non compete as an independent contractor

dear mel, I had an agreement with a autoglass replacement co. in az, not as an employee but i was an independent contractor or as they called it a licensee. in the agrement we had there was a non compete clause in it. i was not an employee! so is this enforcable? i want to start my own business and not be do work for a company that has bad business ethics. not to mention they have went back on the compensation part of the agreement we had severl times. what legal binding laws are there for a independent contractor?

1 answer  |  asked Apr 29, 2003 12:06 AM [EST]  |  applies to Arizona

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Answers (1)

Francis Fanning
non-compete is not an employment contract

A non-compete agreement is not an employment contract but a separate agreement that extends beyond employment. Such agreements are often used in connection with the sale of a business, even though the seller never has an employment relationship with the buyer. There is no law that prohibits such an agreement between an employer and an independent contractor. I have my doubts as to whether you are an independent contractor, however. Independent contractor arrangements are often used by employers who want to avoid the obligations imposed by law on employers, such as providing worker compensation insurance, income tax withholding and protection against workplace discrimination. The IRS, the EEOC, the Industrial Commission and the U.S. Department of Labor all scrutinize such arrangements carefully, and often conclude that what is called an independent contractor relationship is actually employment. If you were truly an independent contractor with a "franchise," your customers would belong to you, not to the "franchisor." Further, you would not be forced to engage in unscrupulous practices because you would be running your own business already. I suggest that you spend the money to have an attorney review your non-compete agreement as well as your "franchise" or "independent contractor" agreement and advise you on the specifics of each. You may want to consult with an attorney who deals with franchises rather than an employment attorney. He or she would have greater knowledge of the use and enforceability of non-compete provisions in connection with franchises.

posted by Francis Fanning  |  Apr 30, 2003 4:44 PM [EST]

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