Last night in our class on employees with Becky Reisdorf, a question came about moonlighting employees. This is an ongoing issue for construction business owners.
If you are supplying 40 hours of work each week, I believe you have a right to insist on no moonlighting. There is a clause in our Employee Manual that covers moonlighting. Now, this is a legal issue, and some states might not allow you to prohibit moonlighting. You need to work within the laws where you operate.
If your employees are moonlighting, that means they are working more than a 40-hour week. Are they still able to give you 100% when they work for you? Or do they rest on your dime to be sure they have the energy to work for their dime? That is one reason I encourage construction business owners to calculate the dollar volume of work produced by each employee. When you know that number and it drops, you will be able to deal with that issue right away, not long after the fact.
If you aren’t supplying 40 hours of work each week, it may not be appropriate to deny an employee the opportunity to make enough to pay their bills. But you need to protect yourself first, and that might mean denying them the ability to perform construction-related jobs if they are moonlighting.
If they are doing construction-related work, where are they getting their leads? If they are doing work for your clients outside the scope of your contract, you have a right to complain. They didn’t pay for or develop that lead, but they are profiting from the lead. At the very least, a finder’s fee is appropriate. They are taking work away from your company. It may be a small job that you would not normally want or do, but in economic times like today, you take what you can get.
Make sure there is no relationship between your business and the work they are doing. That means making sure your tools and equipment aren’t being used to build the job. If they are, charge rent and make it high enough to be prohibitive. Now, I’m not an attorney and I’m not sure, for liability protection, that charging rent will “separate” your business from the work the employee is doing on their own. You need to speak to an expert but you get the idea. You don’t want to be held responsible for any work the employee does that you aren’t being paid for. And let’s be real – you also aren’t Santa Claus, why should you supply equipment to another business for free?
Have you checked to be sure your materials are not being used on other job sites? This is far more common than many contractors believe, because some don’t consider it unethical. Imagine that.
If your employees are working on their own jobs and get hurt, can they file a workers compensation claim against you? The largest number of worker compensation claims is filed on Monday morning with no witnesses to the injury or accident. And one more question begs to be asked – do they have their own contracting license? If they don’t, can someone come back at your company with a claim? These are both legal issues that need to be addressed.
Tough questions, but issues you need to watch.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations as needed.
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