Here is the situation. You are working a job by the hour. Have been doing remodeling and additions. The HO starts to run on funds and says they can’t afford the whole crew, but would like to hire your lead man on the side. Not through your company, but pay him directly. Questions are 1) Would you do it? and if so 2) would you do it again. If so Why or why not. Some input would really be great guys and gals. Thanks in advance!
Tamara
Replies
Moolighting implies that the lead man would still be working his normal shift for you (on some other job) and working evenings and weekends for the financially constrained HO. If that's the case, I would very graciously agree to the arrangement. If the lead man wants the work, then forbidding the arrangement gives him, and possibly the homeowner, an incentive to lie to you about what they're doing evenings and weekends, which would ordinarily be none of your business. Unenforceable laws are always a bad idea.
If the actual proposed arrangement is different from what I'm assuming, or if you have specific reasons for not wanting to agree to it, please tell us more.
on moonlighting ,if your lead would continue to fill the requirements of the position he holds with you and if he was not to use any company assets then no prob.
all my help knows that weekend work or evening work is ok as long as they use the above listed guidelines and these.
your employees need to know that if they are going to do work for one of your clients they should charge the same rate per hour as you would. I can not emphasize this enough. having said that, the home owner should also be aware that they are potentially dealing with an unlicensed contractor and also the work that your lead is to complete may need to be permitted and inspected. ( we will not share our permit with non employees or subs that were not hired by us ) and by doing this the h.o. is putting themselves out as the owner-builder and is required to carry work comp insurance for all employees and sub contractors who do not have it. ( ie your employee is not a licensed contractor so he would in effect become the employee of the owner builder ). here in California that can open up a big can of worms if someone was injured or killed.
long story short, do not do it. if the h.o. is out of money maybe they can reduce the scope of work or pay by credit card or credit draft.
James
James
Section 7044 of California's Business and Professions code exempts homeowners from the requirement for a contractor's license provided it is not a residence being constructed or remodeled for sale or rent. This allows the owner to contract with mechanics to perform the labor on their property directly without the owner being a licensed contractor. The same section allows contractors who are employees of an exempt homeowner to be exempt from licensing.
Section 7018.5 states that contractors and laborers who contract directly with the owner are exempt from certain notice requirements pertaining to liens since the owner is aware by virtue of such direct contract of their presence on the job. This means that any carpenter, painter, plumber, electrician, etc. who has a direct contract to perform labor is exempt from the notice requirement. This extends to firms and corporations who have direct contracts to perform labor.
On the other hand, the California Contractor Licensing statutes are unconstitutional. Pursuant to the statutes, each construction trade must be supervised by the person designated as the qualifier for a contractor's license in that specific trade. If the contractor is an individual, the supervisor can be the individual or an employee of the individual. If the contractor is a partnership, the supervisor can be a partner or an employee of the partnership. If the contractor is a corporation, the supervisor can be an officer of the corporation or an employee of the corporation. Such a provision was declared unconstitutional by the Arizona Supreme Court in City of Tucson v. Stewart.
Thanks for all the input! I will have Lars read the rest that I haven't already printed. Basically it is known that our lead will work for us during the week. If he wants to work some extra hours for the HO on weekends then that is fine. We come first. This is a slower time of year, thus we can consider this for a day or two. Past that no way. Tamara
I wanted to say this before but didnt ;
I heard this story just last week. Firewood prices here are 35 per rick. A lady friend of mine called a wood cutter and said she had an order for 10 ricks if the price were reduced. She is buying for next year. She knew this was the time to deal with most of the wood orders winding down in the season here as we have mild winters. He admitted he was slow. She offered 25 per rick and the conversation ended. He called back that night and accepted. She called peoples exchange selling firewood! She called him back and booked 50 ricks. Shes taking orders and calling friends and family . She is selling to most all of her neigbors. He delivers it where ever she says. Shes a retired real estate sales person . She is calling all of her contacts. Wouldnt supprize me if he wasnt still working for her when grass starts growing where he has a lawn care business. She is thinking about that part of his business!
Bottom line is that word got out big time. He is currently worth 25 per rick which is a 28 percent reduction for his living.
