Independent Contractors and the Non-Compete Agreement

While there are many nuances to what should be outlined in an independent contractor and non-compete agreement, as an employer, you may have another agenda in requiring a contract overall. As California began to crack down on businesses in recent years over employee classifications (with the independent contractor status allowing employers many benefits regarding taxes, insurance, worker’s compensation, and more), employers were forced to become somewhat more forthcoming about the true status of each employee.

An independent contractor agreement can be very simple, covering important basics like project scope, all the facets of their status as an independent contractor, a summary of any training they may be required to undertake for the project, beginning and end dates for the contract if applicable, and very importantly, pay. Within the portion outlining the status of the contractor, you may want to add a non-compete clause. And while such a clause may usually be considered binding and one that is taken very seriously in other states, it is rather limiting in California—but may still be useful for your needs.

A non-compete is helpful in general because it assures the employer that the people working for them will not be giving out trade secrets and valuable client information, or go running off to work for the competition—for a stated period, anyway. Certainly, there are many reasons for the employer to worry in today’s competitive market; for example, in the tech industry, many secrets are guarded closely in research and development as well as in the creation of marketing campaigns and then full-on production. If employees are working second jobs within the second industry, or consulting, an employer may have every right to be nervous—and even more so if they quit abruptly to go work for a direct competitor.

In California, the non-compete is usually only considered enforceable while the employee or contractor is working there—and may largely just serve as an intimidation tactic—however, for many that better than nothing, and the hope is that the contractor will continue to abide by the contract later too.

Do you have questions about independent contractors or employee contracts and enforceability? If so, contact Attorney Shane Coons. Our law office represents clients involved in a wide range of businesses and legal issues, and we would be glad to review your case and help you explore your options.

Call now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com.

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Independent Contractors and the Non-Compete Agreement

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