Foreign Independent Contractor Agreement With Non Compete Clause In Oakland
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FAQ
Even workers labeled as “independent contractors”—who should have the freedom to work for multiple clients—are often required to sign non-competes that limit where they can work. Employers often present non-competes as a “take it or leave it” contract, forcing workers either to sign or forego employment.
As previously reported (Dentons Alert), the US Federal Trade Commission (“FTC”) issued a regulation earlier this year that effectively bans most non-competes for employees and independent contractors (the “FTC Rule”). The effective date of the FTC Rule is September 4, 2024.
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.
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.
Non-compete clauses will likely be unenforceable if an employee is misclassified as an independent contractor. Typically, independent contractors are experts in their chosen field and can work for multiple companies. They do not have the same benefits as employees and manage their affairs independently.
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.
Every state has its own law regarding the use of non-competes. For example, in California, they are deemed illegal, except when selling a business or a shareholder's stock or dissolution of a partnership; while in Florida, they are allowed but are subject to strict scrutiny.
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.
Non-compete agreements are a critical tool for protecting business interests in a globalized economy. By understanding the global landscape of non-competes, employers can create agreements that are both enforceable and fair.
