Non-Compete Agreement for an Independent Contractor: What You Need to Know

As an independent contractor, you may be asked to sign a non-compete agreement with your client. This type of agreement is designed to protect a company`s confidential information, trade secrets, and customer relationships. However, it can also limit your ability to work in your field and earn a living if you`re not careful. Here`s what you need to know about non-compete agreements as an independent contractor.

What is a non-compete agreement?

A non-compete agreement is a contract between an employer and an employee or independent contractor that restricts the employee`s ability to work for a competitor or start their own business in a similar field for a certain period of time. The purpose of the agreement is to prevent the employee from sharing the company`s proprietary information or stealing its customers after they leave.

What are the key provisions of a non-compete agreement?

A non-compete agreement typically includes the following provisions:

Scope: The agreement should clearly define what types of activities are prohibited and what geographic areas are covered. For example, it might say that you cannot work for a direct competitor within a 50-mile radius of the company`s headquarters.

Duration: The agreement should specify how long the non-compete lasts, which is typically anywhere from 6 months to 2 years.

Consideration: The agreement must provide you with some form of consideration, such as a bonus or higher pay, in exchange for your promise not to compete.

Enforceability: The agreement should state what happens if you violate the non-compete, such as a monetary penalty or injunctive relief.

What are the risks of signing a non-compete agreement?

While signing a non-compete agreement may seem like a small price to pay for a job or project, there are several risks involved. For one, it limits your ability to work in your field and earn a living. If you sign an agreement that is too broad or restrictive, it may be difficult to find work in your area of expertise after your contract ends. Additionally, if you violate the non-compete, you could be sued by the company for breach of contract, which can be costly and time-consuming.

How can you protect yourself when signing a non-compete agreement?

Before signing a non-compete agreement, you should carefully read and understand the terms of the contract. If you have any questions or concerns, ask your client or a lawyer for clarification. Consider negotiating the terms of the agreement to make it less restrictive, such as reducing the duration or geographic scope. You can also ask for additional consideration, such as a severance package or extended health benefits, in exchange for your promise not to compete.

In conclusion, if you`re an independent contractor considering signing a non-compete agreement, it`s important to understand the risks and potential consequences involved. While these agreements can protect a company`s interests, they can also limit your ability to work and earn a living. By carefully reviewing and negotiating the terms of the agreement, you can protect yourself and your career.