Chris316; thanks for the information. It makes it a bit easier to provide helpful information.
Here are my thoughts:
The non compete won't hold up in court, IMO. It still might be a good idea to go into business with your current boss instead of going it alone, but fear of a non compete shouldn't be a reason.
Five years experience is normally more than enough to be able to go it alone and make it.
3.5 years of knowing your business partner is. . . .. a little bit on the 'not enough' side. The best rule of thumb that I heard was '10 years of knowing someone before going in to business with them'. In that time, you should have been able to experience them through the ups and downs and see how they are in both good times and bad. What they didn't say was that 10 years of socially knowing them, or 10 years of working with them. To me, there's a difference. The main thing (besides the usual caveats of competence, hard work, etc) that you want to look for in a business partner is integrity. What does he do when no one is looking? How does he treat the customers he doesn't like? How does he treat the employees he doesn't like? How does he solve conflict? Is he fair to everyone or just the people he likes? Does he under-promise and over-deliver? Or does he over-promise and under-deliver? As his employee, you are in a unique position to make this determination.
The reason I ask is that as DocMcStuffins says, at some point there will be conflict and you want to know how he will act and react. The best way to know this is by looking at how he acts and reacts in these situations now.
I can see the value in the go-it-slow approach to the new business. You can slowly transition from one job to the other, all the time keeping a 40hr work week (and paycheck!). This is a good reason to go into partners with someone; there is no risk of paying someone 40 hrs/wk but only 10 hours/wk of work. As the workload builds up to 40 hours, you'll slowly transition to the new position and someone at your old job can move up (I guess?).
As an employer, this is how I could potentially see the thought process from his point of view, he says: "I've got a great company in the water pipeline inspection business. I know there's opportunity in inspecting other pipelines, but I can't manage both at the same time. Dammit. How do I get a piece of that other business? I've got one great employee. He knows what he's doing and I can depend on him. But, I don't want to open a new business, shift him over, and not have the work, piss him off, lose him and then be worse off than before b/c good workers like him are hard to find. I know, I'll offer him a piece of the new business. Then, I know he'll bust his ass and get the most out of his crew. I'm giving up half, but I'll still get 50%, which is better than the 0% I'm getting now."
Of course, he may have a different reasoning entirely, but that to me is the most plausible.
I understand the sentiment, but your sentence:
"Pretty much I want to make my economic value of what im worth, reasonably of course, with out someone taking advantage of me or making money off my hard work. but I still might need some help to be able to succeed..."
is pretty off the mark. Here's why; someone is making money off of your hard work and taking advantage of you right now (!!!). If this weren't the case, he'd fire you right now. For example, Apple employees are some of the best paid people in Silicon Valley and the jobs are coveted by many in the tech world, but they are also incredibly abused and not receiving anything close to the value they provide the company. We know this b/c Apple has over $200billion in the bank. This is money earned by the employees hard work, but they will never get it. It's going to the shareholders, not the employees. My point is that a person may be exploited, but it still might be a good deal for them anyway.
By going into business with your boss, you will be both an employee of the company and a shareholder. Depending on how the company develops, your company may be billing out hundreds of hours of work every week at $75/hr and paying $20/hr. Then *you* will be the one exploiting the employees.