employees taking business from you

[WAS]

The key phrase is legally binding agreement. If it is a non-compete, no matter what it is referred to as in a contract, and you are in a right to work state it won't hold water in front of a judge.

It'd be great to see the legislation regarding your right to work. If it's as straight forward as you say it is (and I'm not questioning that it isn't), then I can't see how any larger corporations with real intellectual property valued in the millions could ever operate in those states.



And I still say that if your ex-employee stole customers from you using YOUR list, there's still the oppotunity to file suit, even in a right to work state. If they simply quit and stater their own detailing business and operated it as if you didn't exist and they didn't know you, then maybe you're SOL, but I wouldn't be as worried about that as I would be if they were stealing my customers.

 

[Junebug]

My day job - I work in service sales for a large (13 billion in annual revenue) corporation. Even with a boat load of pricey lawyers, it's not worth going after a field engineer or technician that decides to go into business either for himself or with a competitor. We've found that over half of the customers that do leave (on price) decide to come back after a year. For the small detail shops, I'd just keep a good/honest relationship going.

 

[David Fermani]

If they work for you, then they represent your company. If they were sub-contractors how did you control quality?

Yes, of course they represent my company. But, just because they are sub-contractors, it doesn't mean their work wasn't inspected prior to delivering to the customer. Plus, this was at a brick n morter shop where I supervised all work being performed.

You could also install a GPS tracking system on the mobile rig so you know where it is at all times.

It could help, but it doesn't deter them from setting up multiple hidden details at an already established location? That's why knowing your customer and staying in communication with them during the experience can be valueable.

 

[Nth Degree]

Yes, of course they represent my company. But, just because they are sub-contractors, it doesn't mean their work wasn't inspected prior to delivering to the customer. Plus, this was at a brick n morter shop where I supervised all work being performed.

I don't know the details of the situation, but there are certain requirements to qualify as a sub-contractor. If you were supervising work in your own location you were walking the line at best and more likely were improperly classifying "employees" as "sub-contractors". Anyone considering hiring sub-contractors should consult an attorney to make sure they are within the proper parameters.

 

[David Fermani]

So what you're saying is that a Contractor can't supervise and inspect their Sub-Contractor's work?

 

[Jean-Claude]

As you know, you get what you pay for.

CA does allow non-competes...



I was thinking about a truck mounted video camera I can check out on my home computer



monitoring supply use and towel use...when two towels should be used per car, and there are 15 towels used, but only 4 cars scheduled, something fishy is going on!



obviously its got to be worth it to work, otherwise no one would be employed! my payout model should be pretty enticing since I dont want to be doing the work, but rather administering it!



Now to find an employee or two. I have recently talked to about 6 people and none are going to be able to fill the need

 

[MichaelM]

So what you're saying is that a Contractor can't supervise and inspect their Sub-Contractor's work?

The IRS is cracking down on this big time because of the unemployment benefit ramifications. You really need to be hands off with subs for them to be considered such or else you are fined for all the taxes you should have withheld. It's not really conducive to this type of business anymore.



Here is a blub about some of the guidelines that the IRS uses to determine whether or not your subs are considered employees.



"1. The IRS has developed a list of 20 factors it uses to test employee or subcontractor status. The Department of Labor and state boards will normally follow these as well. Here are some highlights you should be aware of before deciding to call an employee an independent contractor. Does the business require the worker to follow their instructions on how work is to be performed? Does the business provide training to the worker? Does the business require the worker to perform all services personally? Does the business set the worker's schedule and hours? Does the business require the worker full-time? Does the business provide the workspace? Does the business pay by the hour, week or month? Does the business pay expenses? Does the worker have profits and losses independent of the business? Does the worker have multiple clients? Does the business have the right to discharge the worker at any time? "



From here: Subcontractor versus an Employee withholding tax rules



IRS Guidelines: Independent Contractor (Self-Employed) or Employee?

 

[Nth Degree]

The IRS is cracking down on this big time because of the unemployment benefit ramifications. You really need to be hands off with subs for them to be considered such or else you are fined for all the taxes you should have withheld. It's not really conducive to this type of business anymore.

Exactly!



What happens when a customer comes back a year later when their clear coat has failed and it was discovered the paint was thinned by the polishing, thus voiding the warranty. Do you require the sub-contractors to use a PTG. If so, they are an employee because you are dictating how the work is performed. You are stuck accepting responsibility either way, but one way gets the IRS involved.



And since this is a thread about employees stealing customers, if a customer learns it is a sub-contractor working on their car why wouldn't they save a little money and pay the sub-contractor themselves. You are a detail shop and they are "professional detailers" with their own businesses. Why would you help your competition find customers?

 

[David Fermani]

The IRS is cracking down on this big time because of the unemployment benefit ramifications. You really need to be hands off with subs for them to be considered such or else you are fined for all the taxes you should have withheld. It's not really conducive to this type of business anymore.



Here is a blub about some of the guidelines that the IRS uses to determine whether or not your subs are considered employees.



