How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask LawTalk Your Own Question

LawTalk
LawTalk, Attorney
Category: California Employment Law
Satisfied Customers: 27889
Experience:  I have 30 years of experience in the practice of law, including employment law and discrimination law.
15277592
Type Your California Employment Law Question Here...
LawTalk is online now
A new question is answered every 9 seconds

I was an Independent Contractor with a company for 2.5 years

Customer Question

I was an Independent Contractor with a company for 2.5 years but was working inside the office as the Director of Sales 10+ hours a day. I was told I had to be in no later than 7:00 AM and was expected to work more than 8 hours per day. I was also receiving checks pad to my Incorporation.

Over the 2.5 year time span I would come back to my home office after hours and work on sales training materials and also techniques for my sales team. I developed tan entire training manual on my own systems on my own time simply to better my sales team. I was paid commission only, 10% of monthly revenue's generated from the sales associates I managed.

After approximately 1 year I was asked to sign a non-disclosure/non-compete. This document sat on my desk for over a months time as I did not want to sign it. I was told not from the owner directly but from the woman working in HR that the people who don;t sign will be released from their duties. I signed and continued to work.

This non-disclosure is limited to 3 years and I am in Californina, it does limit scope of work and the covenant to not solicit.

I am now no longer with the firm and opening my second INC in the same field, my first company is a direct marketing firm and my new company focuses more on internet marketing.

I have a fear that once I release my website the previous owner will sue me. The Remedies for the agreement read: "Notwithstanding the foregoing, Recipient and Company hereby agree that damages calculation is uncertain and thus agree to liquidated damages of one hundred thousand U.S. dollars (USD $100,000.00) for each distinct violation of this agreement"

What precautionary measure's should I take?
Submitted: 1 year ago.
Category: California Employment Law
Expert:  LawTalk replied 1 year ago.

Good morning Erich,

I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.

While an agreement not to solicit customers of your previous employer is enforceable, under CA law, a non-compete agreement between employer and employee is illegal and not enforceable.

They will argue that you were not an employee, but a business. However, based on the nature of your work, and the control your employer had over your work, time and ability to come and go as you please---I strongly believe that you can shoe that you were never an independent contractor.

An employee is more likely an Employee than an Independent Contractor if the worker:

1. Is required to comply with the employer’s instructions about the work.

2. Receives training from the employer.
3. Provides services that are integrated into the business.
4. Provides services that must be rendered personally.
5. Hires, supervises and pays assistants for the employer.
6. Has a continuing relationship with the employer.
7. Follows set hours of work.
8. Works full-time for the employer.
9. Works on the employer’s premises.
10. Does the work in a sequence set by the employer.
11. Submits regular reports to the employer.
12. Receives payments of regular amounts at set intervals.
13. Receives payments for business or traveling expenses.
14. Relies on the employer to furnish tools and materials.
15. Lacks a major investment in facilities used to perform the service.
16. Cannot make a profit or suffer a loss from the services.
17. Works for one employer at a time.
18. Does not offer services to the general public.
19. Can be fired.
20. Can quit at any time without liability.

If, it is still unclear whether you are truly an employee, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) can be filed with the IRS. The IRS will review the facts and circumstances and officially determine your working status.


Presuming that you can prove you were an employee, the following applies to you:
CA Business and Professions Code §16600 specifically holds:
Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

While you cannot seek to use information gleaned while working there to take customers from the company---if the customers find you through your advertising, you may help them. Neither can the employer limit the location in which you choose to compete against them.

Finally, you might want to file the Form SS-8, because if you can show that you were misclassified, you can sue to recover the taxes that should have been paid by the employer toward your FICA obligation. And the IRS will give a definitive answer to whether you were truly an employee and not independent.

I strongly urge you to meet with a local employment law attorney, who can be prepared to drop a suit on your employer, if they interfere with your right to work. You appear to have a meritorious defense to a claim of competition from the previous employer.

You may reply back to me using the Continue the Conversation or Reply to Expert link if you need any clarification of my answer.


Please remember to rate my service to you when our communication is completed, so that I will be compensated for my time in providing you with the information you requested. I will be happy to continue further, and to assist you until I am able to address your concerns, to your satisfaction.

I wish you the best in 2013,

Doug

Customer: replied 1 year ago.

My Manager agreement states several times that I am to be Independent not Employee. However, it this agreement void based upon the decision of the IRS?


 


Is it my best interest to be an employee and not a contractor in this scenario?


 


What happens if I am sued and cannot pay the amount being asked. Is there a possibility criminal charges could be filed?

Expert:  LawTalk replied 1 year ago.
Hi Erich,

However, it this agreement void based upon the decision of the IRS?
An IRS finding that you were an employee and not an independent contractor would be the evidence you need to prove you were an employee.

Yes, as an employee any non-compete agreement in CA would 100% illegal.