You might apply this story to other customers that find out you "lent" out your top hand for free. As usual my mind centers around marketing. You think they will keep their mouth shut? If it is done for them , why cant the next customers have the same opportunity. Will they feel slighted when you say no? Is it fair marketing? This was your customer . I would concentrate on selling more work and keeping the profit dollars moving toward your bank account. In my wifes job ; If production catches sales , its time to revamp sales. She normally works on sales overtime to make the bisquits and sorgrum equal out. Sales go to 10 hr days in 5 day weeks, while the plant is cut to 4 days per week . That puts a lot of pressure on sales. If they dont deliver , more sales people are hired to share the same customer base until the plant is over booked. Then the least productive sales people are layed off. Which brings me to the final point. At no time does she ever consider sacrificing top plant help, for she would lose the ability to produce at peak periods. The top producers of her product are the kings and queens on her chess board. Management , sales,clerical all stand behind top producers making the product in the plant. She will sacrifice labor ,but never a machinest for example. If the knowledge is lost , profits will follow. The top hands are the heart of the business. They are the ones responsible for repeat sales because of their standards and knowledge. They are the hub to the wheel. They repersent the company values in which reputation is born..
Ive always said as my father always said; If you want to work over time , work for me . Its a lot easier.
Tim Mooney
"The same section allows contractors who are employees of an exempt homeowner to be exempt from licensing. "
What in the world does this mean?
Contractors are contractors
Employees are employees
Try it this way to see if it makes anymore sense,
"Republicans who are Democrats are exempt from voting in Cuba"
"Men who are women are exempt from bearing children after they pass childbearing age"
"Chevies that are Fords don't need license plates to drive on private roads"
"IBM PCs that are Macs don't need to register their software installations"
.
Excellence is its own reward!
Piffin
I didn't write the legislation. The California Legislature is responsible for that. I gave the section number of the statute so that all could look it up. Type in the phrase 'California Contractor Statutes' for your search.
Under California law, a trade contractor such as a plumbing contractor or an electrical contractor is the party who awards contracts to perform labor to the mechanics and awards contracts to supply materials to the materialmen in a specific trade. If the contractor who does that is an employee of the owner, then he is exempt in certain circumstances.
By the way, there are two types of employees. A contractor who is independent and a contractor who is a servant are both employees. For purposes of unemployment compensation and other matters, they are treated differently. I would bet that if you looked up your states unemployment compensation laws they would state that those employees who are engaged in an independent trade or profession are excluded from coverage.
I am sure that California means that contractors who award contracts on behalf of the owner as a servant and not as an independent agent are the ones exempted.
"A contractor who is independent and a contractor who is a servant are both employees." What ???
Can you please make sense? I'm being totally serious. I can't tell if your posts are for real or there an Abbott and Costello routine. Like who's on first,what's on second, & I don't know is on third.
I've yet to understand anything you've posted on the law. I have to ask are you pulling our legs with this stuff or are you serious? I can't tell if your serious or not. If you are serious please find a way to communicate your ideas more effectively - in other words - make sense not complete confusion.
You can't read this ? Seriously ?.
Phill Giles
The Unionville Woodwright
Unionville, Ontario
pif... robert has a history... if you like talking to brick walls... he's the guy...
what he is basically gonna arrive at is that employers are stealing the fruits of their employee's labor..
but he's gonna site every obscure legal decision to support his case in getting thereMike Smith Rhode Island : Design / Build / Repair / Restore
I know, I know. It was a rhetorical question.
He said he didn't write the law but was just quoting from it. What I queried him about was his own paraphrase of it, not the legal wording in context..
Excellence is its own reward!
As an architect I cannot let an employee moonlight. If they use my telephone, xerox, computers, etc. I am liable according to my insurance company. It's hard to moonlight as an architect and not take a call at work during the day. Not sure if this is true for a contractor.
It's pretty obvious that the HO is hoping to hire your own man, pay him under the table, to do the work he originally hired you for. And you hired your man to do, under your umbrella.
I'd tell them both to go ahead if they want, and then your man and the HO can go take a leap, cause they'll never see you again. It would take a pretty sleazy HO to even suggest this.
" It would take a pretty sleazy HO to even suggest this."
Or a very dumb one which is not normally the case. Sounds like a shifty one that doesnt care.
I can just imagine also that if there is trouble claim wise they wouldnt hesitate to ask Lars for another favor. Or expect it since Lars started the job. Hes also sure Lars is insured. Opposing lawyer would say; its worth a shot for half. The courts are full of cases that shouldnt be there.
