Of all the clauses and agreements detailed in an independent contractor agreement, which one do you think is the trickiest to enforce for business owners🤨? For many, it’s the non-compete agreement🤩! But are non-compete agreements enforceable for independent contractors in the first place🤨?
There have been many controversies regarding the enforcement of non-compete agreements, and they have raised many questions. Companies feel non-competes are necessary, but freelancers worry that they’ll be too restrictive. This article shows you what a non-compete agreement is and whether it can apply to independent contractors👌.
What Are Non-Compete Agreements?
A non-compete agreement, also called a non-competition agreement, is a standard part of many independent contractor agreements or employment contracts. It’s one of several such agreements (another example is a non-solicitation agreement) that restricts 🚫 an employment relationship or independent contractor relationship that bolsters a competitor. For example, if an artist paints 🎨 a mural in a cool new event space, the event space might try to get the artist to sign a non-competition agreement restricting them from painting a mural in a competing event space.
A non-compete agreement can also protect 💪 and uphold the confidential nature of valuable company information. As such, it can prevent former employees or contractors from working for a company’s competition and breaching confidentiality agreements. It can stop people from leaking business secrets like client lists, business models, business formation, business contacts, and clients’ email addresses for a period of time after working for a business.
Is there an ideal restricted period for a non-compete clause? It really depends on the type of business contract and the employment relationship of the parties entering into this agreement 🤝. In most clauses, the restricted period for the worker is six months.
Simple, right🤨? Well, a lot of people don’t see it that way, especially in California 🙂. Let’s get into a common question on this topic: are non-compete agreements enforceable for independent contractors?
Are Non-Compete Agreements Enforceable for Independent Contractors?
The enforceability of non-compete clauses depends on the state, circumstance, and/or situation. In California’s employment law and general labor laws, non-compete agreements are generally not enforceable for anyone 🤔. Yep, you read that right! The California Business and Professions Code stipulates that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void” (section 16600). That means employers in California can’t enforce a non-compete agreement at all, regardless of independent contractor status!
If you’re located elsewhere, you should know some of the other factors that can affect the legal ⚖️ enforceability of non-compete clauses.
Overly Broad Scope
By definition, a non-compete clause maintains a degree of restriction or degree of control over a regular employee. Being inconsiderate by adding a crippling restriction to a non-compete agreement can make it legally unenforceable. For example, an employer can’t enforce non-compete provisions in an employment context if the restrictions cover a whole field, like advertising or public relations.
In general, courts lookout for excess restrictions 🚫 that may mar the contractor’s ability to find another sustaining work after working with you. If there are lots of these in your non-compete agreement, you may be unable to legally enforce it. Restrictions on certain competing companies in confidential businesses, however, are considered fair and can be enforced.
As pointed out earlier in this article, a non-compete clause should not span out for too long. The duration stipulated in a non-compete clause can go a long way in determining its enforceability (e.g. if it’s too long, it might get thrown out). Six months is a pretty standard time demarcation for a non-compete clause.
Lack of Confidential Knowledge
Let’s say an independent contractor worked in a non-sensitive position in your organization, or your business simply doesn’t have confidentiality provisions. There is no secret or confidential information that such a person can divulge to the competition in this case, so enforceable non-compete agreements may not be necessary.
Method of Contract Termination
The enforcement of non-compete clauses is also sometimes determined by the circumstances surrounding the termination of the employee’s contract. In some cases, however, the employee may opt to leave your company voluntarily. In that case, in the event of a breach of non-solicitation agreements and unfair competition, an employer could potentially enforce this clause.
Other Considerations for Non-competition Agreements
Generally, employers should be considerate when adding a non-compete clause in independent contractor agreements or employment agreements. A non-competition agreement shouldn’t override any of the employment agreements in the independent contractor agreement. It also shouldn’t demand anything unfair of the contractor. This can help you enjoy a great employment relationship👭 🧑🤝🧑 or contractual relationship.
Businesses can also replace non-compete restrictions with alternate agreements, like non-disclosure agreements, which are more enforceable in a business relationship. A non-disclosure agreement can prevent a former employee from divulging a company’s confidential information to a new client, for example.
Do I Need a Lawyer?
We know you have a lot of questions about employment law issues; it’s a complicated topic, after all! If you need legal advice ⚖️ from an experienced social media business lawyer on how you can protect your legitimate business interests and priorities or stand up for your rights as a freelancer, we’re here for you. You can also use our customizable independent contractor template to craft a wonderful working relationship.
Don’t hesitate to consult with us at Ian Corzine to discuss the protection of your legitimate business and your brand. Reach out to us today 📞 for affordable help with non-compete restrictions, restrictive covenants, and more from an experienced lawyer!