Side Jobs

June 2008

For quite some time, you’ve been helping one of your best employees with his small side jobs by selling supplies to him at cost and letting him borrow needed tools and equipment. But lately it seems that the side jobs are getting bigger, and you’re starting to lose money. You suspect he also may be starting to build a client base so he can strike out on his own. What do you do? What are your arrangements for side jobs?

1. Stop side jobs. 2. You do any more and you are done here. Side jobs are grounds for discharge unless approved in advance.
—Anonymous

Tell him that you’re going to pay him more money so he does not have to go out and do side work. Otherwise let him go and wait till he comes crying back for his more secure job, and then set him straight about side work.
—Anonymous

Fire him immediately! Our policy is "no side work.” It causes lost productivity because they are overtired, leading to fraudulent workers’ comp claims (injury on side job); theft of tools and materials (too tempting with side work); less availability for overtime when required (recruiting other employees for their side work).
—Jim Canatella, James G. Canatella, Inc., Baltimore, MD

Side jobs are run through the office. They are only given to a select group of people as a reward for hard work and good service. I don’t sell supplies at a reduced rate, and they are not allowed to use any company equipment, including pick-up trucks. If we find that any equipment is being used, it is reason for termination. This is in writing to the employees.
—Anonymous

I permit side jobs. I find it’s good for morale. But it cannot interfere with my company. I do not help them in any capacity. I don’t let them cross the line.
—Joe Autodore, Owner, Autodores Plastering & Stucco, Woodbury, NJ

Our standing policy is that we do not sell material to our people. They are technically prohibited from performing side jobs by the union. If they are caught by the union, they can be fined or suspended. If we learn of any commercial side work being done, that employee is fired. That simple.
—Anonymous

Recover all your tools and property and fire him on the spot. Establish that any side jobs must not exceed a certain size or amount of money; that way there’s no confusion with future or current employees. We give our employees side jobs that won’t exceed $400.
—Alan Castro, President, Advanced Specialty Const. Inc., Fort Walton Beach, FL.

We discourage all side jobs except for those the employee does on his own property or for a very close relative where he furnishes his time for free. Otherwise, why should any contractor be forced to pay the benefits, and then have someone else reap the benefits? Besides that, side jobs are probably done under the tax radar, right? That also isn’t fair to the contractor who must pay income and property taxes, employment taxes, etc.
—Anonymous

I do not sell them supplies for side jobs; however, I will lend them the equipment necessary to do their project as long as it all comes back in the condition it left our yard. I think by allowing the key employees to do this it gives them some understanding of what contracting is all about. As far as them building up a client base, well, I guess "it is what it is,” as they say. If someone has the desire to try and start their own business, more power to them. Most of the ones I know that have tried, failed because they don’t understand what happens on this side of the fence as there is a lot more to the wall and ceiling business than being a great field hand.
—Shaun Patterson, President, S. Patterson Construction, Inc., Bakersfield, CA

While everyone needs more money (did you ever meet someone who said he earned enough?), side work is a difficult issue. Difficult because in my experience, much of that employee’s time is spent thinking about or planning for the side job. Also, materials are oftentimes taken, without permission, from job sites or the yard for the side job. This drains cash from the company and confidence regarding the employee. This company has a hard and fast rule: If an employee steals from the company, it is grounds for termination. That is expressed in the company policy, which is given each new employee upon hire. When the company is very busy and a small job arises with a regular customer who we want to service, we might offer it to a company employee—but only one who will serve that customer well and maintain the good relationship between this company and the customer. There is a host of companies owned by former employees of this company, doing the same work we do. We do not encourage employees to leave and start their own, but when they do there always seems to be enough business to go around.
—Anonymous

Side jobs paid a lot of bills for me when I was working in the field. Letting my employees do them may do the same for them. My first concern for my employees should be their welfare. Both of us need to be healthy. The one thing I will not tolerate, however, is the employee bidding against me. If he is building up a client base to strike out on his own, more power to him. He has the right just like I did. Simply put, side jobs should be gotten completely independently and be clearly separated from any company business with all materials provided by the employee or others.
—Anonymous

