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