According to reports, more employers are hiring people as
independent contractors rather than employees to avoid Obamacare,
minimum wage requirements, or other laws that only protect
employees. It is also being reported that federal and state
agencies are intent on exposing and punishing employers who
improperly classify employees as independent contractors. Since
these reports are, in fact, very correct, there are a lot of
employers with a lot of independent contractors who may find
themselves subject to a lot of penalties for improperly classifying
independent contractors.
As we all know, there is no one right answer for determining
employee –v- independent contractor because each agency has
its own multi-factor test and it's very fact specific, etc.
BUT, employers MUST know that they CANNOT have their independent
contractors sign a noncompete agreement because that is something
that only an employee should sign! An independent contractor is
supposed to work for other entities, usually at the same time as
he/she is working for the employer. The independent contractor may
work for the employer's competitors because he/she specializes
in a particular field and, guess what, the employer's
competitors in that field need the independent contractor's
specific expertise, too. You may, like any other company, be
concerned that the independent contractor will obtain your
proprietary information and run off to start a competing business
or take it to a current competitor. If that is a real risk, then
maybe the task that this person is performing for your company is
simply not meant to be an independent contractor task. Anyone who
is doing something for you that allows them to have that much
access to such a critical and confidential part of your business is
doing something that is too integral to your operations to be
considered an independent contractor assignment.
Make your independent contractors sign a confidentiality agreement
but do not put that noncompete in front of them if you want to keep
that independent contractor status. Never. Ever.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.