Independent Contractors and Non-Compete Agreements | Mann & Elias 

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Independent Contractors: Are Non-Compete Agreements Worth It?

If you are an independent contractor, signing a non-compete agreement might not be in your best interest. In most cases, independent contractors perform a specialized service or skill for a company or person. Unlike an employee, you have a level of control over your job opportunities. You are not contractually obligated to sign the contract to get the job, as the employer has less control over the terms of employment. Contractual provisions are distinctly different but can imply the same protection.

When a company offers you to sign a non-compete agreement as an independent contractor, they hope to safeguard sensitive information from competitors. But when you sign it, there are a few consequences that might occur. What is beneficial for the business might not be in your best interest to conduct business outside of this job. Before you decide to sign, reach out to an employment attorney in Los Angeles.

Independent Contractors vs. Employees

In California, there are laws to help employers address employment status. In 2019, Governor Newsom signed Assembly Bill 5 (AB 5) into law, making it easier to hire and avoid claims and suits. Employers refer to this law to determine if someone is an independent contractor or employee before going into business. California Department of Industrial Relations suggests using the ABC test to determine how to categorize based on Labor Code, Unemployment Insurance Codes, and related factors. The ABC test determines a worker is an independent contractor if he/she meets all of the following conditions:

  • The worker is free from the control and direction of the individual or company hiring. The worker is free to perform the work as they see fit to fulfill the contractual agreement.
  • The worker performs work outside of the hiring entities business.
  • The worker takes part in an independent trade, occupation, or business. It must be similar to the work they provide to the client/customer.

The Importance of Written Agreements

Written agreements are an easy way to avoid costly misunderstandings. It should contain a description of the services you will provide, the cost of the job, materials, and detailed information about the job itself to avoid circumstances like wage and hour disputes. Although federal law does not require both parties to have anything in writing, state laws may differ on independent contractor legal rights and obligations. Our workplace lawyers in LA will explain what you should know about your rights and what is in your best interest. When you legally abide by the agreement, it must show that you operate within a hiring/independent contractor relationship, not an employer/employee relationship.

Chances are, you will receive a non-compete agreement if you are performing a service for a larger company. This agreement will deter you from working for a competitor or businesses within the same industry for a certain amount of time in exchange for employment. If you sign without counsel from a non-compete agreement lawyer in Los Angeles, you are putting your business at risk. Independent contractors seldom have the same loyalty as an employee because they own their own business. Therefore, signing might cause them to sacrifice their profit in exchange for a single job. That is an unfair advantage.

Employment Relationship

Independent contractors should not get offered any non-compete agreement to sign – especially if it reclassifies them as an employee. It would give the employer a certain level of control over the contractor. Signing a non-compete agreement relinquishes your rights and gives the hiring entity more control. That can make it harder to take legal action if needed. Employers often try to hire independent contractors to provide skilled services under the presumption that they will work under a full-employment relationship. It is appealing to corporations because short-term relationships save the company money from unused benefits like health insurance or family and medical leave.

We recommend that you have a Los Angeles lawyer review your non-compete agreement before signing. Depending on the nature of your job, your chance to file a workers’ compensation claim or unemployment insurance might be limited. Our attorneys will ensure your rights are protected as we negotiate reasonable terms before you start working. While you should avoid getting classified as an employee, the company would be liable for business-owning penalties like overtime pay or compensation premiums if you were.

Do Not Feel Pressured to Sign the Dotted Line

You might feel anxious thinking about when you can start the job. It might be one of the first things on your mind. However, try not to make an immediate decision for these agreements because they are often unenforceable against independent contractors who own a business. As an expert, you might work for several other companies and have multiple contracts at once. A non-compete can affect each job opportunity and impact your profitability. You are free to perform and conduct business as you see fit. In fact, California law prohibits the use of non-competes. Employers are liable for offering or forcing you to sign it. However, in states that allow them, a court might enforce the covenant until the job gets finished.

Businesses have alternative ways to protect their interests outside of non-competes. If you were requested to sign one, you should contact a knowledgeable agreement violations lawyer for advice. You might also be able to negotiate a deal or amend the written contract before it goes into effect.

Our Non-Compete Agreement Attorney Will Get You Justice

The Law Offices of Mann & Elias is an employment law firm that provides guidance and legal support for individuals facing issues in the workplace. We represent clients at every level of the state and federal court systems in lawsuits regarding discrimination, wrongful termination, unpaid wages, and more. When your case is in our hands, we hope to minimize stress and concerns associated with work.

Workplace disputes and negotiations can be complicated and uncomfortable between an employee and employer. In many cases, an employer can retaliate, causing individuals to feel disadvantaged in the company. When you retain one of our lawyers, you will be well-protected and advised. While there are thousands of lawyers to choose from, we believe our success is on:

  • 50+ years of trial experience
  • Excellent advocacy skills
  • Intense preparation and research
  • Quality care

Since our partnership began over 20 years ago, we have settled hundreds of claims, completed 100 jury and bench trials, and recovered more than $18 million in settlements. In the end, our goal is to understand what you need and achieve the best outcome for you by focusing on those needs. For dedicated representation with no upfront fees, give us a call at 323-866-9564 or email info@mannelias.com.

 

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