Guidance beginning PE 3

If you are just starting out IMHO I would advise against this. It's hell on wheels to start a business and on top of that, you are also just beginning to hone your technical skills. It's easy to become overwhelmed with so much going on and that might lead to costly mistakes (not just in the monetary sense).

But if you do go ahead here are my answers:

1. Generally yes but it depends on your association's rules. For example, in my jurisdiction the work would have to be substantially different from your what your current employer does in either type of work or in geographic area served (i.e. you wont be taking work away from your employer). You also need to notify your employer about your activities. Only if they give you the greenlight is it acceptable.

2. Yes. If you plan to run a business treat it as such and open up a c-corp with all the associated legal / insurance jazz. In addition, you'll need to apply for a CofA (or equivalent) via your business before you start to offer services to the public.

3. My association technically doesn't require insurance but if you do not carry insurance you need to notify every single client you ever deal with as such and get them to confirm in writing that this is agreeable to them. However, I truly dont recommend this route and would suggest you get both general liability insurance and errors/omissions insurance. Talk to your broker about policies and coverages.

To be ethical, you must let your employer know you plan to do outside work. If he/she says "No", then you cannot ethically do the work.

I agree with Enable. To say that starting a business is tough is quite an understatement. It's also very expensive and somewhat risky.

Your supervisor will probably be leery of your moonlighting activities, so asking for permission won't score you any points in the company. Most companies want your full attention. Even if you have extra time, you have limited mental bandwidth and energy.

Even if your supervisor is OK with moonlighting, I would advise against it. I've done some of this over the years. It's interesting at first, but it's easy to become overwhelmed. I look at this part of my career as a mistake.

If your current position isn't enough to keep you "fully engaged" (That seem to often drive such desires to moonlight.) then you might consider looking for one that is more challenging.

If you're determined to be an owner, then I'd recommend getting 5-10 more years of experience, a lot of savings put away, and start your own full time company.

Good luck.

Maybe ask your employer for more meaningful work and responsibility.
Either way, you should keep them in the loop. You don't want them to find out on their own.

As for self-employed or employed in the second job, that depends on who hires you and what they demand. If self-employed, you need to have insurance. The problem is, that is expensive even if you only work one hour a year. Same for software licenses etc. Self-employment has a pretty high fixed cost that requires quite a lot of hours working to cover. So you really have to be sure to work a LOT to make it worthwhile financially. Better to be employed so the employer has the insurance and other fixed cost. I did the latter once, but there ended up to be too many conflicts of interest and at some point the "side employer" wanted me to become full time and I decided against.

Thank you for your input. My plan is to eventually quit my work and start a steel drafting company. Since I'm a PE I will be able (from time to time) to design steel connections. Which option would be best for this type of business: LLC, Inc, or something else?

Thank you,

As a "supervisor" of engineers, I would be very skeptical of someone asking to do independent work and stay working for me. I just don't see how using normal business hours, you can't communicate on your freelance work without using company time, phones, air conditioning, heat, office supplies, etc. As others have said above, you only have so much bandwidth. Not to mention, this defines you as a short timer. Will you quit in the middle of a project? When things get tough? Will you be using company contacts to market? To annoy?
But that's just me.

Buleeek - what are you doing right now? Structural design and consulting? If so, I'm 99.9% sure your company will have a policy against moonlighting. Even if your company avoids the small stuff you might take on, it's usually an insurance thing. That work is being done outside of your company's QC system, but because you're a full time employee of that company there have been cases where the employer was sued when there was a problem with a moon-lighting job. It seems illogical, but that's the way it is.

How deep is your client list? If you leave, will they follow you or stay with your boss? In other words, are they your clients or are they the company's clients and they just happen to work with you at the moment? You don't want to go anywhere unless you either have a deep contact list or you're certain there's an under-served market that you can snap up. Even then, there's no sure thing.

If you just got your PE, wait a couple of years at least. You may be licensed, but that doesn't mean you're ready to go out on your own. When you do, the safety net is gone. Right now if you make a mistake your boss should catch it and if they don't, it's his/her neck on the block - not yours. Even if you start sealing the work, you'll be relatively shielded from civil issues as an employee of the company (that's a whole other topic). But if you go out on your own, it's on you. Working a good lawyer can help protect your personal assets, but single member LLCs/PLLCs are tricky things and the slightest accidental mismanagement of the business side can let an opposing attorney 'pierce the corporate veil' and take your house and life savings. If you're not ready to take that chance, don't go out on your own. Wait until you can find a partner or two and make a go at it as a full time business.

