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I'm a programmer quitting my day job at an outsource shop and going freelance. I've already built a good reputation within the company and to the client. Is it ethical for me to keep working with the same client as a freelancer? Given that the client will still hire the same amount of people from my company and my quitting has absolutely no connection to this client. I would still quit regardless of whether I work with them afterward.

If it's ethical (as I cannot see anybody being harmed this way), is it a good thing to ask my current employer about this? I don't want to make it looks like the client solicit me into leaving.

Thanks!

  • 3
    Given that the client will still hire the same amount of people from my company You are not your client, how do you know that? – scaaahu Oct 26 '15 at 5:19
  • 15
    Your staying with the same client is unethical to me. – scaaahu Oct 26 '15 at 5:24
  • 3
    If you quit and work for different client, there is no ethical issue at all. If you work for the same client, it's hard to say if the client would hire the same amount of people from your current company. Your saying "I work with them so I know their situation" is groundless - you are not they, you simply don't know. – scaaahu Oct 26 '15 at 5:32
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    I suggest that you take your employment agreement with the outsource shop to an attorney and ask him for an opinion as to whether or not you can work at the client in question after resigning your position with the contracting house. Every contracting house employment agreement I've ever seen has included a non-compete clause which bars the contractor from working for any client the contracting house has introduced them to for a period of time after they leave the contracting house. Best of luck. – Bob Jarvis - Reinstate Monica Oct 26 '15 at 11:43
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    What's amazing to me is that some of the people arguing that it's unethical for an employee to make a business decision that's in their own best interests are the same ones who've in the past defended a business's entitlement to make decisions purely based upon profit motive without a thought given to ethics or to doing "right" by its employees, because "that's capitalism". I think capitalism cuts both ways; if businesses can chase profit to the exclusion of all else, individuals can too. Arguing the other way is hypocritical at best. – aroth Oct 26 '15 at 14:36
25

Ethical is something that can easily get into the lovely grey opinionated area; therefore I would instead recommend checking your contract - or more appropriately, your company's contract with the client.

They usually have a "no-hire" clause that prevents clients from hiring outsourced staff for a certain period of time. If such a clause exists, your client may be in breach if they hire you.

Your own employment contract may also have such a stipulation (although this is quite rare - usually I see this when you are individually outsourced to them in a consultant position).

Make sure these things are cleared up.

As for the issue of ethics - this will be different for each person. Keep in mind that as far as the law is concerned, ethics is not really set in stone:

Local, state, and federal regulatory acts influence the conduct of some professions. Business executives are faced with two types of ethical issues in conducting their day-to-day affairs, and the law holds them accountable for their actions in these areas. Micromanagement issues include conflicts of interest, employee rights, fair performance appraisals, Sexual Harassment, proprietary information, discrimination, and accepting or offering gifts. Macromanagement issues include corporate social responsibility, Product Liability, environmental ethics, Comparable Worth, layoffs and downsizings, employee screening tests, employee rights to privacy in the workplace, and corporate accountability.

Although the law does influence the conduct of some professions, many ethical issues cannot be settled by the courts. The ethics of a particular act is many times determined independently of the legality of the conduct. In fact, decisive answers cannot always be given for many ethical issues because there are no enforceable standards or reliable theories for resolving ethical conflicts.

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    Your contract may also have a generic non-compete clause which could apply. As a freelancer, you'll be competing with your current employer. – MSalters Oct 26 '15 at 9:38
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    @MSalters Be advised, Non-Compete agreements are often unenforceable, as noted " ...noncompete agreements also let the employer control its former employees’ actions long after they leave the company, which doesn’t fit well with our country’s honored traditions of free enterprise and the right to make a living." – Andyz Smith Oct 26 '15 at 14:31
  • I find an important distinction here: "...For example, high-level employees who will learn the employer’s trade secrets and the ins and outs of how the business runs can do plenty of damage to the employer if they leave to start a competing business. Low-level employees who perform basic administrative tasks, customer service, or manufacturing, for example, probably wouldn’t harm the company if they went to work for a competitor. " nolo.com/legal-encyclopedia/… – Andyz Smith Oct 26 '15 at 14:31
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    @AndyzSmith: "our country" doesn't make sense on a global Internet. – MSalters Oct 26 '15 at 14:37
  • @MSalters Perhaps the OP could add more details about the situation/country/jurisdiction in question. I have a feeling that doing that is going to cause the question to be closed as asking for specific legal advice. If you believe that "...contract may also have a generic non-compete"... I suggest that the Nolo article may be a helpful general guideline for many situations. If you differ, I will gladly remove it. – Andyz Smith Oct 26 '15 at 16:54
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Ethical?, debatable. Good business?, definitely. Is it ethical for a company to charge $180 an hour for your time but only give you $25? Debatable? But definitely good business.

