Here's a long thread about what terms an employer should set for allowing an employee to build a personal project in the shop. February 11, 2009
Question The wonders will never cease. One of my employees asked to build his sister’s cabinets in our shop. (We have let our employees build things after hours before). We ordered all the materials, he used all equipment, including a spray booth to finish all the cabinets.
His materials we ordered came to around 10k and I added on $2,500 for shop time. I programmed his parts for the CNC, the rest I figured was for wear and tear, heat, lights, and etc. Do you think this is a fair number? He is mad that I charged the $2,500 for the shop time. What do you think, and how do you handle employees working in your shop after hours? He is one of our best cab men and has been here about 18 years. Thanks for all your help.
Forum Responses (Business and Management Forum)
From contributor T: It seems like you have been more than fair. I would however, suggest that letting employees do this kind of work in your shop almost always results in someone being unhappy. What if he had gotten hurt while doing this?
From contributor A: I would let them but I would do as you did on a large project. But I don't know about letting them do a kitchen. In the past I've always let them do small projects. I’ve never had one ask to do a large one. But if I did the CNC programming and it took more than 30 minutes or so, I'd charge them for it. Or let them use it as a learning tool so they could learn to program the CNC themselves. Then I'd check it over before cutting. You have to do something.
From contributor K: All my employees have had to do is pay for their materials. I never charged them for shop time, or my time for that matter, on any project that was for them or their families. If it was a side job that they were getting paid for I would most certainly charge them. But because they want to stay and do the work, and learn from it, it makes them better builders for me, so anything they can do to learn or anything I can do to teach them is most certainly welcome.
My jobs become better because of their growing education. As far as getting hurt, they are working on their time after hours and are not on payroll. It wouldn't be any different than if they got hurt in their own garages doing woodworking. I owe my employees the world for sticking with me and growing with my company. For that, they can build whatever they want for the cost of materials.
From contributor S: Why should he care about a few bucks for shop use? I bet he didn't bring in his own blades and cutters either. You paid for things you never knew about too. Besides, he's not donating the $10 K to his sister either. Additionally, if he gets hurt in your shop, whether on the clock or not, whether he had permission to be there, you would be liable. Frankly, a vanity or entertainment center I would look the other way, a $45K kitchen is a bit nervy on his part in my opinion.
From contributor P: Contributor S has my vote. It’s too big of a side job really. His side job should not cost you money. I charge for materials, actual cost, plus 10% of the price for shop use. I mean 10hp compressor, 15hp dust collector, blades, sand paper, glue, finish materials, it adds up. I get cash and that’s my gravy. I make them get it done quickly. I don't want their job sitting around. The only thing is you should have told him up front of your shop use charge, sounds like you didn't.
The last job that went through my shop was a full size kitchen which I was a little uneasy about. The job was for my low man's family and my low man and my journeyman built it. They argued about the money, the low guy thought he should get half the money, the journeyman thought he should get more since he was running the job. The low guy just built drawers, shelves, and sanded. They worked it out after all, but it’s risky. And your right, what if someone gets hurt?
From contributor H: I have produced many of my own projects in other shops over the years - some where I was an employee, others where I do a lot of their work in their shops for them as a sub. I have always made certain that they picked up a nice chunk of change for the "rental" time. Not just costs associated with it but also profit for them, and generally more than they would have hoped for, but I insist and cut them a check. This way it has always been win/win. Seems he did not understand up front what your expectations were and that is where the problems began. If it put him in a bind (financially) after the fact then you can understand why he is disgruntled. Talk it out with him, and help him to see why you feel this was appropriate. Next time discuss it upfront.
As far as liability, there really should not be any, but anyone can sue anyone. If you are going to continue to allow this practice then a signed waiver of liability form should be able to cover these issues.
You have nothing to feel guilty about but you should try to smooth over the ruffled feathers of an employee you have had a longstanding relationship with, for both of your sakes. Remaining silent can really backfire.
From contributor B: Making a foot stool or something small is one thing but producing a 45K kitchen isn't going to happen. Fabricating cabinets is what you do for a living I wouldn't have let it go through my shop in any manor except full payment - too much money's worth.