Ron said:

To be ethical, you must let your employer know you plan to do outside work. If he/she says "No", then you cannot ethically do the work.

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100% disagree. As long as your activities outside of office hours do not affect your employer, it is none of their business what someone does on their own time. Owners of firms typically become more businessman than engineer. Businessmen have a habit of thinking they they have a right to their cut of everything. Why would any employer willingly grant an employee permission to do work on his own when he could make money off the employee doing the same work in the office. Only the rarest. There is nothing unethical about taking on work that is outside the scope of your firms typical client. For sure, protect your employer from any sort of liability with the appropriate insurance. Unethical, NO.

I will also add that employers can also benefit from employees moonlighting. Moonlighting can serve as free training for employees. Someone who is taking on their own contracts and stamping their own work outside of the office is much more motivated to study the code, hone their skills and be a much more careful engineer rather than someone who is content to remain someone's employee. They are also presumably exposing themselves to different varieties of work and experience that can easily become an asset to their employer.

pvchabot said:

As long as your activities outside of office hours do not affect your employer, it is none of their business what someone does on their own time

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Depends on whether or not you want to follow / buy into your association's codes of ethics. For example, here is a snippet from mine which puts what you are suggesting squarely in unethical territory / grounds for misconduct:

[URL unfurl="true" said:

https://www.ontario.ca/laws/regulation/900941#BK93[/URL]]A practitioner who is an employee-engineer and is contracting in the practitioner’s own name to perform professional engineering work for other than the practitioner’s employer, must provide the practitioner’s client with a written statement of the nature of the practitioner’s status as an employee and the attendant limitations on the practitioner’s services to the client, must satisfy the practitioner that the work will not conflict with the practitioner’s duty to the practitioner’s employer, and must inform the practitioner’s employer of the work.

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pvchabot said:

100% disagree. As long as your activities outside of office hours do not affect your employer, it is none of their business what someone does on their own time. Owners of firms typically become more businessman than engineer. Businessmen have a habit of thinking they they have a right to their cut of everything. Why would any employer willingly grant an employee permission to do work on his own when he could make money off the employee doing the same work in the office. Only the rarest. There is nothing unethical about taking on work that is outside the scope of your firms typical client. For sure, protect your employer from any sort of liability with the appropriate insurance. Unethical, NO.

I will also add that employers can also benefit from employees moonlighting. Moonlighting can serve as free training for employees. Someone who is taking on their own contracts and stamping their own work outside of the office is much more motivated to study the code, hone their skills and be a much more careful engineer rather than someone who is content to remain someone's employee. They are also presumably exposing themselves to different varieties of work and experience that can easily become an asset to their employer.

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That's how I used to think. IMO, that line of reasoning misses an important part: Engineering is not a wage-earner type of career.

Engineers must be creative and mentally "all there." They are high enough in the leadership structure that they must be fully engaged. Inevitably the moonlighter's activities will come into some sort of conflict with the day job. Edit: I guess what I'm saying is "do not affect your employer" is very unlikely.

271828 said:

Engineers must be creative and mentally "all there." They are high enough in the leadership structure that they must be fully engaged. Inevitably the moonlighter's activities will come into some sort of conflict with the day job.

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I won't disagree that there is moonlighting requires some forethought, but to use our typical parlance, that is "means and methods".

You have an unfortunate professional association whose rules must have been written by successful owners trying to eliminate additional competition. Business owners can not make money without employees to do the work at a reduced cost.

Two practical issues,
1. Cost of living in our society is currently based on two wage earners. A single engineering salary unfortunately does not suffice raise a family. One either has to work for himself (operate a business) or supplement the normal income somehow.
2. Operating a business may not be the best option for many people, but for those that do aspire to that, one has two options -- if moonlighting is considered unethical, then there only option is to build up a client list while working for their employer and then leave with those same clients. I would think that more unethical than building up one own clients on the side and then separating with no prejudice to the employers clients.

pvchabot said:

1. Cost of living in our society is currently based on two wage earners. A single engineering salary unfortunately does not suffice raise a family. One either has to work for himself (operate a business) or supplement the normal income somehow.
2. Operating a business may not be the best option for many people, but for those that do aspire to that, one has two options -- if moonlighting is considered unethical, then there only option is to build up a client list while working for their employer and then leave with those same clients. I would think that more unethical than building up one own clients on the side and then separating with no prejudice to the employers clients.