My lawyer would put it bluntly ! LOL!
Tim Mooney
Edited 2/2/2003 9:15:32 PM ET by Tim Mooney
roberthaugen,
Section 7044 of California's Business and Professions code exempts homeowners from the requirement for a contractor's license provided it is not a residence being constructed or remodeled for sale or rent. This allows the owner to contract with mechanics to perform the labor on their property directly without the owner being a licensed contractor. The same section allows contractors who are employees of an exempt homeowner to be exempt from licensing.
that may be fine , sure they can be the contractor, but it dosen't change the contractors responsibilities ( H.O. ) regarding employees.
the fallowing is an excerpt from the cslb web site-
2. Who must be licensed as a contractor?
All businesses or individuals who construct or alter any building, highway, road, parking facility, railroad, excavation, or other structure in California must be licensed by the California Contractors State License Board (CSLB) if the total cost (labor and materials) of one or more contracts on the project is $500 or more. Contractors, including subcontractors, specialty contractors, and persons engaged in the business of home improvement (with the exception of joint ventures and projects involving federal funding) must be licensed before submitting bids. Licenses may be issued to individuals, partnerships, corporations, or joint ventures.
3. Is anyone exempt from the requirement to be licensed?
Yes. Here are some of the exemptions:
Work on a project for which the combined value of labor, materials, and all other costs on one or more contracts is less than $500 falls within the minor work exemption. Work which is part of a larger or major project, whether undertaken by the same or different contractors, may not be divided into amounts less than $500 in an attempt to meet the $500 exemption. Unlicensed contractors must provide the purchaser with the written disclosure in B&P Code section 7048 stating that they are not licensed by the CSLB, or the $500 exemption does not apply and that a citation can be issued for work completed by an unlicensed contractor;
An employee who is paid wages, who does not usually work in an independently established business, and who does not have direction or control over the performance of work or who does not determine the final results of the work or project;
Public personnel working on public projects;
Officers of a court acting within the scope of their office;
Public utilities working under specified conditions;
Oil and gas operations performed by an owner or lessee;
Owner-builders who build or improve existing structures on their own property if they either do the work themselves or use their own employees (paid in wages) to do the work. This exemption is only valid if the structure is not intended or offered for sale within one year of completion;
Owner-builders who build or improve existing structures on their own property if they contract for the construction with a licensed contractor or contractors;
Owner-builders who improve their main place of residence, have actually resided there for one year prior to completion of the work, and who complete the work prior to sale. This exemption is limited to two structures within a three-year period;
Sale or installation of finished products that do not become a fixed part of the structure.
A seller of installed carpets who holds a retail furniture dealer's licenses but who contracts for installation of the carpet with a licensed carpet installer.
Security alarm company operators (licensed by the Bureau of Security and Investigative Services) who install, maintain, monitor, sell, alter, or service alarm systems (fire alarm company operators must be licensed by the CSLB); and
Persons whose activities consist only of installing satellite antenna systems on residential structures or property. These persons must be registered with the Bureau of Electronic and Appliance Repair.
the key in all of this is the definition of employee. I , in no way object that the home owner can act as their own contractor but if they are acting as a contractor then they still have to fallow the same rules that apply to contractors, if the person you hire will be paid more than 500.00 labor and materials then he will need to be licensed. if he is not licensed then he is in violation of the licensing requirements so he can not do the job, if he and the H.O. go fourth on the assumption that the h.o. is the contractor then the lead man must be an employee, that is where the rub comes in.
another excerpt from the cslb web site-
A frequent practice of non-licensed persons professing to be contractors is to have the property owner obtain the building permit as "owner/ builder", erroneously implying that the property owner is providing his or her own labor and material personally. A contractor's license issued by the State of California Contractors State License Board is required when the work is to be performed by someone other than the property owner and is valued over $500.00 including labor and material. The licensed contractor should obtain the permit. Building permits are not required to be signed by property owners unless they are performing their own work personally.
Contractors are required by law to be licensed and bonded by the State of California and to have a business license from the city or county in which they are performing work. They are required by law to provide for workers' compensation if they employ or otherwise engage any person to work. They are also required by law to put their license number on all forms of advertisement, proposals, estimates, and contracts.
