Independent Contractor Agreement With Non Compete Clause In California
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FAQ
Under California law, the sale of business exception only allows non-compete agreements for business owners who sell (i) the goodwill of a business, (ii) all of their ownership in a business entity; or (iii) all or substantially all of the assets of a business together with the goodwill of that business.
Quick Summary. Employee noncompete agreements are void and not enforceable in California. This same rule applies if a business says you are an independent contractor and puts you on a 1099.
The ban covers all non-competes for U.S. workers (including employees and independent contractors) with limited carve-outs, and is subject to certain exceptions based on the FTC's statutory authority.
The ban covers all non-competes for U.S. workers (including employees and independent contractors) with limited carve-outs, and is subject to certain exceptions based on the FTC's statutory authority.
California Agreements. Although non-competes are banned by California law, you can still have robust protections for confidential information and trade secrets. These provisions are critical and should be tailored enough to avoid being considered “de facto” non-competes.
Because independent contractors operate independently and engage in their own business, they are not subject to the same restrictions as employees. As such, non-compete agreements are less likely to be enforced against independent contractors in California.
You are bound by whatever conditions you agreed to in the non compete contract. You can leave the job and likely still practice in your given field. The most common restriction is one of distance. So you cannot leave your current company and go across the street to work for a competitor.
Non-compete agreements usually aren't valid when working with independent contractors. You're more likely to have a valid non-compete agreement with an employee than an independent contractor.
As with many things, however, California is different. California law explicitly voids all non-compete agreements for employees and independent contractors. These agreements are simply not enforceable, no matter how reasonable they may seem.
11 - What difference does it make if a worker is an employee rather than an independent contractor? California's wage and hour laws (e.g., minimum wage, overtime, meal periods and rest breaks, etc.), workplace safety laws, unemployment insurance, and retaliation laws protect employees, but not independent contractors.
