Legal Question in Business Law in California

Noncompete clause

I have worked for a franchise owner as a ''so called'' independent contractor for the past 4 years. Although we are considored independent contractors to avoid the franchise owners from having to carry workers comp and payroll, they contract all of our work and we are told that we cannot work for a competitor while working for them. I have worked for the company for 4 years and now I want to start my own business that would compete with my former employer. Many of my former employers customers would like to follow me with my new business. I did sign a noncompete clause with the company that states that I will not own or operate a business that is a competitor for 5 years after working for them. Is this legal and can it stand in court? If I am providing my own choreography and not copying anything exactly of my former employer, can I open my own business that will compete with my former employer? Can I service my former employers' clients if they choose to work with me instead?


Asked on 6/29/08, 1:45 am

1 Answer from Attorneys

Re: Noncompete clause

Generally, non-compete agreements in California are not enforceable (void as against public policy).

There are limited exceptions where a court will enforce a non-compete, but that does not appear to apply to your situation based on the information that you provided.

However, there are several important issues that arise when you stop working for them, which are likely to result in a lawsuit (even though possibly not justified).

Additionally, although they called you an independent contractor, it seems as though you might actually be an employee. This may open them up to liability for overtime, employment taxes, etc.

You should, therefore, consult with an attorney who knows about this area.

See my article: http://www.donnerlaw.com/contracts.htm

Let me know if you would like to set up a consultation.

Caleb

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Answered on 6/29/08, 1:40 pm


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