Employee Side Projects in Your Shop

Thoughts on whether to allow employees to use shop equipment for occasional personal projects. November 13, 2009

I’m curious about what you guys have as rules for home projects for employees. Do you use any shop tools? Do you buy materials through the company? Do you give away excess material? How about times? What about jobs they do on the side? Any help is appreciated.

Forum Responses
(Business and Management Forum)
From contributor G:
I would disallow use of the shop and tools. I see no problem in employee's buying materials through the company, as long as you cover all of your costs. Excess (or "waste") material is a double-edged sword. Like you, I hated to see material go to waste but I also did not want to encourage my people to deliberately cull/waste material for their own benefit - which some will do. Any side work which competed with my company was grounds for immediate dismissal, no questions asked.

In short, the more you can direct your employees' questions to your written employee policy for answer, the easier your life will be. A well written employee policy means you don't have to spend time answering the same questions from different employees, and mentally making sure you keep all of your "niceness" spread equally amongst your people. In my experience, you're better off to find other ways of being a "nice boss", for as soon as you begin to feel as though you are being taken advantage of, your attitude begins to change for the worse, and that isn’t good.

From contributor O:
The problem you run into is once you start, how do you control the size of the job? One employee wants to build a jewelry box for his mom. Then the next guy wants to build a dining table for his girlfriend. Before long someone is building a kitchen and taking up your shop space. How do you control the size of projects once you allow anyone access to your shop? Do you only allow them to do projects that are considered to be gifts? Are they doing paid projects and using your tools, blades, bits, materials and etc. What do you do when you come in one morning and your shop space is taken up with half a kitchen?

If you have several employees who do you say no to, and who is allowed to use your shop. Over the years I have discovered it is too difficult to police these situations and there are too many who take advantage of it to make it worthwhile. I have allowed employees to cut up parts during their breaks but they have to take it home and build their. It becomes a "but he got to build a dining table," "why can't I build a set of chairs” situation. Where do you draw the line?

From contributor J:

Interesting dilemma. I actually give my guys an opportunity to do smaller residential projects (we do 95% commercial) that I don't want to be bothered with. They throw me money for the utilities and they get to put a few bucks in their pocket. I would not allow a kitchen, but vanities, a couple of panels/doors and etc I give to them. It creates a good workplace environment at our shop. It may not work for all shops and a lot depends on the character of your guys, mine are solid people who I trust.

From contributor T:
What matters is the owner’s attitude. If you feel exploited then say no, it is not worth the annoyance to you. If your 'cool' with the idea and don't mind the annoyance with letting folks know there are limits, and then in a good humored way enforcing them, then say yes and most likely it will be appreciated by your employees. On the other (now third hand) if you need that appreciation to feel good about yourself you will not receive it from every employee in equal measure, and if that bothers you again say no, or is that too new age?

From contributor Y:
At my first woodworking job some 25 years ago, personal projects were encouraged, and this played a big part in my development both as a self-directed cabinetmaker and later as a self-employed shop owner. Recently a helper wanted to use the shop for a couple personal projects and I helped him along, bought the materials and deducted it from his pay, and tutored him where needed. One was for his house, one was for pay. If the person is already a good employee, this can work to the advantage of both sides. But you have to be real clear on ground rules. I wanted to be informed whenever he was using the shop after hours, and he had to clean up entirely after each personal-use session. If I had two or three guys wanting to do the same thing, I can see how it would definitely become a problem, and it might not work as well, or at all. In a two-three man shop I think it makes sense to encourage any and all initiative.

From contributor R:
To contributor Y: the rules may be different around the country but I know in NY (in a shop I was in) there was an employee that had money taken out of his check for a similar situation you mentioned and when he left he filed with labor board and won for all deductions like this. We were not allowed to take anything from his paycheck.

From contributor B:
There are too many risks involved with allowing "employees" to work on their own projects during non business hours for this to be a good idea. If the "employee" gets injured while using your machinery that you gave him permission to use on his own time, the insurance company will not view the injured person as an employee and workman’s comp will not cover the injury. This is a very dangerous position to be in for both you and your company. Read your insurance policy. Run the job through the shop just like you would any other job (contracts and all). Offer the employee a percentage of the job's profit or a straight commission for all the work they bring in. You should have a written policy on this in your employee manual. If you don't have an employee manual you should write one now.

