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Risks of Using Independent Contractors

On Behalf of | Jun 28, 2017 | Business Management

Today, I want to talk about independent contractors, specifically using them when they may have a contractual tie to somebody else. Recently I was speaking at an event and somebody approached me asking, “What do I do if I have an independent contractor who may have a contract with somebody else? A prior employer?” They were concerned about what the risks were. We want to dive into that a little bit.

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Let’s jump into the issue a little bit. A lady had a situation where she was a business owner, and she was looking to prospectively hire somebody as an independent contractor, who was truly going to be an independent contractor from her perspective – minimal control, freedom of stability and scheduling. The independent contractor would be working their hours, so she was a little less concerned about some of these traditional employee-versus-independent-contractor issues, but still, issues were there. The bigger issue was that this independent contractor had a prior employer who had a non-compete. The question was what risk did this business owner have with this employee and their prior employer?

Unfortunately, we had a situation where there might be risk involved, because we don’t know what that prior employer is going to do. One underlying principle in a lot of legal situations is that you can’t hire somebody, you can’t force or help somebody break another contract. Even though she was doing the right thing, since she’s aware of the independent contractor having the other relationship and possibly violating that contract, we might have a tortious interference with contract claim here. We must investigate thoroughly, understand what’s going on, and make sure we know what the risks are.

Something comes up all too often. You hire independent contractors, think you’re scot-free because they’re not employees and you don’t have to worry about them, but that reclassification risk, which we’ve talked about extensively in our blog still exists, but you also have these kinds of risks with contract claims.

Hopefully, I answered some of your questions, and I’d love to know what else you want to talk about. Follow this page if you’re not already a fan, the R. Shawn McBride public page. We want to make sure we’re getting this word out to people and helping them. We want to know what you want to see.  Go over to and sign up for our blog and newsletter so we can bring you updates on business and what’s going on in the world.

Can’t give you specific legal advice over this medium, but I want to give you some idea of some of the issues you should be looking for if you’re working with employees.  Feel free to reach out to me. Let me know what questions you have, and we will address them in future sessions. Please, e-mail questions into the R. Shawn McBride public page, let us know what you and your friends want to hear, and we’ll help build this community and get more people in the know.

Each case is unique.  Past results do not guarantee future outcomes. This posting is intended to be a tool to familiarize readers with some of the issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique.  Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. Photographer Ulrik DeWachter.

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