There are precautions you can take to avoid getting sued by your employee or independent contractor. If they are truly an independent contract, you need to make sure you have a written agreement in place and do not treat them like an employee. They should be free to contract with other companies to do similar work. However, you should make sure they hold your work and information in confidence through provisions in the contract. As stated in a recent Wall Street Journal article linked below, there are other precautions that must be addressed to protect yourself against employees: (1) Are they exempt from employee wage and hour rules? (2) Do you have proper policies in place regarding discrimination and harassment? (3) Have you documented the employee's history with the company?
Here is the full article. If you have questions about dealing with employees, please contact Jeffery Jacobson.