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Binding Contract - is this legal?

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  • Binding Contract - is this legal?


    I work in the Interactive Media Industry here in Hawaii and my employer wants us designers to sign a contract that binds us to his company even after 18 months of leaving the company. Basically, the contract states that if we decide to quit or terminated we can't do any design work for any other design company for the next 18 months.

    Not only this seemed like an illigal approach to his insecure thinking but this means if we get offered any other job by another company in the similar field we are not allowed to take it.

    Is this legal?

  • #2
    Hawaiian courts have recognized the validity of non-compete agreements as long as the stipulations in it are reasonable. 18-months would probably be construed as reasonable. For best results, however, you'd need to have the actual contract reviewed by a local attorney.
    I am not able to respond to private messages. Thanks!


    • #3
      Thank you..

      Thank you for that quick response. We will have an attorney look over the contract before we sign it.



      • #4
        One of the claims that could be made against a non-compete is that, in some industries, 18 months is a lifetime and is unreasonable. I don't know if that applies in your industry or not.
        I am not able to respond to private messages. Thanks!


        • #5
          tax cheat?

          Hi Marketeer (or anyone willing to help!!)

          It seems as if my boss is trying to cheat the system and I was wondering if this is legal?

          I'm a 1099 employee and a week ago he wanted me to start coming in on a scheduled time. I checked with the Board of Labor here in Hawaii and they told me that was definitetly illegal. Because I am an Individual Sub-Contractor I work on my time, if I come in on a scheduled time then I would have to be an employee.

          Well, now he is saying to still come in as a 1099 employee but also as a regular employee..The way he is swinging this one is he will pay me minimum wage and balance out the rest of my pay using the 1099.

          I have no idea what he is trying to do but it doesn't sound like the ethical thing to do as an employer. Won't I still have to pay back all those taxes at the end of the year because of the 1099 employee status??

          Please help me out because I would like to know what to say to him when I meet with him on Monday.

          Here are some of the things he is trying to have me agree to as a 1099 employee. If you can also help me on these issues that would be great!

          - bound to a contract stating I can only work on his projects
          - bound me to a non-compete contract stating that if I quit I cannot work for a similar company in the industry
          - want me to come in on a scheduled time
          - hire me on as a regular minimum wage employee and pay the rest of my salary on a 1099

          Thank you!
          Last edited by inked; 02-12-2006, 09:15 AM.


          • #6
            You are either an independent contractor (1099-MISC) or an employee (W-2). There is no such thing as a 1099 employee.

            The IRS test is the most common test used for determining whether a worker is an employee or an IC. The most indicative criteria are 1)whether the company has the right to control when and how you do your work (whether they exercise that control or not), 2)whether you are provided with the tools, training, etc. necessary to do the work, 3)whether you stand to make a profit or incur a loss on the work, and there are others, but those are the main ones.

            The fact that he may have enough work to preclude you from working for other clients does not, in and of itself, make you an employee. The presence of a non-compete clause in an agreement is also an indication of an employee; ICs are expected to market their services to a number of clients (just like a supply vendor, for example). ICs often set their own schedule, but requiring you to meet a certain time in/out schedule does not, again, in and of itself, make you an employee.

            What you have here is kind of a "preponderance of the evidence". The higher percentage of criteria that exists to imply "employee" vs. "indpendent contractor" would normally prevail to determine which you are.

            The main thing that troubles me is the "minimum wage" deal. This guy seems to know that you really should be an employee, but is trying to cheat the system by paying you a portion of your agreed-upon pay under the table. Personally, I wouldn't go there. You would be helping him cheat a number of taxing jurisdictions, violate a number of employment laws, and it would be to your disadvantage as well, for no other reason than you would have to pay the matching portion of Social Security/Medicare taxes.

            This whole thing sounds fishy, at best.
            I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


            • #7
              thanks pattymd!

              Thanks pattymd for all that information, the problem now is if I tell him that it wouldn't be to my interest to do the minumum wage thing for the benifits but still be on a 1099 he may just say well we don't need you then and right now he is my primary source of income.

              Is there a discrimination law that can protect me from this situation I'm in?

              Thanks again


              • #8
                Well, if you want to assist him in violation of the law, that's your business.

                And what type of discrimination do you think there would be a case for?
                I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


                • #9

                  You're absolutely correct, even though he may be my primary source of income I'm not about to assist him in breaking the law - that would be ludacris.



                  • #10
                    No problem. Companies like this make it hard on the ones who do comply with the regulations.

                    Good luck.
                    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.