If you plan to do your own work as an owner/ builder, with the exception of the various trades that you plan to subcontract to licensed contractors, you should be aware of the following information for your benefit and protection:
If you employ or otherwise engage any persons other than your immediate family, and the work (including materials and other costs) is $500 or more for the entire project, and such persons are not licensed as contractors or subcontractors, then you may be an employer.
If you are an employer, you must register with the state and federal governments as an employer, and you are subject to several obligations including state and federal income tax withholding, federal social security taxes, workers' compensation insurance, disability insurance costs, and unemployment compensation contributions.
There may be financial risks for you if you do not carry out these obligations, and these risks are especially serious with respect to workers' compensation insurance.
For more specific information about your obligations under federal law, contact the Internal Revenue Service at (800) 829-1040 [and, if you wish, the U.S. Small Business Administration at (800) 359-1833]. For more specific information about your obligations under state law, contact the Employment Development Department at (916) 653-0707, the Department of Industrial Relations at (415) 703-4580, and the Franchise Tax Board at (800) 852-5711.
to go one further I remember ( but am to lazy to dig it up, being not easily located) reading in one of the study guides for the state licensing exam the fines for not providing work comp insurance to employees, they didn't seem to care if you " DIDN'T KNOW" and the fines were calculated for every hour the employee worked for you.
long story short, if they don't have a license and the job is over 500.00 then they are your employee weather or not you like it and it is up to you to handle all the associated paperwork and insurance.
James
Edited 2/2/2003 2:57:05 PM ET by james
James
At what point do you know that the total price of labor and materials is going to be $500 dollars or more?
Pursuant to California's lien laws, those who perform labor are entitled to a lien. Those who furnish materials are entitled to a lien. Contractors are entitled to a lien. Subcontractors are entitled to a lien.
There can be no lien unless there is a debt and there can be no debt unless there is a contract - either express or implied. Contractors, subcontractors, mechanics and materialmen are each entitled to a lien for the amounts of their contracts. If the owner never paid anyone and none of these received any payment, then what would be the total of the liens? It would certainly not be the amount specified in the contractor's contract. Nor would it be the sum of the contractor's contract and the subcontractors' contracts.
Now I ask you James, at what point do you know that the $500 combined value of labor and materials costs is exceeded?
By your own excerpt, it said nothing about the amount of a contractor's contract. It only stated that when the combined value of labor and materials contracts exceeds $500, then the contractor must be licensed. Thus when the lien value exceeds $500 for labor and materials a license is required. However, the contractor is not entitled to a lien for labor and materials. Those liens are for mechanics and materialmen. The contractor may have a contract for $200 and the cost of labor and materials may be $100,000. In such a case the contractor would need a license. The lien value would be $100,200. On the other hand, a contractor could have a contract for $5,000 and the total cost of labor and materials might be $400. In such a case the contractor would not need a license. The lien value would be $5,400.
How come James' post made total sense to me and your posts are so off the wall. Please - go play in traffic, handle a live grenade, stand in a field with a long metal pole in a lightning storm - do something to shift your brain out of the twilight zone & into our world.
I'm laughing so hard I'm crying - as Ralph Kramden said "Norton, you are a mental case."
Edited 2/2/2003 9:01:18 PM ET by mickus123
Tell me why the U.S. Supreme Court and State Supreme Courts all say that the occupation of plumber and the occupation of plumbing contractor are different occupations. Tell me why they say that the occupation of electrician and the occupation of electrical contractor are different occupations.
Then tell me why some states or cities require licenses of plumbers or electricians but not of plumbing contractors or electrical contractors.
And your point is?
My point is that you cannot tell me the difference between an electrician or an electrical contractor or between a plumber and a plumbing contractor.
If you could, you would describe the difference between the contractor and the mechanic.
I challenge you to tell me what an electrician makes a contract to do and what an electrical contractor makes a contract to do. And since a property owner can act as his own electrical contractor, what would he do in such capacity?
If 10 (ten) electricians formed a corporation and employed a secretary and an estimator, how would such corporation be paid?
Would the corporation be liable to pay workmen's compensation on it's employees (secretary and estimator)?
Such corporation would not be subject to any contractor licensing laws.
You cant stop moonlighting. However what the first post conveyed was moonlighting on a job you got. In this case its direct competiton to you.
