Employee and Non Employee Definitions and Possible Legal Issues

[ntrimm]

We have a friend/acquaintance that has been out in the field on his own time speaking on behalf of our company trying to generate new leads and business for us as well as submitting proposals (that we approve) to companies and having meeting by himself on behalf of our company. He says he is doing this to try to help his friends but to also have something to do when he retires. he is not employed with our company. neither as a W2 or 1099 Subcontractor. Should we be concerned about any legal issues? Should we label him as an employee or subcontractor and agree on a salary or commission structure and have him sign a non-compete agreement? Can we have him sign a non compete agreement as a 1099 sub-contractor? Any information would be helpful.

[AFFA]

I wish to inform you that a person is an employee if he works under the control and supervision of other person. In this, one of the essential things for enforcing your agreement will be consideration.Further, your non compete agreement can be valid if your friend is getting some consideration. However, if he is not charging or taking any remuneration then the non compete agreement cannot be enforced because the agreement lacks consideration. Further, the terms should be reasonable for the agreement to be valid. Your non compete agreement should clearly provide as to the area and time for which your non compete agreement will be valid.

AFF