I built a kitchen for my son's in-laws and charged full price. One afternoon I found him making Corian window sills out of my material. The expectation because he was providing the labor was that it was free. I billed them for shop time and material less his donated labor. It’s not right to expect something for free.
From contributor K: Our policy is that we allow employees to do anything for their own personal use for the cost of materials. We see it as a fringe benefit of working in a cabinet shop. Anything for friends and family simply receives a 10% discount. If friends and family want to come and work on it in the shop with the employee, then we will let it go for the cost of materials.
From contributor S: Assumptions are always a recipe for disaster. He assumed he would not be charged for all the shop time, etc. You assumed he would be willing to pay for something which he was unaware of. You should have told him that building the kitchen is above and beyond the normal boundaries of what is allowed, and that you would have to charge a small amount to cover this. He should have asked if there would be any other charges considering the scope of the job. Relatives, employees, and friends in this day and age expect too much from others. If I wanted my friend to help fix my car he would be compensated, either with money or a piece of furniture to keep the slate clean. People need to learn to pay their way, and then life's little surprises will be few and far between.
From contributor E: You were more than fair. Wonder what he charged his sister. That $2,500 must come from his profit. It’s funny how they don't like when the table is turned on them. Now he should know how bosses and owners feel lots of times when they feel employees are cheating them.
From contributor R: Our policy is that employees are allowed to use the shop for personal projects if they provide all of the materials. They can usually get our pricing from our suppliers but we won't finance the purchase, they pay cash. They can use the shop after hours only, and there must be no trace of their work when the shop reopens the next day. This eliminates larger jobs. We've had no problems with this policy. It's written in our handbook and we don't make exceptions.
From contributor C: The shop i used to work at it was 10% of profit and he would carry materials till you settled out. It alleviated all headaches. Unless you were doing something for yourself or immediate family then it was just cost of materials.
From contributor W:
One way to deal with this issue is to run it through the shop like a regular job, and give the employee a very generous discount. That way the job moves on through and out of the way. He gets a deal, the sister gets a deal, you get some reimbursement, but mainly, the job gets behind you. I bet he didn't complete this in two days of working after hours. Most of all, a good heart-to-heart up front might have alleviated some of the conflict. An 18 year employee is someone you want to keep happy and on your side.
From contributor O: A 45k dollar kitchen here is a mansion. In fact the most expensive kitchen I have ever done was around 42k. As a brother I would never charge my sister to build her cabinets, or any work for her (them actually). They are here for me as family and it is the least I could do. So if they are paying for materials then it would be an honor to build their cabinets. In fact I was building an entire house for my parents at one point for free. So if he is charging his sister to do the work then you need to look at it differently.
Family or not it becomes a paid side job. It's extra income for him. He should be liable for paying for blades, etc. Screws, glue, etc should be part of their material costs and they should purchase that stuff on their own. A 45k kitchen would take a few weeks for my 2-3 man shop to build, and it would fill it up. So then it becomes a space issue. They would be required to take the cabinets elsewhere once assembled, and wouldn't be able to finish in my shop. That way they don't impede on my business. If he didn't charge his sister and is doing it as a good will thing then it will be a good experience for him, and he shouldn't have to pay for anything but things that need re-sharpened or replaced.
I'm not sure where all the maintenance fees come in. I've been cabinetmaking for a long time and a can of Bostich spray silicon, some grease and a dust collector keeps my tools running fine. When I am busy my blades rotate out to the sharpener weekly. So he either owes you a cut because he made big bucks, or he owes you $100 for little things. This is why everything is getting out of hand financially everywhere. Everything is about money, and not helping each other. Of course I am the guy who would sub out to a fellow cabinet maker if I was very busy and he wasn't. And that is why I'm probably going to go out of business soon.
From the original questioner: A lot of you made the point I was trying to make to the employee. It is not his new kitchen and vanities. It is his sister’s. We know his sister and brother in law, and have worked for them before. If he would not have done the job after hours, they would have come to us to do it. I let the employees do small things for cost of materials only. This one we told him we would charge something for the shop use. We ordered the lumber in, he put it on one of our lumber carts and parked it by his bench for four weeks, while we worked with one less lumber cart (out of a total of seven). The other employees helped unload trucks when they came in, had to work with less space on days he didn't get the stuff done and moved out, etc. I see the other side also, you've worked here 18 years, I make you money, etc. We are going to sit down and discuss.