Could this moonlighting affect YOUR normal course of business? Most likely it can. Will your company end up footing the materials cost? the added cost of supplying those materials? Most likely yes. If he/she gets hurt on the job, who pays? The business since your normal course of work will be delayed, this doesnt take into consideration of legal matters.
Once the door opens, what other employees might consider taking the HO aside and offering their services on the side for cheap, undercutting your business?
Isn't the differentiation made clear in the applicable legislation ? What does it say ? Generally there're differences in scope of work; employees; liabilities; contracts; ... It could be as simple as the difference between a hospital and a surgeon..
Phill Giles
The Unionville Woodwright
Unionville, Ontario
ROBERT
in response
"My point is that you cannot tell me the difference between an electrician or an electrical contractor or between a plumber and a plumbing contractor"
a plumber or electrician is a person who works with plumbing or electricity respectively. a plumbing or electrical contractor is a person who contracts to do work involving plumbing or electrical. the plumbing or electrical contractor may in fact be the plumber or electrician or they may send out an employee ( a plumber or electrician ) to complete the work.
the difference between the contractor and the employee would be the license and insurance. in California if you hold a speciality contractors license ( plumber or electrician ) you are required to demonstrate trade experience but a contractor can hire a " green " individual, give them some training and send them out on jobs that they could handle or that the contractor could supervise them.
well there you have it the difference between plumber and plumbing contractor. even in a state where no licensing is required the difference is still apparent
"If you could, you would describe the difference between the contractor and the mechanic. "
I think that the above paragraphs sufficiently describe that.
"I challenge you to tell me what an electrician makes a contract to do and what an electrical contractor makes a contract to do. And since a property owner can act as his own electrical contractor, what would he do in such capacity?"
the above paragraphs also spell out the difference between electrician and electrical contractor, now an owner builder can act as their own electrical contractor but if they are not doing the work and hire it out they need to hire a licensed subcontractor if the value of the labor and materials exceeds 500.00 ( in California). if the home owner hires an unlicensed electrician ( tradesman not contractor ) to do the work and the value is over 500.00 then the owner in effect becomes an employer ( much the same as if a contractor takes on an unlicensed tradesman) and the home owner becomes responsible for all state and federal withholdings as well as workmans comp insurance.
"If 10 (ten) electricians formed a corporation and employed a secretary and an estimator, how would such corporation be paid?
Would the corporation be liable to pay workmen's compensation on it's employees (secretary and estimator)?
Such corporation would not be subject to any contractor licensing laws."
The first paragraph makes no since but I will attempt to interpret you to mean how would the corp be made -
the corp would be made through the usual incorporation rules ( which I know little of ). in order for this corporation to preform work in the state of California in the field of electrical with jobs whose final billing is over 500.00 it would be required to have a license. to get a license it could need a qualifier ( 1 person with over 5 years of experience in the field of electrical ). if this corp had no employees it could file for exemption from workmand comp ( the other 9 electricians each having a share of the corporate stock would not be considered employees), but if the corp had no employees it could not do any work so the corporation would be required to pay insurance on all 10 of the electricians if they drew a check from the corporation for work they preformed. if it was a 10 way partnership they would still need a qualifier but none of the owners would have to be covered by work comp insurance.
in any event the estimator and secretary would have to be covered by workmans comp being that they are employees.
and finally such a corp would be subject to the same laws that other contractors are subject to.
I think that about sums it up.
James
a short response to this
"At what point do you know that the total price of labor and materials is going to be $500 dollars or more?
Pursuant to California's lien laws, those who perform labor are entitled to a lien. Those who furnish materials are entitled to a lien. Contractors are entitled to a lien. Subcontractors are entitled to a lien.
There can be no lien unless there is a debt and there can be no debt unless there is a contract - either express or implied. Contractors, subcontractors, mechanics and material are each entitled to a lien for the amounts of their contracts. If the owner never paid anyone and none of these received any payment, then what would be the total of the liens? It would certainly not be the amount specified in the contractor's contract. Nor would it be the sum of the contractor's contract and the subcontractors' contracts.
Now I ask you James, at what point do you know that the $500 combined value of labor and materials costs is exceeded?
