Eighth Circuit Says Court or Jury May Decide Validity of Independent Contractor Salesman’s Noncompete
An independent contractor who sold products of an Iowa-based agricultural supply company agreed to a three-year restrictive covenant not-to-compete. When he started selling to a competitor within months of termination, the company sued. While the salesman sought to block enforcement of the noncompetition covenant based on his independent contractor status, the court said independent contractors are subject to noncompetes. However, the court invalidated the noncompete on the grounds that it was not reasonably needed to protect the employer’s business and it unreasonably restricted the employee who was essentially a reseller. The company did not supply any special information or support to help the salesman who bought products from the company and sold them to his own customer base. Notably the court held as a matter of first impression under Iowa law, a court or jury could make this determination.