From contributor J: Do you guys really respect your employees? If the guy has been there for 18 years and has been loyal to you (he has probably made you more money than the $2,500.00 over the year) he should be an asset plus you said he is one of your best guys. If he was not doing something for his family then yes charge him but family is family (18 years I would consider that employee almost family). We let our employees make what they want as long as they pay for their raw materials.
From contributor J: I've let my employees do small jobs for home and one guy built a communion table for church. I've never been asked about doing a whole house full of cabinets before and this thread has given me great insight into how to deal with it when it comes up. Bottom line is, this guy's given you a great opportunity to be in a bad position. You were a nice guy trying to do the right thing and I don't think it was unfair for you to charge. A kitchen that size cost you money! I think I'm going to pass.
From contributor N: First off, I think everyone is reading too much into the fact this kitchen is for his sister, or that she has money, or it’s a 45k dollar kitchen. Granted I work in a much larger shop (over 100 employees), so I’m not sure how smaller shops handle stuff. You need a policy for non worker related work by employees. My shop is 10% over cost of materials, and work on it in your own time. We have lots of space, so it’s not so much of a problem.
What you need to do is set a standard and stick to it. If someone wants to build themselves a few garage cabinets, 10% over cost of materials. If their neighbor wants some - same thing. If his sister wants them that’s fine - same price. If he wants to build a set a weekend and have a small second business, as long as he is working his day job fine, pays you on the terms you ask, then what’s the problem? You are buying more from your suppliers, possibly lowering your price. You could bill those materials to another job and write them off. I understand the small materials issue as well as electric, ect. Just set a rule and stick by it.
Now for those saying people who wouldn’t give anything for free to their family. What? I’m glad I’m not related to you. I would never charge my family anything. They can buy materials, and I’ll do the work. I might get lunch, or they might buy me a tool that made the job easier, but I won’t charge them. The same goes for my friends, church, and neighbors I like. That’s what is wrong with the world today - no one wants to help anyone. These people who won’t help out are the same people who get flat tires on the highway and no one stops. It all comes back around, at least I believe so.
From contributor J: Seems like most everyone wants something for nothing. Even people in the cabinet trade somehow think " hey it's only wood and labor what could that cost". Our customers and employees somehow think cabinets are way overpriced, and that is at any price no matter how low you go. An electrician or plumber could charge $15,000 for a job materials could add up to $3,500 and customers accept that. I get people who now want to recycle the plywood parts in old cabinets into their new cabinets (to feel good about saving the planet) and of course this alone will save them a ton of money. If this guy continues this fight over the $2,500 and creates new problems in the business, put his position up for a new hire. His sister is making a killing taking advantage of her family with this one.
From contributor S: The whole topic is a slippery slope. If you set a policy that allows employees to build projects of that magnitude, where does it stop? If you have an eighteen year employee building a kitchen, what is the three year employee allowed to do? Can he only do coffee tables because he hasn't been there long enough? How do you police the whole situation, and for that matter why would you want to?
I worked for car dealers in my youth and one dealer set Wednesday nights for employees to work on their own vehicles. It didn't matter if it was their sister’s car but if they weren't done they had to wait until the next Wednesday to finish . I guess it can work, but you better have responsible employees who remember to clean the spray equipment after use, and put the right saw blade back in the saw, etc.
I had an employee once build a cabinet and he had 18 drawers in it, so he used up all of our 20" drawer slides but didn't tell anyone so we had to take the time to go buy more at a time when we were in a rush - I wasn't pleased . It is an ok idea as long as it doesn't interfere with regular business and become work for the management. It unfortunately doesn't always work out that way. Understandably the bookcase they want to build is the most important thing to them, and the $40,000 worth of cabinets the business has to get out is not.
From contributor P: Look at the situation from the perspective of the other employees. The 18 year guy was given a big bonus, and they had to work around his stuff and help him deal with it for four weeks. Everyone would be better served if personal work were kept out of group shop space. This may seem less family-like, but it sure is less complicated.