By your own excerpt, it said nothing about the amount of a contractor's contract. It only stated that when the combined value of labor and materials contracts exceeds $500, then the contractor must be licensed. Thus when the lien value exceeds $500 for labor and materials a license is required. However, the contractor is not entitled to a lien for labor and materials. Those liens are for mechanics and material. The contractor may have a contract for $200 and the cost of labor and materials may be $100,000. In such a case the contractor would need a license. The lien value would be $100,200. On the other hand, a contractor could have a contract for $5,000 and the total cost of labor and materials might be $400. In such a case the contractor would not need a license. The lien value would be $5,400. "
the value of a job is readily apparent if you bid a job for 5,000.00 and a contract is signed then the value or amount paid is 5,000.00. if I bid 500.00 for a job that will cost me 5000.00 then I am in big trouble.
about your 200.00 contract and 100000.00 dollar job if the only thing you have is a signed contract for 200.00 than all you can get in the lean is 200.00, now if you do not pay for any of the materials or pay any of the subcontractors they ( subs or suppliers) can lean the house for the works of improvement they put into it as long as they have a contract ( written or implied) or invoice for the goods provided. if the subs are not licensed they can not lean, and they have no right to get paid.
and that's the way it is here, you do not have to like it that's just the way it is,
a question for you ... are you a contractor just trying to argue the finer points of California law or are you an unlicensed contractor trying to justify your lack of licensure. if you are not licensed and get caught in a sting you will be found guilty no matter what obscure defense you try to bring up and you will not even get a chance to take your case before a jury because it is a misdemeanor to contract without a license so you will be arguing a matter of law with a judge, and will probably lose.
just curious
James
The general rule in business is that employees may take secondary employment if; and only if, a) it does not interfere in any way with the job he does for you, and, b) he is in no way competing, or giving the appearance of competing, with your business (even if that includes doing tasks that are not normally the employee's responsibility). To give an example: normally management would not approve any IBM employee, no matter what their normal job is, to accept a secondary position selling computers, servicing computers, or writing programs for computers. That same employee would be allowed to take secondary employment as, for the sake of example, a waiter; provided it did interfere with that employee being able to work OT, travel, work their normal day at full effectiveness, not be in the appearance of conflict of interest (like working as a waiter in a competitor's caffeteria), and not likely to put the company in a bad light.
If there's no way around this, then make sure you take great pains to put any and all work this employee is doing outside of your control at full arm's reach. There's a real liability exposure unless you've conclusively established a complete break with the work he's doing (workman's comp, liability insurance, payroll taxes, income tax collection, permits, licenses, drawings and designs, the list goes on).
Phill Giles
The Unionville Woodwright
Unionville, Ontario
woulld you bring an altenator to your mechanics top guy ? not only is it unprofessional it (i think) can give you an idea of the type of person you are dealing with. p.s it would probably come back to you
I wonder if you could clarify things a little. I would have to assume too much. Your question is partly rhetorical and partly specific, inasmuch as I know you are in the contractors position but your query is worded more like you are the employee. So when you ask, would I do it, Who am I in this scenario?
Briefly, with this little to go on, I'd say you stand a good chance of losing your lead man and your customer.
.
Excellence is its own reward!
Edited 2/1/2003 5:04:05 PM ET by piffin
Apparently the HO has more faith in your lead man than in you. To permit this arrangement is to undermine your role as business owner, furnish ego enhancement for your lead man, and give him the first step in setting up his own business. When the finances of the HO improve, and more men are needed, your lead man will pull other members of the crew to help him. Now the lead man has work,and your crew.At this point, who needs you? Don't do it. It's nice that the HO asked you(most don't), but I would steer away from this one, and find other work,keeping your crew intact.
In this you are the builder. The fact is they want the work done cheaper. Our leadman can take weeks with this project on the side if we let him. There is that much more work to be done. The client doesn't want to have to pay for our whole crew. They just want to pay for the leadman. If we had our whole crew going then we would be out soon, but they don't have that kind of money up front. This way work continues and they don't have to pay us the "crew rate".
The is the first leadman that knows his stuff can run a project and do QUALITY work. Hard to find around here. We are trying to keep a competitive wage etc. The leadman is happy with our company, but yeah one thing we have learned that can change at a moments notice. This guy has owned his own business, but seems to not want to have to deal with the "business" part anymore. To be honest we know he just wants to help the customer out. We APPRECIATE that the employee and HO are on the up and up with us.
