Hi, I'm scott & I hope to provide you with some useful perspective on this.
First, be aware I am licensed in California, and in any case, lawyers in this forum cannot give specific legal advice, like suggesting whether or not to take any particular legal action. Rather, we only address issue of law generally.
In this economy, these are contractor relationships are increasingly common -- and I've workd that way myself, and probably will again!
And I know this is a frustrating situation -- and I am hoping to offer helpful perspective.
First, there are 2 contract relationships here: your contract relation to the contrcacotr-company that placed you to work, and that company's contract relationship with the client, where you were placed.
So as I read your question, I also see two components.
The first compenent is your promise not to compete by taking a job with the client company for up to1 year.
This is a fairly standard non-compete clause, curbing employees rights to go immediately to work for the client company. It's design to prevent client companies from poaching, and limited protection of the contractor's interest in having cultivated the client.
These non-compete clauses are generally perceived as legitimate contract terms, as long as they are not "unreasonable" or otherwise violate public policy. Also the terms of this limitation should have been made clear to you when you signed on with the contractor. (if not, that's a sparate issue!)
Whether a non-compete clause like this is valid, hinges on several factors, including amount of time specified, and 1 year has been generally upheld as "reasonable." An example of an unreasonable time would be a ban of 5 years, which has been held by courts as "unreasonable" as being too long and proscribing too much.
The second part of your question: how does your friend end up getting hired legitimately in less time?
Her ability to be hired was governed by the contract relationship between the client company and the contractor.
There may have been a provision for the company to hire, or the parties may have come to an agrement later to enable that. Contracts are freely changeable at the mutual contsent of the contracting paries.
Again, I myself have been in similar working arrangements, and I understand the frustrations, especally when we keep hearing from the government & media how well the economy is doing -- if the economy was doing so well, contract employees would not be so pervasive!
In any case, I know this probably not what you wanted to hear, but I hope the perspective helps, and I hope you will consider a positive rating if you thank so.