My policy in regard to side jobs is, if it doesn’t interfere with the day-to-day operations of my business, fine. If they start missing time and are no longer focused on being a good employee, then some time off may be in order. The hard part is some employees are difficult to replace, especially ones who have been with you for a number of years, but if they cross the line and start taking work away from you, it may be time to sever the relationship permanently.
—John Fritz, Owner, Premier Drywall, Auburn, NY

Our policy is no side jobs, and certainly not with company equipment or materials. That doesn’t mean that guys don’t do them, we just don’t offer an environment where it is encouraged. There are many issues to consider, including liability in addition to the posited issues of loss of money/ customers. If we find an employee is doing more than an occasional side job, we usually let him go. Ultimately, there are very few benefits for the company in allowing him to build his business on our time.
—Patrick Harvey, President, Patrick G. Harvey & Sons Contractors, Inc., Mission Viejo, CA

Do not get involved in his side jobs. If he gets hurt, who’s job do you think he will say he was on when it happened?
—Anonymous

If he’s doing side jobs, he’s not your best employee. Quit selling materials to him and use only when you have to.
—Tom Blood, President, Long Beach Acoustics, Inc., Long Beach, CA

Doing side jobs places employees in a position of competition and compromise with the company. Our policy prohibits this because of the potential loss of business and many other complications associated with side jobs. Consequently, all parties involved with side work would be dismissed.
—Anonymous

I allow side jobs that don’t interfere with the times that I need them to work for the company. I don’t help them with materials and I limit the use of equipment. I also don’t allow them to work for anyone that is in my customer base.
—Anonymous

We do not prevent our men from doing side jobs, but there are conditions. It cannot interfere with our normal work schedule, which is Monday thru Saturday, weather permitting. If a man is missing work to complete his job, his attendance is lacking and he cannot work for us. We also expect to be notified of the side job so that there is no conflict of interest. In addition, we do not sell materials to the men. If they are bidding and doing side jobs, they need to make their own arrangements for material.
—Anonymous

We don’t support our employees with their side jobs. We try to make them understand that it is not ethical. I do not think we as an employer should in any way support this.
—Anonymous

Side Jobs can both be a blessing and a curse. You don't want to lose your best employee, but why stop him from making money, and why not even talk with him about joining forces when his client base gets larger? Unless you are paying all the taxes, insurances and for his way of life, then the employee has every right to make some extra money. Just maybe the word partner, if he really is good, can help both of you down the road.
—Wayne Dickinson, Dickinson Drywall, West Bridgewater, MA

I would not sell supplies or lend tools. I would try to train and add additional responsibilities on to that employee to help increase his worth and therefore his salary with us. You reap what you sow.
—Doug Parrish, Vice President & Director of Operations, Donaldson Organization, Hauppauge, NY

I do not sell materials to my workers; that is a good way to have materials start to walk off jobs. I also do not condone the use of company equipment for side work. As far as the labor involved, if their "moonlighting" does not interfere with company time, then what they do on their own time is their business. As far as encroaching into the company’s client base, we send a large packet of information about EIFS insurance issues and the general lack of qualified insured firms, with all our bids. If they want to play that game then they better have the armor. We spend an enormous amount of money to remain properly insured for all of our EIFS installations, residential and commercial. One thing that ticks me off is that M&O is like an elephant chained to the tree, and these uninsured applicators are like gazelles prancing around us. I do everything in my power to either chain them or crush them. My key guys know this. If they decide they want to play the game in our circle—which some do, rather than receive the benefits we offer, then we require them to get properly insured to work as subcontractors if they want to sub work from us. Then it’s just business.
—Jeff Muller, Vice President, M&O Exterior Applicators, Inc., Frederick, MD (www.moapplicators.com)

We discourage side jobs except on Sundays. And forbid it with regard to our own customers, their next door neighbors and people who stop by and solicit work on site.
—Anonymous

Company policy: No side jobs. Mom, dad, personal homes: OK.
—Anonymous