A non-compete agreement prevents an independent contractor from competing with his or her current employer or former employer. It's not uncommon for trade secrets to be revealed to a contractor who's essential to completing the job.
Include the following information when drafting a non-compete agreement:
- Non-Compete Terms. It depends on whether the contractor will be prohibited from working for competitors in the same industry or just those specific companies.
- Term. The duration of the non-compete. States typically limit non-compete periods between two and five years.
- Geographical restrictions - If the contractor is prohibited from doing business in a certain area (e.g., 50 miles from a store).
The independent contractor non-compete agreement is similar to the standard non-compete agreement but it's tweaked so that it better captures the relationship between clients and independent contractors.
With that being said, it's still meant to protect both parties and should be signed by them so that it's legally binding. Oftentimes, it'll be included in the independent contractor agreement but it can still be served as a separate document that needs to be executed.
It's a simple contract and a notary acknowledgment isn't required.
Independent Contractor Agreement – Whenever a contractor is hired, this document is used to set the parameters.
Independent Contractor Non-Disclosure Agreement (NDA) – Frequently used in states where a non-compete agreement is unlawful (California, North Dakota, Oklahoma). Prevents a contractor from divulging confidential and proprietary information.