What happens if I am sued and cannot pay the amount being asked. Is there a possibility criminal charges could be filed?
Nothing happens. if you can;t pay then they can't collect. There is no crime in not being able to pay---and this entire scenario is civil---not criminal. You won't commit a crime by competing.

Please remember to rate my service to you when our communication is completed, so that I will be compensated for my time in providing you with the information you requested.
I will be happy to continue further, and to assist you until I am able to address your concerns, to your satisfaction.

I wish you the best in 2013,

Doug
Customer: replied 1 year ago.

Hi Doug,

 

Thank you for your advice.

 

If I were to stay a contractor and am sued and cannot pay, can the company seize assets or garnish my wages or those of my spouse?

 

How long will the company have to collect?

 

What remedies can they utilize to collect?

 

The company and I departed on pretty good terms. Should I call the owner and try to get out of the non-disclosure?

Expert:  LawTalk replied 1 year ago.
Hi Erich,

If I were to stay a contractor and am sued and cannot pay, can the company seize assets or garnish my wages or those of my spouse?
Garnish your spouse---no. Seize assets belonging to you personally, yes---but only after getting a judgment. If they go that far, all you need do is file bankruptcy and eliminate the debt.

How long will the company have to collect? 4 years from the date of any breach in the contract that occurs. If the contract only precludes competing for 1 year, then 5 years out would be the limit.

 

What remedies can they utilize to collect? Wage garnishment, levy on bank accounts your name is XXXXX XXXXX your real property. Again, remember bankruptcy if they sue you.

 

The company and I departed on pretty good terms. Should I call the owner and try to get out of the non-disclosure? That Erich is entirely up to you.

 

Kindly remember to rate me, otherwise I am not paid for helping you.

 

Doug


LawTalk, Attorney
Satisfied Customers: 27889
Experience: I have 30 years of experience in the practice of law, including employment law and discrimination law.
LawTalk and 2 other California Employment Law Specialists are ready to help you
Customer: replied 1 year ago.

If bankruptcy was filed eliminating the debt, I assume If I continued to work lawsuit after lawsuit could continue?

Expert:  LawTalk replied 1 year ago.
Good afternoon Erich,

So long as you continue to create a breach of the contract, yes, filing bankruptcy would only affect debts/claims pending before you file. Later claims would not be covered under the bankruptcy. That is why it may be so critical for you to try to fight your having been classified as an independent contractor. If you are an employee---they can't hold you to the non-compete agreement.

Thank you for your positive rating of my service. It has been my pleasure to assist you and I hope you will ask for me on JustAnswer should a future need ever arise.

Please feel free to bookmark the following link so you can request me to answer any future legal questions you may have:
http://www.justanswer.com/law/expert-lawtalk/

Thanks again.

Doug

When you receive your Customer Satisfaction Survey from JustAnswer, please do rate me highly (8-10). It benefits my ability to assist you and other customers, and would be tremendously appreciated.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • LawTalk

    Attorney

    Satisfied Customers:

    933
    I have 30 years of experience in the practice of law, including employment law and discrimination law.
< Last | Next >
  • http://ww2.justanswer.com/uploads/LA/LawTalk/2012-6-6_17379_LawTalk.64x64.JPG LawTalk's Avatar

    LawTalk

    Attorney

    Satisfied Customers:

    933
    I have 30 years of experience in the practice of law, including employment law and discrimination law.
  • http://ww2.justanswer.com/uploads/MU/multistatelaw/2011-11-27_173951_Tinaglamourshotworkglow102011.64x64.jpg Tina's Avatar

    Tina

    Attorney

    Satisfied Customers:

    869
    JD, 16 years experience & recognized by ABA for excellence in employment law.
  • http://ww2.justanswer.com/uploads/PI/PIExpert/2012-7-1_152453_Attorney.64x64.jpg Brandon, Esq.'s Avatar

    Brandon, Esq.

    Lawyer

    Satisfied Customers:

    332
    Has received a certificate of recognition from the California State Senate for his outstanding legal service.
  • http://ww2.justanswer.com/uploads/PH/phoenixrising119/2012-7-26_11214_043.64x64.jpg melissamesq's Avatar

    melissamesq

    Attorney

    Satisfied Customers:

    47
    Represent clients to maximum recovery in employment cases.
  • http://ww2.justanswer.com/uploads/IG/Iggy1001/2013-11-20_23344_JApic.64x64.jpg Joseph's Avatar

    Joseph

    Lawyer

    Satisfied Customers:

    3602
    Extensive experience representing employees and management
  • http://ww2.justanswer.com/uploads/JK/jkiani22/2013-11-18_15348_JacobKiani1copy2.64x64.jpg jkiani22's Avatar

    jkiani22

    Attorney

    Satisfied Customers:

    24
    Attorney
  • /img/opt/shirt.png Legal Counsel's Avatar

    Legal Counsel

    Lawyer

    Satisfied Customers:

    32
    California Licensed Attorney- 29 years- Wages, Hours, Overtime, Discrimination, Wrongful Termination.