This discussion is actually a spawn of another on RBC that can be found here
. Much like many topics on RBC, discussions lead to new discussions, thereby reinforcing the value of community :) To keep things tidy, I decided to create a new topic. Looking forward to your thoughts and insights :)
Per the discussion on weighing whether a TPR firm should 1099 versus hire W-2, I am in 110% agreement with the fact that top salespeople are interested in commissions (as they trade security for greater potential reward). In fact, it's why I run my own firm - Could there be a better example? :)
However, let me ask a question for a point of not really understanding how this could play out . . . but not being completely in the dark, either. (What I mean is that I am not, nor have zero aspirations to be, an attorney . . . however, I have sat through classes on top of classes regarding law [unfortunately, I might add - lol.] Personally, I have only seen one case in which a non-compete was enforced within our industry, and it was a former W-2 employee (not a 1099 contractor.)
Here is my question: Do you believe, or do you have relevant examples, of whether a true Non-Compete is enforceable with a 1099 contractor who is working for a TPR firm as a Production Recruiter?
[Note: Keep in mind that the context of this question - It is NOT about our typical misclassification examples, such as a 1099 contractor really being co-employed by working at a Client site through a contracting firm, etc. This question is purely from a TPR firm perspective.]
I very well may be incorrect, but my instincts tell me that this arrangement would be quite difficult to enforce, given the fact that the Client (or engaging party of the 1099 contractor) is not withholding taxes.
I may be incorrect here as well, but I have a hard time believing that such a case would be ruled in favor of the Client or engaging party . . . however I do believe it would be quite a deterrent for recruiters who do not wish to sink thousands of dollars into defending themselves (and/or recruiters who have little knowledge about what makes a non-compete enforceable in the first place.)
In the end, I truly wish things were so simple (that we could hire 1099, avoid taxes withheld, be under no obligation to pay any form of benefits, be able to lay the 1099 off 'at will' with no recourse to unemployment insurance, etc.). However, my better judgment tells me that when the chips fall, we would be at a significant disadvantage legally.
Just my $.02 and I look forward to responses.