From contributor S: After reading through this it seems like whatever an owner does someone isn't happy. While I have been doing wood projects all my life, I just recently became a "business" after retiring from another field where I owned a shop for forty years. I have built many kitchens for friends and relatives either at or at cost plus some new toy they left at my shop as a "thank you" such as a router table, shaper or drum sander.
From contributor W: Let's say you worked out a deal with your lumber supplier. They are going to let you come up and pick out your own material, you drive the forklift and you load it. You get it at their cost. They even let you use their truck to deliver it. It has to be after hours, though. Later that week you receive a bill from them for $500 to cover fuel, and having someone come in after hours for you. Is it fair for them to do this to you? Nothing was discussed about this cost? Shame on you for not spelling out the "shop costs" with your employee beforehand. Move on and learn from it.
From contributor R: After hours and no liability? Wake up and smell the coffee. I had an employee that I allowed to do a small side job on his time and he cut off his finger on the table saw. It was totally his fault due to negligence and he was totally off the clock. There were no workers comp issues but general liability insurance had to cover everything.
I still allow small side jobs to run through the shop - but anything large goes through the shop - after all that is my business. I charge material cost plus tax plus 10% to order unload and handle. There is shop time for any job.
As far as the 18 year employee issue - it cuts both ways. Why is it always that the employee has done so much for the employer? He was compensated during all of that tenure. He probably had many perks along the way. I have been in business and an employer for thirty years and I try to treat all employees with respect. But the one thing I have found is that not one person is irreplaceable. You might think so if you haven't been through the process but it's like divorce, you get over it and it all works out in the end.
From contributor P: Honestly, I can't believe the selfishness of some, and the lack of business etiquette of others. The fact that they were able to get $45K of cabinetry from a shop they've already done business with for $12.5K (including the $2,500 to cover the costs), at the clear-cut discount of 63% off what they would've paid (talk about a fire sale) is the benefit being there for 18 years!
Please tell me where else the 18 year employee would have gleaned this benefit from? Why should the original questioner, after being generous enough to give up over $32,000 in gross profit, now fork over additional money to pay for the bills/costs associated to it?
The 18 year employee also derived the benefit of being employed for 18 years. Although I have also done work for family for costs, or charity, my educated guess would be that the brother did not do the job for only materials, and this is why he is really upset, as it has eaten into the money he probably charged the sister or whatever barter they may have set-up.
18 years or not, if I had an employee complain to me that his/her sister (a previous satisfied customer) just saved over $32,000, provided my employee with the shop, tools, electric, supplies, CNC programming, affecting my work production in the process, helping to order materials, insurance, etc. when all I am looking to do is cover my costs, and maybe a little taste on top for the effort, I guess I would have to just look at him and say - "are you kidding"!
From contributor W: We are even up till now. As an employer, we provide pay and flexibility for minor indiscretions. As an employee, we work and take minor indiscretions. As long as the employment agreement is in place, we are even, and can walk away from each other tomorrow and not owe the other anything except a final paycheck. A 42 cabinet side job is not part of that equation. That requires a separate agreement, in advance, that both parties can be happy with. Once the agreement is made, the complaining stops.
From contributor C: I have a friend with a shop who allowed an employee to do a personal project on the weekends. Obviously the scope was never discussed. On Friday a truck pulls up and has a couple lifts of sheet goods on it.
I allow workers to do personal jobs (my foreman did his kitchen here) and nothing else. If it isn’t for you (well , maybe your parents), forget it. I feel that being able to play in my million dollar shop is a huge perk, and allow workers to use only machines they are trained on (I guess that's obvious). But I love to see people ply their talents for their own benefit. In the correct atmosphere, it's a chance for them to appreciate what they have learned. As for the case at hand, I'd say no to a job that big.
From contributor J: This is why I work alone. The more you give your people, the worse they crap on you. I finally see the wisdom of my old bosses treating us like cattle. They could not care less about us as it was work, quit, or be fired. Save the drama for your mama. Feeling forced to cater to a top flight long term profit making employee is like being held hostage.
From contributor P: My employer found an easy solution. We can do side work, any size job from a foot stool to an entire grade school, but you have to schedule it and keep it out of the way of regular production. That's the factor that keeps the side work limited. The floor space is limited to 70,000 sq ft and every bit is taken with equipment or current production. There is no room for side jobs, problem solved.
