Client Request for a Non-Compete Agreement
My question involves independent contractors in the state of: Nevada
My employer wants me to sign a non-compete. I work for a sales company and the contract states that I would not be able to work in my industry for two years. Additionally, it states that I can not go after any clients that I bring into the business. My pay is 100% contracted, and I am not paid a salary by my employer. My employer does require that I come into the office in order to continue to collect commissions.
I wanted to start a firm within the next 4-6 months using products that I brought into the firm. I have been employer for over a year, and the firm started with one product. My employer recently wanted me to sign the contract.
I was curious regarding the legality of my employer, and if I am still able to begin my own firm after termination with this employer.
Re: Indepdent Contractor in Nevada -- Nc/Nd
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bicismypen
My question involves independent contractors in the state of: Nevada
My employer wants me to sign a non-compete.
There's a dangerous contradiction there. If you are an independent contractor you are not an employee. If you are an employee you are not an independent contractor.
I'm guessing that you are being misclassified as an independent contractor for the "employer's" nefarious purposes. That, in itself, can cause you trouble.
So, if you haven't signed it yet, I suggest you refuse to sign it because it's the kiss of death.
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bicismypen
I work for a sales company and the contract states that I would not be able to work in my industry for two years. Additionally, it states that I can not go after any clients that I bring into the business. I was curious regarding the legality of my employer, and if I am still able to begin my own firm after termination with this employer.
It's legal for your employer to have you sign a non-compete.
It's legal for you to refuse, but you'll probably get fired if he's making an issue of it now.
It's illegal to classify you as an independent contractor if you aren't. You can find out more about that on the IRS website.
You will still be able to start your own firm. Nothing "prevents" you from doing that. Unfortunately, nothing prevents the employer from suing you into the poorhouse.
My advice: Don't sign it.
No matter what.
Re: Indepdent Contractor in Nevada -- Nc/Nd
I have a slightly different take than AJ, but I know he's been burned on this issue.
It is legal to ask you to sign a non-compete. However, that is a completely separate issue from whether or not the non-compete is enforceable. That non-compete would not be enforceable in my state. That's doesn't mean it's illegal to make you sign it.
Have a Nevada attorney review it and determine if the employer could enforce it, IF you were to sign it. If he could not, then it doesn't matter much whether you do or not. If he could, THEN I would agree with AJ that you should not.
AJ is quite right that you need to determine if you are an employee or an IC. It is legal to classify you as an employee if you meet the definition of an IC, but it is not legal to classify you as an IC if you do not. Let me clarify that at bit. It is always legal to classify you as an employee. It is only legal to classify you as an IC if you meet the definition.
Re: Indepdent Contractor in Nevada -- Nc/Nd
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cbg
I have a slightly different take than AJ, but I know he's been burned on this issue.
That's right. I have the "been there, done that" t-shirt. :friendly_wink:
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cbg
It is legal to ask you to sign a non-compete. However, that is a completely separate issue from whether or not the non-compete is enforceable. That non-compete would not be enforceable in my state.
I think a two year, industry wide non-compete is likely to be unenforceable in any state.
But that doesn't keep the employer from filing suit and costing the OP a barrel full of money defending it.
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cbg
Have a Nevada attorney review it and determine if the employer could enforce it, IF you were to sign it. If he could not, then it doesn't matter much whether you do or not.
Yes, it does matter if you sign it. Even when it's potentially (or even guaranteed) unenforceable you still end up with a lot of grief and expense defending against it.
Re: Indepdent Contractor in Nevada -- Nc/Nd
I don't understand why an independent contractor would be required to sign a non-compete. I'm in sales as well in PA.
My opinion of non-competes: they are bad for business and prohibit free market principles.
Choice #1: Sign the non-compete and forget about it. Even if you quit or get terminated, is your employer who has the non-compete agreement really going to stalk you and find out where you go after the employment agreement ends? Non-competes are like a game. You just have to find the right way to play without getting caught. Companies cannot tell you that "you can't do business with these clients". The company doesn't own those clients. They are free thinking people who are eligible to do business with who they choose. And is your current company really going to chase you down and take you to Court?
Choice #2: tell the employer requiring you to sign a non-compete that you do not agree with the principal behind a non-compete and are unwilling to sign on. I've worked with 3 different sales companies. All of which "required" me to sign a non-compete. First company I worked for I was young and dumb and they said sign here. 2nd and 3rd company I worked for I told them I wouldn't sign it. All of the sudden it was no longer a requirement.
I will never sign a non-compete again as long as I live.