Employee non-compete agreement

[flattopkurt]

I would like to start my own business, but I have an employee non-compete agreement that may restrict this. I feel that this agreement is not valid for the following reasons:

1. I was never an employee of the business that I have the agreement with. I was hired as an independent sub-contractor responsible for paying all my own taxes and business expenses. The contract specifically refers to me as an employee.

2. I think the terms of the contract are unreasonable. It restricts me from opening the business within 100 miles and for five years from seperation of the business relationship.

This form was a stock form that was purchased at an office supply store, not drawn up by the contract holders attorney. I live in Colorado and am having difficulty locating information concerning this topic. Thanks for your help.

 

[Michael Wechsler]

The general rule that I have seen is that restrictions of trade in this manner must be reasonable. A general rule is relatively limited geography and a term of one year. Reasonableness is a sliding scale -- if you were just a cashier in a business, it is unreasonable to create restrictions anywhere near that level, if at all. But if you had access to trade secrets and other confidential data then the non-compete becomes more reasonable and subject to enforcement. As an independent contractor, you may not have been given the same confidential trade secret data an employee would have.

Originally posted by flattopkurt I was never an employee of the business that I have the agreement with. I was hired as an independent sub-contractor responsible for paying all my own taxes and business expenses. The contract specifically refers to me as an employee.

This doesn't mean you aren't bound unless it says that if you are an employee it applies. If it says your name and then, for reference in the agreement, it says "Employee" or "hereinafter 'Employee'", that is just an easier way to reference the parties and would not, by itself, in my humble opinion, be enough to say that you are out of the box.

I think the terms of the contract are unreasonable. It restricts me from opening the business within 100 miles and for five years from seperation of the business relationship.

That may be... it all depends upon the facts -- the nature of the business, whether you had access to confidential/trade secret data, how long it has been since you severed ties, whether the geographical scope is reasonable (seems like it may not be since it is only 100 miles), etc.