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I hear you on both of those. Those are the exact reasons I've moonlighted over the years, and I bet they're common.

pvcabot...

I haven't dealt with this recently, but at two different firms I was at years ago plus when I was working for myself for a while, our professional liability insurance could decline coverage if the firm knew that a professional employee was moonlighting in the same field. I don't remember the language, limitations, etc., but I remember reading it.

Here are a couple discussions related to this issue:

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"Is it the only lesson of history that mankind is unteachable?"
--Winston S. Churchill

fel3

I doubt it was a absolute restriction since there is more than one option out there for moonlighters to procure their own profession liability insurance.

pvchabot...

One policy in particular (when I was a partner in a firm back in the late 1980s/early 1990s) did have an absolute restriction on professional moonlighting. The policy I had when I worked for myself (starting about 10 years ago) was pretty restrictive, but not absolute. The third policy (early 1980s) is vaguest in my memory, but that company also had a "terminate for professional moonlighting" clause in their policies. I just don't remember the language of these policies.

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"Is it the only lesson of history that mankind is unteachable?"
--Winston S. Churchill

I think the ethical consideration comes down to two things: 1) professional association ethics rules as Enable has pointed out, and 2) employee contracts/handbooks/rules/etc. The last consulting firm for which I was an employee didn't do contracts, but we had an employee handbook. It laid out the rules I was expected to follow as an employee and was presented to me with my job offer so I could review it prior to accepting. In that handbook was a no moonlighting rule. And that's because it is a legal problem for the employer. Check out this article produced by an E&O insurance provider to the AE industry. It's a broad strokes sort of view of the issues.

So if your firm has a rule against it, it's not up to you to decide what may or may not affect the employer. Mostly because the problem with ignorance is that you're ignorant of what can affect the employer. I don't use ignorant in an inflammatory capacity here - most people just don't know what they don't know know. So if I accept a job and a condition of the job is no moonlighting, and I moonlight, I've committed an ethical breach.

And if you're working for a firm where the sole purpose of the firm is to squeeze every last dime it can out of it's people (I know they do exist in much larger numbers than anyone likes to believe), then you should probably work somewhere else anyway. They clearly have no loyalty to their employees, and if you moonlight while working for them and an issue arises, they'll almost certainly take you to court without a second thought if they think they can get any blood from your turnip.

You have an unfortunate professional association whose rules must have been written by successful owners trying to eliminate additional competition

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My thoughts exactly. In any case, why does this association get to prescribe the ethical rules?

There is nothing unethical about taking on work that is outside the scope of your firms typical client. For sure, protect your employer from any sort of liability with the appropriate insurance. Unethical, NO.

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Good luck arguing against decades of IP precedent in court. Without a release or agreement otherwise, IP developed by salaried engineers stateside is property of their employer regardless if its on the clock or after. The reason moonlighting without notice is unethical is that your side work opens clients up to litigation from your employer for illegal use of prints, reports, or other products that you created.

IME most employers could care less about moonlighting so long as the engineer is open/honest about the scope of their work, and will gladly sign a two-way release. If the OP's wont, then I'd advise going elsewhere bc there are plenty of employers for good engineers that will.

Another trap many fall into regarding engineering IP is failing to read/follow severance agreements. Employers today commonly stipulate periods of a year or three after employment ends in which they own any IP you develop. For my employer that wanted one year's IP in exchange for six months' salary I had no qualms about signing bc it was a lot of money that wasn't particularly limiting since I dont stamp anything and patents/copyright are easily owned by others. For the employer that wanted two years tho, $5k wasn't nearly enough.

Insert ad here for a day or ten of continuing legal training annually, and disclaimer to consult with an attorney specializing in corporate IP law, not the local chicken-farmer who chases ambulances, litigates divorces, and defends petty criminals on the side.

The reason moonlighting without notice is unethical is that your side work opens clients up to litigation from your employer for illegal use of prints, reports, or other products that you created.

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So the engineer is responsible for the parlous state of the legal industry and for unethical behaviour (IMO) of the employer?