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Withholding payment until “Do-Not-Compete” is signed
Is it legal for a client (freelance based) to withhold payment on a product already finished and delivered until you sign a do not compete contract?
My client has recently given me a do not compete contract, and they have put holds on my invoices until I sign it… These invoices were given to them before mention of any do not compete contract. This just doesn’t seem legal.
Essentially they are threatening me with non-payment if I do not sign their contract. They have all of the masters and finished products in hand. Usually I do not give the product until I have been paid, but this client is someone that I have worked with for quite some time now, and they always pay on time… until now.
Another question is, the product that they have not paid for is being sold and distributed by them. Since I have not been paid, is this a copyright infringement on their part?
Thanks everyone, I hate being in these binds and your advice is usually amazing!
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18 Replies
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Go back and search this forum for “Non-Compete” as there was a long discussion just recently.
Long story short, Non-Competes are not valid and especially as a freelancer, you should be not be required to sign a non-compete for payment. I would check with a lawyer and inform your client that you will be consulting an attorney on the matter, but in the meantime you fully expect payment for the services you rendered.
Walter Biscardi, Jr.
Biscardi Creative Media
HD and SD Production for Broadcast and Independent Productions.STOP STARING AND START GRADING WITH APPLE COLOR Apple Color Training DVD available now!
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Walter,
Thanks, I am definitely not signing the contract. I completely understand that I pay 15% more taxes, have no insurance, no paid vacation and no 3-5% raise every year for a reason. That reason being that I can approach any client that I feel increases the success of my business. I just needed to know if they were overstepping their legal limitations by essentially forcing me to sign this. I will speak to an attorney if we do not come to an agreement.
I appreciate your advice Walter. -
Walter is absolutely right….
They have abstolutely NO right or standing to request that you sign a non-compete AFTER the fact. To do so takes a fair bit of gall in my book… they definitely have brass cujones.
They did have the right to ask you to sign one BEFORE they contracted with you for the work. I’m not saying that would be correct or the “right thing to do” to a freelancer, which is isn’t. But they do have the right (we have the “right” to do a lot of things which we shouldn’t). In any regard, a pure freelancer shouldn’t sign a non-compete even before the fact, either. That’s just maddness, and a clear blockade to your pursuit of your livelihood. What if they never called you again? They can’t expect you to sit at home and starve.
Request your money, in full, immediately. If the firm-but-polite request doesn’t work, demand it. If you still don’t get it, tell them you will be hiring a lawyer. Then do it.
T2
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Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com
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[Bryce Leverich] “Is it legal for a client (freelance based) to withhold payment on a product already finished and delivered until you sign a do not compete contract?”
They call that “extortion.” Under the circumstances you describe, i.e. it was never mentioned until now, it’s certainly not ethical, and probably, if you check with an attorney, not legal. And, even if you sign the document it’s probably not enforceable, especially if you write and sign an addendum to the Do-Not-Compete right below your signature explaining the situation.
Here are the two pertinent questions that come to mind:
1) Does this wonderful, long-term client owe you much?
2) Do you care about working with them ever again?These are important issues, because, you have to decide if the money is more important than the relationship.
[Bryce Leverich] “the product that they have not paid for is being sold and distributed by them. Since I have not been paid, is this a copyright infringement on their part?”
Copyright is a difficult question. Listen to the Business & Marketing Podcast on the Cow that I recorded recently with Franklin McMahon and an IP attorney, and you’ll learn that you and the client may both share claims to different aspects of the copyright. But, that would take a long, long time to sort out.
More important are the following two issues:
1) How can the client justify selling a product that they haven’t paid for?
2)How can they justify not paying you for the work product that’s good enough for them to sell?In other words, they can only withhold payment if they claim the work product is of inferior quality. They can’t withhold payment for some other reason that they drum up out of thin air. Selling the product is a pretty good indicator that it’s acceptable quality, right?
David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los AngelesPOST-PRODUCTION WITHOUT THE USUAL INSANITY ™
A forum host of Creative COW’s Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.
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David, in response to your direct questions:
1.) This client does owe me a decent amount of money roughly $6,000.
2.) I do care about working with them, but I don’t think this will happen once I refuse to sign.
3.) They cannot justify selling the product, and not paying me, pretty simple.
4.) They can’t justify not paying for good work either.It’s a tricky situation, but I am afraid I will lose this client. I simply cannot sign a Do-Not-Compete. I have a mouth, and it needs feedin’
Thanks again.
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[Bryce Leverich] “1.) This client does owe me a decent amount of money roughly $6,000.”
Not to minimize the importance, but by legal standards, that’s a relatively small amount Bryce. It’s the stuff small claims are made of.
The typical steps one would take in a matter like this are
1) a chat
2) next, a personal letter
3) a formal letter (demand note with a time limit: i.e. pay within 7-days)
4) file a claim in small claims courtThese are important steps because it shows a judge that you have tried to be reasonable.
Have you called to speak with the client about this yet?
David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los AngelesPOST-PRODUCTION WITHOUT THE USUAL INSANITY ™
A forum host of Creative COW’s Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.
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David,
I understand that this is a small amount. But at this time, it pays the mortgage/groceries/insurance/etc.As far as your steps are concerned, I am on step two 🙂 I will send a personal letter this week.
Again, thanks for your advice, it is greatly appreciated!
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No. If you did the work before they were presented, that is their bad. Their asking you to sign such a thing as a freelancer is just an invitation to never mess with them again.
Get your money and stay clear of em.
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Is the non compete agreement dated? And if so, is the date prior to or after your invoice dates?
Mick Haensler
Higher Ground Media -
The contract is dated the 10th of this month, so no, the contract does not predate the prior work.
Bryce Leverich
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