Thank for the input!Tamara
You can't compare a small remodelling contractor to IBM. IBM offers a competitive wage plus medical, dental,vacation, grouplife & disability ins. & other incentives to retain employees loyalty.Any small business in the US can at best offer a good wage & maybe a decent medical plan & maybe vacation. If all a guy is getting is a wage [ good wage or not] then throwing them the small jobs that you don't have time to do {by small job I mean a 1 or 2 day job - not weeks of work for one guy} is important to do. It makes them feel that even though the job has so-so or no bennies at least they are getting a chance to make up for it on the liittle jobs - & the boss looks more caring at the least.
A big job like this shouldn't be turned over to your employee. If it was a small extra the customer wanted you could give it to him & tell him what the going rate is so he makes out & the HO doesn't feel they are getting over. Big jobs are your jobs - little jobs can be doled out as a bennie & reward to your employees & a reward to the HO. Your doing them a favor getting the little stuff done - maybe not by you but your accomadating the situation.
tamara, this is not going to turn out well...i've been in your situation... and the problem is your customer has put you in a no-win position..
if this guy is as good as you say... you can afford to pay him overtime and still make money.. so you can keep him happy.. and covered as a bonefide employee..
your customer is not going to be happy.. which will make you unhappy, but your customer is cherry picking... he hired your company.. and is skimming the cream... that's not fair to you.. unfortunate that the customer doesn't have enough money.... but it has taken you years to get to the position where you can actually have an employee as good as that one...
his value is as a lead man.. not as a moonlighter...
the best way out of this is to give him a better opportunity to make money working for you than for working at the same rate for the homeowner... now the choice becomes the employee's choice and you get to wear the white hat instead of the black one...
in other words... the best situation is where the customer asks and the employee says no thank you ...
and in the nature of locking the barn door... make it part of your contract discussion that your employees should not be asked to work for the customer... what's up with this.. how come they hired your company if they didn't have enough money ?
Mike Smith Rhode Island : Design / Build / Repair / Restore
The home owner is willing to pay for the labor, but not your overhead. The crewlead has no overhead, because you provide that benefit. Next, they will say, "bring along a couple of buddies" so we can wrap this up in time for my trip to Bermuda.
If the Homeowner can't afford to pay his bill, how will the crewchief collect? Liens can be one of the most useless pieces of paper you've ever seen, and it always costs money to get one of them.
If the crew lead moonlights on the side, more power to him. If you bid, plan, procure materials, and all the other prep work, so your employee can then cut you out of the picture, that is treason.
I can't afford a Corvette right now maybe one of those guys in Detroit will come by my house and put me one together in my garage, on his weekends off.
This one can be ugly, and you end up looking like the bad guy for preserving your rights and interests. There are three points of view. I can't see into everyones heads so my opinion here could be wrong. Since I'm part blind on the points of view, I have to go with basic principles.
The HO view
They just want it cheaper. What they told you about running out of money may not be true. In pursuit of keeping more money in their pockets, they are willing to do or say anything to get what they want. If this idea can be planted in your leads head along with the question, "what will you do when they find someone else cheaper?" he might realize that working for you is better in the long run.
The Lead view
He went to work for you in the first place to get away from situations like this, didn't he? why does he want to go back into it? He misses being in control. He may kid himself into thinking that he just wants to do them a favor, but he finds the idea of being in control instead of you or Lars appealing.
Your view
This is not moonlighting. It is leaving your employment to pursue his own thing while taking it away from you. That is disloyal and a form of thievery. I'm old school on this too. You ride for the brand. If you start rustling steers from the ranch to put extra cash in your pocket, you deserve to get hung. They are not just hiring one man away from you. If you have set up the company on a lead man organization style, they are destroying a whole profit unit
Moonlighting is a separate subject. That is evening and weekend work. I've turned work sideways to guys to do small jobs to let them make extra bucks and to save someone some money. They do it completely on their own without my tools or equiptment tho. My name isn't connected to whatever happens and I put no time into it. I don't want the liability. Most of us in this industry got started by moonlighting. It's a great way to learn and gain experience and HOs willing to chance it can sometimes save a buck.
In this scenario, you have a HO and a lead who are willing to collude in taking from you what you have worked for. Neither is worth trusting further than you can see. Both should know that if they go that way, they have both broken contracts with you. No hard feelings, just simple business facts. Any new relationship with either should be considered separately as a new one. ie maybe if your lead wants to be an independent sub, you can sub a few jobs to him when and if they are available with part of the contract language that he doesn't get paid if he steals your customers.
