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Advice about New Employee

Advice about New Employee

Advice about New Employee

(OP)
I have this employee who as worked for me for 1 year. It has been great. The particular employee was a framing contractor who decided to switch gears and come work behind a desk, for a variety of reasons. His plan was to keep his framing company, but reduce this jobs down to ones he could manage without having to physically being there. He has worked for me part time for 6 months, and then full time for the last 6 months.

Things are going well, and then I find out that one of my clients has decided to drag his feet in paying me, is also a client of my employees framing company.
I find out that my employee has basically dual natured conversations with this particular client, where they talk about my business, and then switch over and talk through my employee's side business.

I can easily see a fast approaching conflict of interest. My employee is basically saying "I don't want to be in the middle of you and problem client", and "I didn't ask for this", which is not quite true, because he did invite himself to work for this client on the side, as a framing contractor under my employee's personal business.

Any advice on people's perspective of this would be great.

Thank you.

RE: Advice about New Employee

Does the client's issue of non-payment have anything to do with the work your part-timer does for you or with the service they provide the client on their own?

- Andrew

RE: Advice about New Employee

So did you talk about this beforehand - i.e. if he found himself doing work for you on design?, but then also what sounds like construction (framing what?).

If not then you're both in an uncomfortable place. but "dragging his feet2 about paying isn't the same as not paying.

Has your man been paid for his work as side company?

it looks like there is a lot to lose here if you go in too hard or make it too uncomfortable for your man.

So grind this one out, but then have a conversation about how to stop the next one going south when you both end up working for the same person.
Maybe an exclusive deal so if he's doing framing you're not doing design or vice versa, or a more comprehensive agreement between you on how to act for the same person.

Or create a single JV company if this happens to offer both services under one contract?

Many ways to arrange the skin of the cat here.

Remember - More details = better answers
Also: If you get a response it's polite to respond to it.

RE: Advice about New Employee

(OP)
@ SuperSalad, no the issue of non payment is because my client is lazy and has prioritized us out of his schedule.

The conflict of interest happens when one of the relationships with the "client" goes south....either client and myself or client and my employee,
at which point everyone is riding the sinking ship regardless of if they want to or not. We are all connected.

We cannot design/build because we cannot sue ourselves, which means the insurance company will not insure that type of set up.

The similar situation, which has not come up yet, is where he is working for my client using his side business, and things go south and he is fired etc., and
yet is still working on the clients project under my engineering business. The bottom line is that we cannot work on the same job period.

RE: Advice about New Employee

Yeah, that might be the solution going forward. Figure out the best way to keep the two entities from working on the same project and the conflict won't arise.

- Andrew

RE: Advice about New Employee

Where I see the risk is in your last scenario: his side business screws something up and the client sues you. They argue that you're one and the same/ design-build and he always talked to one guy about both sides of the project.

Similar to why insurance companies argue against moonlighting.

RE: Advice about New Employee

What kipfoot said. You probably should make an agreement with him to never serve the same client.
And if the client hires the employee first and later your business wants to serve the client, your business should have priority and he has to drop that client in that case. Because otherwise he is cutting into your business.

In a law suit everyone with deep (or any) pockets will get named if they were even remotely connected.

And your client paying late is your problem, not his. He could as well be just a personal friend of that client, still not his problem.

Here is radical idea: pay the guy better and give him more work so he doesn't have to moonlight. It wasn't clear if he does the same type of work on the side he does for you (framing?). So if it is the same type of work he isn't doing it because he is bored. If he is that great, why not work extra hours for you for the same money he could make moonlighting?

RE: Advice about New Employee

Quote (bigmig)

We cannot design/build because we cannot sue ourselves, which means the insurance company will not insure that type of set up.

Whether the paperwork and hoop jumping would be worth it to you is a completely separate ball of wax to melt.. but projects on EPC contracts are building built in the hundreds (thousands?) every single day, and that construction method of delivery is only becoming more common as time goes on.

RE: Advice about New Employee

This statement confuses me a little:

Quote (bigmig)

I find out that my employee has basically dual natured conversations with this particular client, where they talk about my business, and then switch over and talk through my employee's side business.

Does the that mean the employee is on your time talking about one of your projects and during the same conversation, they switch gears and spend time on one of their projects? Is so, then that seems like a bit of a problem.

I'm reading a little between the lines -- are they talking about your company, as in criticizing it behind your back? If this is the case, then there's a major problem.

RE: Advice about New Employee

Quote (EnergyProfessional)

pay the guy better and give him more work so he doesn't have to moonlight

I've heard this on before. Usually it's from a business owner who has long forgotten the realities and treadmill of working for an employer. The fact is no business owner can pay an employee a comparable amount to what one earns by working for oneself. The whole premise of a business is that you charge the client more than what you pay the employee. If an employee already had a reliable source of income why would he want to reduce that income for a paycheck. The hours he spend working for himself are going to be 3-5x more profitable.

RE: Advice about New Employee

So if a full-time employee expects to get paid as well as working for himself, it's not a fair comparison.

You provide consistent, reliable income and normal work weeks. Running a business by yourself does (should) not. If there are benefits, that's another huge difference. Working by yourself poses interesting legal and insurance considerations too. Apples and oranges.

RE: Advice about New Employee

It seems the 'better compensation to prevent moonlighting' argument is off the mark here here. The OP clearly states that this guy is a framing contractor turned 'sitting behind a desk employee' (bigmig is a structural engineer...so my assumption is that this employee is working as a structural engineer now) who kept his old business (pay a manager to run the show and keep the profits...it's a nice model if you can pull it off). So it's not a matter of "I'm an engineer that doesn't get paid enough, I'll go find more engineering to do." Or framer, or whatever.

bigmig - certainly a conflict of interest and a bad situation. I'd suggest setting ground rules that dictate the employee's company cannot and will not bid on or perform work on any jobs designed by your office. Additionally, your office will not provide engineering support for his business or projects that his business has worked on. Failure to comply, including any representation of your company to clients while wearing his 'framer hat' (wearing a company shirt to a meeting, telling them that he's an engineer for you, etc.) will result in immediate termination.

All in all...is it worth it to have him around? Seems like too big of a headache.

RE: Advice about New Employee

Quote:

The fact is no business owner can pay an employee a comparable amount to what one earns by working for oneself.

Hopefully you're not a business owner or PM bc that's simply nonsense. Many of us earn far more as employees of large businesses than we would as owners of small businesses, and have hired small business owners as employees.

JMO but given the OP's situation I'd enact the usual rule - Employee side businesses must remain completely separate from the dayjob to include customers, suppliers, work performed, computers/supplies, etc.

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