Non-Compete Agreements

Kayla Moreland , May 14, 2015

Non-compete agreements are widely used by employers. However, these restrictive agreements between a company and an independent contractor can pose a risk to employers.  In Perez v. Super Maid, LLC, No. 11-C-07485 (N.D. Ill. July 2014), a recent case involving the misclassification of employees as independent contractors, the use of a non-compete agreement backfired and was the basis for the court to find that the maids were employees and not independent contractors.  The court ultimately concluded that Super Maid violated the Fair Labor Standards Act (FLSA) and entered judgment against Super Maid for $184,505.26.  In reaching its decision, the court applied a multi-factor test and highlighted the three-year non-compete agreement that Super Maid required its “independent contractors” to sign.  Citing a similar case, the court noted that employers could not classify maids as independent contractors, who would usually freely utilize their skills in an open market, while at the same time requiring a non-compete agreement that restricts their ability to do so.

Source: V. John Ella, Use of Non-Competes Cited as Factor Against Independent Contractor Status (August 22, 2014), http://www.natlawreview.com/article/use-non-competes-cited-factor-against-independent-contractor-status
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