"The IRS has developed a list of 20 factors it uses to test employee or subcontractor status. The Department of Labor and state boards will normally follow these as well. Here are some highlights you should be aware of before deciding to call an employee an independent contractor. "

Does the business require the worker to follow their instructions on how work is to be performed?

No. Each worker is a skilled professional and is fully aware of how to complete each piece of work.

Does the business provide training to the worker?

No formal training, but support is offered on a "need to" basis and to make sure the final bill is within the desired parameter.

Does the business require the worker to perform all services personally?

No.

Does the business set the worker's schedule and hours?

No.

Does the business require the worker full-time?

No.

Does the business provide the workspace?

Yes.

Does the business pay by the hour, week or month?

No. Per job.

Does the business pay expenses?

No. Worker is responsible for all work related expenses. (tools/supplies, etc)

Does the worker have profits and losses independent of the business?

Yes.

Does the worker have multiple clients?

Yes.

Does the business have the right to discharge the worker at any time?

Yes.



Plus, the “worker” is actually a separate business with a separate business name. Payment is issued to their business which can be comprised of multiple workers. They one signs a Sub-Contractor agreement making them aware of these parameters.

What happens when a customer comes back a year later when their clear coat has failed and it was discovered the paint was thinned by the polishing, thus voiding the warranty. Do you require the sub-contractors to use a PTG. If so, they are an employee because you are dictating how the work is performed. You are stuck accepting responsibility either way, but one way gets the IRS involved.

Not likely on dealer used cars?? Plus, factory clearcoat is only under warranty for the 1st year anyways, so that’s a mute point in your example. I can’t see how the use of a PTG(a tool used in detailing just like a polisher or a vacuum) can be considered “dictating how the work is performed”? That like saying a sub-contract Carpenter can’t use a level or a tape measure?

And since this is a thread about employees stealing customers, if a customer learns it is a sub-contractor working on their car why wouldn't they save a little money and pay the sub-contractor themselves. You are a detail shop and they are "professional detailers" with their own businesses. Why would you help your competition find customers?

That’s a pretty unethical example actually, but I suppose it could happen. Just like when you buy a door from Home Depot and use their sub-contractor to install it and you solicite them for future work. It’s called a conflict of interest and would be grounds for immediate discharge and end of contract.

 

[autoconcierge]

This is why a quality driven based business is so hard to expand, BTDT and with people added to the business character trumps skill set as this is the one component most people lack. Eric you will have to to do the best you can in this regard as if you do production work the wage scale you can afford to make it profitable brings in the guys that have no clue on anything, thus it is a "Entry level" position and all you can do is set expectations and be prepared to "REPEAT yourself daily" if not hourly...........good luck.

 

[WAS]

David, how does the employer not set the hours of work ? Just curious because you said no to that question....

 

[C. Charles Hahn]

Sounds like the way David ran his detail shop was similar to the way a lot of barber shops work -- the barber is a licensed professional who simply rents the chair from the owner; in this case the detail technician is a business entity who is just profit sharing with the shop owner in order to have the right to operate there.

 

[David Fermani]

David, how does the employer not set the hours of work ? Just curious because you said no to that question....

Simple. You don't mandate a set schedule. I had some people get in @ 6am, others 10am if that's how they chose to run their business.

Sounds like the way David ran his detail shop was similar to the way a lot of barber shops work -- the barber is a licensed professional who simply rents the chair from the owner; in this case the detail technician is a business entity who is just profit sharing with the shop owner in order to have the right to operate there.

Kinda exactly. I also know of a successful tattoo chain (Eternal Tattoos Eternal Tattoos and Eternal Ink ) in the Metro Detroit area that operates his business with sub-contract labor. I'm quite sure he's operating within the limits of the law too.

 

[Nth Degree]

I'm not saying it's not possible to do with sub-contractors. I'll just repeat:

Anyone considering hiring sub-contractors should consult an attorney to make sure they are within the proper parameters.

 

[WAS]

Simple. You don't mandate a set schedule. I had some people get in @ 6am, others 10am if that's how they chose to run their business.

I know you had a volume shop, but did you have retail customers ? I ask because I don't understand how you would be able to set appointments and organize a workday without knowing if or when your sub-contractors would show up.

 

[David Fermani]

I never said I didn't know "when" or "if" my workers were going to "show up", I just said they didn't have a schedule. I also had wuite a bit of retail work, but they dropped their vehicles off. We weren't like a express detail shop/car wash where people waited while their vehicles got cleaned. We fit them in between the dealer cars, but unlike the 24hr turnaround time dealers were promised, customers usually had their vehicles back to them the same day.

 

[Richie's Custom Detailing]

If I had employees, this would be my deterrent against stealing.

:cooleek:

 

[Barry Theal]

Respect your employees and don't give them a reason to steal.

 

[WAS]

Richie: .50AE ?

 

[Richie's Custom Detailing]

Richie: .50AE ?

Yes it is!