Independent contracting and non-compete clauses?

Question

I am an independent software contractor. Companies hire me to write very specific pieces of software in a particular industry. I bill/invoice companies only for the hours spent working on the specific project they have me working on.

A new client of mine recently sent me a service agreement that will cover the time period over the next year, in which I will be doing several projects for them. It does not mean they are going to pay me for 40 hrs per week for the next year. Only for the time I spend working on projects for them, as usual.

The projects are usually short (only a few weeks at a time of work) and spread out, sometimes as much as 2 months between projects.

In this agreement, there is a non-compete clause that says I can't work for any competing companies for the length of the agreement (1 year). This surprised me because as an independent contractor, to have a consistent income, I need to work on multiple projects for multiple companies year around.

How do independent contractors usually approach this issue?

Answer 1

That sounds like an odd non-compete clause, going by the way you describe it. I'm an independent contractor as well, and usually the non-compete clause states that I can't work directly for any company that has hired my company to do work for them. I've never signed (or even seen) a contract that says I can't work for any other company while working as a contractor for the company whose contract I'm signing.

It is common for a company who hires a programmer full-time to contractually prohibit the programmer from "moonlighting" for any other company, but this is not at all reasonable for a part-time hourly contractor. Are you sure this is what your non-compete agreement is actually saying?

Answer 2

A lot of what you're asking was discussed last week on .NET Rocks! podcast. It was an interview with John Petersen on the Legal Side of Software! It's less than an hour long.

Answer 3

For companies that like to sign Non-Competes, try to make them as narrow as absolutely possible (E.g. get then to list the companies, if possible or similar). In my experience where I live (MA), they are dangerous and enforceable. You might ask them as I do on other issues (e.g. non-disclosure) to make it mutual 2-way and not hire anyone to compete with you/your-company in exchange. Maybe then they will see the light, but probably not.

Answer 4

In preface IANAL... In most places, non-compete clauses are completely unenforceable, so you can probably just sign it and ignore it. If you are still worried, you are also free to modify the contract, simply cross out that section and initial it. If anyone remarks on this (which would probably be rare anyway - most people treat it as a formality, they just hand it off to some other department that files it.) just explain what you have here.