From contributor S:
As with so many things in this business, it comes down to two camps. The management heavy, tightly controlled factory environment with all details pre-determined, with the narrow path set. The bottom line is the top line, and all things follow suit. Or the more laid-back, creative, diverse environment that encourages a different approach to the work to be performed, whether bench work, teams, or other means of flexible organization.

Both have to make money, but it is obvious that the larger firms in a tight market segment must control all the variables they can. The smaller (generally speaking) shops can still be profitable with the more diverse workforce and product mix, perhaps concentrating on skills over productivity to establish market presence and profitability. No one answer fits all, but good dialogue nonetheless. Either of the two policies, or any middle ground needs to be thought out and clearly explained so everybody knows what to expect.

From contributor R:
Why let them do work for themselves, we're too busy exploiting them for our own purposes and that leaves no time for their work.

From contributor T:
In classical terms wrong direction. We live in a system in which the means of production, the factory full of equipment is in the hands of individuals, who, for better or worse, are able to exercise the traditional rights of ownership, which includes the right to say who can borrow it. The alternative system in which the means of production were in the collective hands of the people was an intellectually interesting experiment, but it failed.

From contributor R:
Right, experiment failed, you keep on telling your guys the only thing they can do in your shop is make money for you, let's see just how they like that and how they respond to you, they should be primed to produce for you, let me tell you.

From contributor C:
It needs to be a case by case basis, for my best, we actually work some items in through a run of work. Our least productive get's no approval, period. The reason is explained - his production has soared. He gets better every day. The ability to earn the right to work on a personal project is just that, earned , case by case, basis only.

From the original questioner:
We don't mind home projects. People can buy materials (pay up front) through the company and can work on them on their own time and all such work is scheduled during off hours. It's really not abused as they know the rules and abide by them. No one works alone in the shop. If they are not checked out on a machine, they have to get one of the trained guys to run it for them.

The "scrap" used is approved by me. It beats having to pay to have it hauled off and it helps them. Everyone pretty much helps one another. It seems as though someone is making something almost every day and they all appreciate the opportunity to do it. Not much side work goes on, it's usually for their own use. We are commercial only so there is no conflict when they do residential side work. It seems as though most of the guys do initial machining (cut, edge, mill, drill) here and do final assembly type work at home. Most of the guys have home workshops anyway. My take is that if it makes them happy and it doesn't hurt the business, it's a win/win.

From contributor O:
I fail to see how providing employment for people and paying them to do a job is exploiting them. Everyone is free to be an employer or an employee, which also means that without one you don't have the other. It is beneficial to both parties to get along so that both can make a living and enjoy what they do. There are other ways to show an employee that you appreciate their efforts without handing them the keys to your shop.

From contributor B:
When I was an employee I never expected more from my employer. I was hired to perform certain duties and in return I got paid the agreed upon wage. When my performance consistently exceeded my employer's expectations I would ask for a raise. My performance and attitude would remain the same regardless if I was awarded a raise or not. I never once got paid what I believed I was worth. I always got paid exactly what I was expecting and every now and then I got a little something extra that I wasn't expecting, a bonus.

From contributor T:
Again, it is called capitalism. The other system where the people own everything is called communism. It was tried and failed, for a dozen reasons. The employee is not in all that bad a shape here and now. Compared to the unbridled capital of the 19th century, ala Dickens, the list of government provided benefits, including social security, workers comp,wage and hours laws, OSHA, and so on make this country the worker's paradise compared to the old soviet system which promised that but did not deliver. It is driven totally by a system in which manufacturers of all kinds provide employment and in effect mark it up to the consumer. That is a good, not a bad. Any system can be abused, and has better and worse areas, but the capitalism/socialism blend we have achieved is by far the best. Best by any measure you care to offer. Do you disagree?

From contributor C:
Greetings all, when I was an employee I couldn’t understand why an employer wouldn’t allow me to do a project of my own in their shop. When I became an employer, I understood why I couldn’t allow an employee to do a project of their own in my shop.

