor do I claim to be an attorney or anything close.  I'm just telling him what I know from going through a similiar situation that was business to business. 



Right...your previous business to business situations do not apply here.  Your playing in a different ballpark.  step off.

Mar 8, 2007 9:25 pm

A TRO is a Temporary Restraining Order....effectively, a business killer to a

broker trying to make a move. It can keep a broker from plying his or her

trade until the matter can get be settled.

Mar 8, 2007 9:25 pm
newandconfused:

broker, didn't have 7 before jones, not producing much at all which is why I think they might be looking at firing me and I want a backup plan. And I will probably have to find another industry altogether but would like to have the option to go to another firm if they will accept me considering I've been fired for lack of performance. lemme know


Temporary Restraining Order.


OK...if jones fires you for lack or production, you will not be responsible for the 75K training costs (it is stated in the contract) But they will send you a certified letter to comply with the non soliciate.  And it is also highly unlikely that another firm would take you on without any production history or time in business. 

Mar 8, 2007 9:50 pm
Broker7:
newandconfused:

broker, didn't have 7 before jones, not producing much at all which is why I think they might be looking at firing me and I want a backup plan. And I will probably have to find another industry altogether but would like to have the option to go to another firm if they will accept me considering I've been fired for lack of performance. lemme know


Temporary Restraining Order.


OK...if jones fires you for lack or production, you will not be responsible for the 75K training costs (it is stated in the contract) But they will send you a certified letter to comply with the non soliciate.  And it is also highly unlikely that another firm would take you on without any production history or time in business. 



All they can ask a judge to do is issue an injunction, and in employment matters, unless somebody is publishing their entire customer list or something as damaging as that, they won't get it. 


People have to remember, in employment contracts, the worst that can happen to an employee is to get fired.  MAYBE solitciting 100 out of 1,500,000 customers (or whatever) isn't doing enough damage to a company to warrant an injunction.  Granted, after they sue you they can shut you down if you have a business, but that's an entirely different matter.  Welcome to the wonderful world of self-employment, you ain't got NO protections lol.