Once you start working for yourself, assuming you want to be successful, a certain amount of ruthlessness and pragmatism helps.

There may be legal implications between your former company and the client, but that's their problem, not yours.

  • 11
    Start running a company with employees, benefits, and a location and suddenly the gap between that $180 and $25 gets surprisingly small. There's far less profit in that gap than one might think. – cale_b Oct 26 '15 at 13:17
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    @cale_b Exactly! An employee's "burden rate" is the hourly rate it costs to employ that person, which includes their salary, but also includes the cost of their computing equipment, software licenses, overhead costs (like admin/support staff (who wants to cut out the accountant that makes the payroll deposits?!), printer paper, internet access costs, electricity bill, plumbing bill (you do flush the toilet and wash your hands, don't you?), occasional catered lunches and other activities, health insurance, life insurance, 401K contributions, and on and on and on. – Kent A. Oct 26 '15 at 13:41
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    @cale_b: I'd wager the profit would be about $110 to $125. Properly run companies have burden rates of 2.2 to 2.8x hourly salary. You're proposing 7.2x, which is truly excessive. (Local laws may cause some variation as well, but not that much). – MSalters Oct 26 '15 at 14:42
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    @MSalters I will concede the point, and suggest that your numbers ($180 / $25), aren't realistic. Most companies don't (and couldn't) charge $180 for the level of work a $25 / hour employee would produce. If companies were doing so, there would be a lot of incentive for competition to step in and offer the same services for a lower cost. – cale_b Oct 26 '15 at 16:38
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    while I agree with what you guys are saying, I would think that your talking from a First World perspective, where employees have rights, unions and all the rest, and there are plenty of takers for jobs, in other societies not so much, a markup of 3,000% is not unusual in many occupations where human resources are hard to get and competition is non existent apart from flying someone in from Overseas. And for many social and political reasons that would not apply in the First World. – Kilisi Oct 26 '15 at 19:08
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as I cannot see anybody being harmed this way

I'll start to answer the question from here.

Your current company is making profit by putting you work for the the client. They pay you X dollars per day. They charge the client X + P dollars per day where P is the profit your company is making.

Now you quit your job. Your company will have to find replacement. They cannot charge the client any money between the time you quit and the replacement starts to work for the client. Suppose it takes 5 days for them to find the replacement and put that replacement to work, your company lose 5 x P dollars. So, how can you say nobody being harmed?

Now, let's look at your side. The client will hire you after you quit your company because they know you can perform well on the job. How do they know that? Because your company put you work there in the first place so that you had the opportunity to show your performance. If your company never put you work there, how would the client know you would perform well?

To answer your question, is it ethical? No. At least, it's not perfectly ethical to me. But, there are just too many un-ethical things in the business world. Your case is not a big deal. If I were the manager of your company, I would be upset. If I were your client, I would be happy because your coming to work for me saves me a lot time and money to interview people and find a good worker. So, somebody gets hurt and somebody else gets help. If you want me to say your act is ethical, sorry, I would never say that. You just did yourself the best of your interests. That's all.

P.S. Please note that I assume you'll have no legal issue when you go to work for your client. If there are legal issues, all bets are off and I am not a lawyer.

  • 4
    Not helping someone to earn "5 x P dollars" is not the same as "harming" them. Almost entire global population is not helping this company to earn "5 x P dollars"; and it seems very much ethical. Isn't it? – kubanczyk Oct 26 '15 at 11:15
  • The OP's current company is making P dollars everyday. Now, they won't be able to make it after the OP quits. Of course, that's their loss. The OP is not anybody in the entire global population . He is an employee of the company. – scaaahu Oct 26 '15 at 11:27
  • @scaaahu: but in talking about the 5P dollars, you are considering a (supposed) harm that occurs whenever an employee leaves a company, regardless of what they do next. It is not generally considered an ethical problem to quit a job, and IMO any harm that's an inevitable part of quitting a job doesn't really relate specifically to the ethics of working for the client. – Steve Jessop Oct 26 '15 at 11:30
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    @SteveJessop I avoided mentioning the issue the OP claims "Given that the client will still hire the same amount of people from my company" which as I said in my comment, I don't buy it. Generally speaking, you don't care the loss your employer endures after you quit. But, taking the job you had earlier to cause that loss is un-ethical to me. – scaaahu Oct 26 '15 at 11:37
  • @SteveJessop If the position the OP NOW fills means there's one less guy from the contracting company, yes he's costing them money. If he moved to a position that was NEVER contracted away, I'm with you. – Patrice Oct 26 '15 at 16:57
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In most contexts in most nations, business ethics are defined by contract law, and/or by general business law, for the country/state/etc. in which you are working. Business ethics as a category of ethical inquiry is not the same as personal ethics, since in the case of personal behavior, ethics are not defined by legal standards, though proscriptions against or req'ts for certain behaviors evinced by individuals are; these are not based on ethics but on the legal, social, and political context of a particular entity or group of people. For this reason, personal ethics can be debated and in some ways are a lot more rigid (paradoxically) than are business ethics. This is because a lot of personal ethical matters are rooted in easily answered questions based on standards assumed to be worthy (for example, the "Golden Rule"). But these are not legally defined, only generally and widely accepted moral imperatives. There is a big difference.