From contributor O:
In our building there are two other cabinet shops, and the guy down the end allows his guys to build projects of their own. About six months ago he had a customer come into his shop to get a quote on a kitchen. The customer came back for a second visit to go over changes etc. While there, one of his employees came into the office and it turns out the customer knew his employee. He didn't get the kitchen job in the end, and the customer asked his employee if he could do it. So he ended up losing a job to his employee, who was using his shop to build the very same kitchen. I can see allowing employees to build things for themselves, but I still have a hard time setting up a shop for someone else to make money with.

From contributor R:
I've been here six years and I couldn't disagree with your views more. I have no problem if a shop owner wants to let their employees do side work in their shop, but you are the one on your high horse telling us all we are wrong if we don't allow it in our shops. That is by no means exploiting our employees, you have a very polarized viewpoint. In the end, it is the employers call, after all it is their shop.

From contributor Y:
I don't know about all of you guys, but I didn't rent a building, stock it with tools and supplies, hire employees whom I have to pay whether they really work or not in order to provide those same employees a place to pursue their hobby crafts or be in business on the side. Tools wear out, machines break, accidents happen, am I supposed to bear that cost for my employees sake also?

From contributor U:
Having owned a few businesses along the way, I have to say that the general advice offered by various people to avoid totally unnecessary and extraneous liability is very good advice, indeed. There's no such thing as an "employee" who is not being paid because he's working in your shop on his own time. He may as well be some guy off the street at that point. Workmen's compensation only covers payroll hours. Business liability insurance only covers business operations.

If you allow someone to use your shop for his personal purposes you are risking your company's and your own entire net worth, the only distinction being whether or not you're organized as a sole proprietor or as some corporate form of business, but that may not matter. Make no mistake, if something bad happens, every possible entity will be sued and any corporate "veil" may be pierced. While it might be a nice way to reward a valued employee, the potential risks are absolutely horrendous. Surely there are better ways to reward productive employees.

From contributor S:
For the sake of the discussion, does anyone have a first-hand experience with the issue? Has anyone had an employee doing his/her own work, off the clock get injured? How did it turn out? Firsthand experience only, just to weed out the propensity for elaboration/inaccuracy. My thought is that, while easily prevented, the fact of someone getting injured with further negative results for the company is like a lightning strike -rare, but possible.

From contributor K:

Very few of us started out as an employer, but rather an employee, so employers are more apt to see "both sides", much to the disagreement of employees. Personally, although we are not big on "discounts", we will take on an employee’s family/friends project at a "discount". Our reasoning is for this that there was no marketing/customer acquisition costs associated with it, so the family/friend gets their project at a "discounted" rate, we keep the production chain running, the employee looks good to his family/friends, and the family/friends get a good deal and someone they know working on their project, and the employee gets a referral fee – that’s a win/win. Otherwise they can set-up shop in their own garage.

The reason we don't let employees do personal projects, beyond all the legal, financial and logistical problems, is that if they are going to work a second job after hours, whether they make money or not, it is very unrealistic that:

1. They will not become a danger to themselves and others, as they will not be as sharp working with dangerous machinery. There is only so much the body can do.

2. Their normal production capacity will not be affected due to the amount of extra physical hours putting extra burden on their fellow employees and the company.

From contributor X:
For twenty eight years we have allowed employees to use tools and equipment and buy material (at our cost) for personal use as long as approved by the president and or designee. It's always worked and gives the employee another benefit for working here. At no time is the manufacture of anything which is sold by the employee allowed. They certify this in writing.

From contributor W:
We have employee weekend, one weekend per month. Each employee pays $50 to work on personal items that weekend and one thing it makes is a better run company. We even BBQ that weekend and no one is boss or owner and we have 30 employees. Another thing we do is give each employee his or her birthday off with pay and $100. The owner of the company thought I was nuts to offer this to employees five years ago, but production is through the roof and now we offer three paid sick days per year and every holiday is off with pay. I can say this company has the best devoted staff you have ever seen. Squeezing your employees is not the way to save a buck it is the best way to lose money.