With a tougher economy, rising financial pressure and less overtime, field employees doing “side work” and competing with employers is a growing issue. Throw in an environment with more and more subcontract installers and things are even worse. Side work is not a new phenomenon; it has been going on forever. As employers, we have to be realistic about this issue. Clear guidelines and open lines of communication are a must. Looking the other way and pretending you know nothing encourages abuse.
In some ways side work is similar to asking employees to work overtime. Some employees can never work enough overtime, and others don’t want to work any. Some employees always need money and others seem to have enough. Understanding and communicating with your workforce is a key ingredient when dealing with the problem.
Start by being realistic regarding your workers’ motivation and career outlook. If you employ immigrant workers whose primary motivation for working in this country is to send wages home to their families, then they have a different motivation than a young person who is looking to build skills and move up through the company. If your employee’s only goal is to learn the trade and then start his or her own business, here lies another career objective. Employee cultural issues, career objectives and your company communication and culture all dictate how this plays out.
Establish Ground RulesRule No. 1: If it quacks like a duck, walks like a duck and looks like a duck, then it’s a duck. Make it clear to all employees that any form of business competition against the company or use of company resources is automatic grounds for dismissal. Make it clear that workers will be automatically dismissed if they:
• Use company vehicles and tools on non-company jobs.
• Print a business card, have a business license or have any other form of advertisement or official business documentation.
• Do any outside work of any kind for any of your customers.
• Ask any employees to work with them on side jobs. If that employee does so, communicate clearly that both will be dismissed.
• Do work for a neighbor, relative of a customer, or another contractor.
If work on authorized jobs where exceptions have been made, such as working for their mother or father, causes an employee to miss work, they will be automatically dismissed.
Make these rules clear, publish them and send notices home in writing so spouses also understand the liability. I am not a labor lawyer, so you can’t consider this legal advice; you should always seek legal counsel regarding termination issues. My understanding is that asking a field worker to sign a non-compete does not work, because you cannot restrict someone like a painter or roofer from working for another company, and it will not hold up. People have a right to make a living. In other words, it can be very difficult to stop a non-management employee from going into business for themselves or working for a competitor. However, what we are referring to is a different issue, as you are ensuring employees do not compete with your company while under your employment. Again, when in doubt, seek legal counsel.
SubcontractorsRegarding subcontractors, first make sure you follow all the legal guidelines regarding that they must provide their own tools, equipment, trucks, manage themselves and have an opportunity for profit and loss. In addition to that, have a contractual understanding of when they can and cannot work for your customers and what financial damages are if they break those rules. Since you are now “employing” subcontractors, dismissal is a simple way to handle the problem.
If you let employees take trucks home and worry about their doing side work in your trucks with your tools and equipment, technology also offers some opportunity to control employee whereabouts. GPS can be a powerful tool in tracking trucks and their locations. Cell phones also are developing GPS and tracking options.
For many companies, the real policy regarding side work is to understand that employees do some of this type of work, and to look the other way. Again, there are ways to clarify when this is OK but rules can get difficult to interpret and enforce. For example, you may have a rule that employees can work for family and friends. This seems reasonable but can be difficult to control. Some companies offer a referral or finder’s fee but such things can open a can of worms and again be difficult to control. Also, remember that using your truck and tools increases your liability even if it was unauthorized use.
So how do you manage all of this? Go back to the quack like a duck rules. If the employee looks and acts like a competitor, then they are a competitor and have to be terminated. It is just that simple. The real issue is communication. Clear precise rules of communication are your weapons of choice when it comes to controlling side work. Make it obvious as to what you consider inappropriate and without a doubt let them know violations will lead to automatic dismissal.