That established, the point of view to approach the matter rests in terms of legal obligations. If you signed a non-compete agreement with your current employer, even if you know they won't go after you for violating it, it's still unethical for you to take the job with the client until after the terms of the agreement are discharged (usually a waiting period of 6 months-1 year, depending on where you live; it's subject to legal or local "customary standards"). However if there is no such agreement between you and the client (and make sure there isn't; it may have been among the sheaf of papers you signed when taking the job with your current employer), then you have no ethical obligation whatsoever to refrain from taking the job with the client at any time.

If you don't believe me, look at the wholly unethical (in the standard sense) behavior of certain large financial corporations or individuals within them. Some of the stuff they do is morally/ethically objectionable in the standard sense but perfectly ethical in the business sense. That is because business ethics do not arise from a sense of moral defensibility but instead from legal obligations and standards.

  • The intent of a non-compete is not to prevent competition, but to prevent mis-appropriation of trade secrets. If there is no such potential most non-compete are complete unenforceable. My questions, I guess which begs, is why it is unethical to compete. If you see that your employer is not serving, not bargaining, not fulfilling it's duties as a contract partner, why, in any legislative environment would you not be a fool to begin to offer a service to any client, every client who needs your services? – Andyz Smith Oct 26 '15 at 18:35
3

If you have access to it still reference your employment agreement with your former employer.

My main concern from an ethics standpoint wouldn't be from you working for the client, but how you were connected with your client. Businesses pay large amounts of money to market and sell their services to clients. By quitting your job and continuing to work for that client you were able to personally benefit from your company's efforts to procure that client, potentially at your former company's loss.

Either way it comes down to your instinct. There are risks involved with working for this client. If your former company found out do you believe they'd pursue legal action (likely no, unless it's a significant sum of lost revenue)? Does the client now get your services at a significant cost savings, and if so are you being taken advantage of?

2

Most consulting firms will have contracts with the company they're providing labor for - i.e., your client - that address this specific issue.

For example, the firms we work with typically have a 6 month period where we may not directly hire the staff for 6 months without paying a finder's fee to them (in that case, they're acting more as a talent scout for us, so they want compensation for that). Once six months have passed, they've earned enough in the consulting contract to feel 'whole' if we choose to hire the staff.

You may have a separate clause in your contract, and you should examine that (and find out); depending on your location, those may be more or less enforceable based on local laws. But I'd expect that your client has terms with your firm that control this, and likely supersede any terms in your own contract. Your best option is to ask, if you can. Don't assume, though, that your client will hire you immediately after separation, unless you have talked with them ahead of time (and are sure it's not a violation of your own contract and/or have talked to someone to confirm that your contract's terms are unenforceable).

0

OP here. I would like to answer my own question that take into account my own unique situation. But I will accept the answer that most people agree with.

I don't have to worry about law and contract since my contract does not have any clause that control this. Also my company is very unlikely to take thing to court. It's safe to assume I will be safe from this.

However I have a close relationship with my current employer and a number of employees. Consider how much this matter fall into a grey area. If words got out and people take this the wrong way, I will be thought of as that guy who make shady deal with the client.

Reputation is everything to me. It's in my best interest to not keep working with this client. Unless they have my current employer's consent.

  • 1
    Then the accepted answer to your question (Are you doing this ethically?) will have to come from your current employer. – scaaahu Oct 27 '15 at 8:42
  • Yes, well I'm tired of the question of ethic at this point. Let's just say this is my pragmatic way of dealing with this situation. – Khoi Oct 27 '15 at 8:45
  • Practically it sounds like you don't have a lot to worry about, but be careful. if your relationship and knowledge of this client's practices, gained from working with them through your current employer allows you to compete unfairly with your former employee, you may still be breaking the law by mis-appropriating your former employee's 'contact lists' which are confidential. Even the one client's phone number. – Andyz Smith Oct 27 '15 at 13:52
  • Your question is about the ethics of what you are thinking of doing, not about how your decision may be met by your current employer. That's a very diff. matter. Your behavior may be ethical from a business POV, but unpopular with your current employer. The two don't have anything to do with each other. It's entirely possible for a person to do something that is "right" (i.e., defensible, etc.), but still be unpopular, with all that that may entail. In your case, sounds like the question is about the risk of alienating your current employer. Only you can answer that and go from there. – Matt Campbell Oct 27 '15 at 14:34

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