So the general principle to apply, in my mind, is how do you tolerate those who steal from you?.
Excellence is its own reward!
I agree completly,I depend on repeat customers and referrals, guys who work for me can do all the work they want anytime they want but not for my customers. It's something your lead man should know if he was in his own buisness,and should have told your customer no right off the bat. He's steatling from you and your customer thinks they're getting a deal.Vince Carbone
Nope. I don't allow side work that directly competes with me for my type of work or my customers. If you do this you are fired. DanT
Given the facts as Tamara has laid them out, I don't think that I would characterize either the lead's or the HO's actions as stealing. If it is, then why are they asking for permission.
All the moonlighting that our employee's do is on their own time. Usually it is for someone that we have no connection with, but sometimes it is for one of our regular customers. One particularly difficult customer of ours has a strong affinity for one of our employees and he has the patience to deal with her. We welcome his moonlighting in this case which provided him with over 300 hours of work for him last year and relieved us of a lot of frustating hand holding.
We have another customer who likes another one of our workers. She wants him working on the job and is willing to wait for his availability. We reserve him for her projects and give him only the help that he really needs. In this case he is billed out by us to the customer as on a normal job. This departure from our normal procedures has preserved our relationship with a good paying customer who gives us an average of $20k of work per year.
I think your question has been covered very well. There is a old saying where I come from "You dont SXXX and eat at the same place". Which somes it up for me. I think the HO and you could find some way of working this financial situation out if they are truly low on funds. They probably are thinking about a way to save money so they can go on that Hawaii trip they always wanted or something.
At Darkworks Customer satisfaction Job One..Yea yea were all over it , I ll have it done by next Tuesday Oh yea I need another draw.........
" If it is, then why are they asking for permission."
MAYBE everybody is really nice and just ignorant that they are hurting Lar's business and crew and production methods.
maybe
But it's more likely that they just think he's either so nice or so stupid that he'll bend over and smile..
Excellence is its own reward!
Roucrumom..... I'm from the old school , I would be loyal to my employer and never think of working one of his jobs on my own. If I was good and wanted more work I'd ask my boss to line me up work that I could do for him. I won"t even go into insurance ,call backs etc. but I would explain to somebody the risk involved . I don't think this lead is as good as people would think. If he wants to do this job hire another lead man and see what happens because I don't think he's going to be around that long anyway. Cheap clients can ruin a man faster than any thing.
Don't do it. You're back dooring yourself and everything you put in thus far. From a legal standpoint, if your lead isn't under your employ for that work, does he have whatever liscences / registration are necessary in your area, does he carry liability for just himself . . . and when word gets out, and it will, what do you say the next time, and the next? IMHO, say NO and try to do it gracefully.
What would the arrangement do with your already signed contract?
" Clothes make the man. Naked people have litte or no influence in society" - Mark Twain
Imagine something goes wrong with the work he does for them. Think there's a chance that the HO's will come after you for redress, because of the unique relationship between you and the lead man, and be/t you and the HO? I think it'd be hard to legally distance yourself from his work and potential liability in this case, especially since some of the work was already done by you. "Your honor, when he installed that board he worked for us, but when he installed that other board, he still worked for us, but just not on this job."
Its undermineing. Point blank. I would tell the hand he had a full time job with me or that customer. Choose one. I would explain to my hand how I felt. Screw the cheap customer that tried to undermine my business.
Tim Mooney
Sorry, but they can't have the lead man, after working all night and weekends, your best man isn't going to be able to keep up his regular job.
Q: If there are 300 man hours of work to do how can there be a saving if only one man does the job?
Q: What happens if your lead man gets injured while trying to do everything himself?
I ran into a similar situation years ago where the HO cried poverty and we took a cut in pay and finished the job. I suffered, and the crew suffered but we thought we were doing the right thing and helped them out. 3mo later we were told by the electrician they had upgraded the new lighting, which included a 12K chandelier in the dining room.
You are being "Discounted", "Marked Down", and they want the same work for less. If they can't cover the cost of the original renovation or the extras they have added, they will have to borrow more money or stop construction. It is not your business to finance the HO. We all have feelings and I know its hard sometimes, but you can't let emotions run your business straight to the Poorhouse.
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