Independent Contractors & Noncompetition Covenants: A Modified Approach

April 1, 2023

This Note examines the way in which noncompetition covenants should be applied to independent contractors.  An increasing portion of the American labor force is now employed outside the traditional employer-employee context.  Today, nearly sixty million American workers are categorized as independent contractors, with many subject to noncompetition covenants that restrict their ability to participate in the labor market freely.  In response to this dramatic change, state courts and legislatures have used a variety of approaches in enforcing noncompetes in the independent contractor context.  These approaches run the gamut, with some states liberally construing noncompetes against independent contractors while others have banned the practice outright.  This Note explores these varying approaches and advocates for a new, modified test for courts to use when analyzing independent contractors’ noncompetition covenants that asks (1) whether the employer has a protectable, legitimate business interest and (2) whether the independent contractor is vulnerable.  This approach preserves the beneficial use of noncompetes when an employer’s legitimate interests are at stake while also protecting the interests of the millions of Americans in nontraditional employment.

April 2023

No. 5