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    13 Replies Latest reply on Jan 13, 2010 10:09 AM by DebbyBlitzLoc

    Self employed contractor - is this considered stealing?

    happybooker Wayfarer
      We are a small firm and I have always made it a practice to hire independent contractors for our commission only sales positions. They seem to be the most motivated and have the most drive over the course of our sales cycle.

      Like most startups, I began this business in my basement and it quickly grew. My first salesperson was brought on when I was overloaded by myself. We will call her "Salesperson A". I knew Salesperson A and had transacted business with her for a couple of years prior to bringing her onboard. Since I did know her and her work ethic, I made the basic mistake of not insisting on having her sign an NCND - a no compete non disclosure document. Frankly, I was too busy enjoying our company growth and though she would be fine. I now consider this a costly rookie mistake.

      Salesperson A has always been paid and treated like an independent contractor. We are small enough that she is considered like family.
      Fast forward 8 years later and Salesperson A has become our biggest salesperson and the one we rely on for the bulk of our revenue and growth.

      During the past year our revenue has declined 59% - much of which I attributed to the economy and our product line. However, it has come to my attention this week that Salesperson A is using our client database and our email system to start booking with customers silently through her own "company". She is using our past client accounts, our email system and our database and then turning around and booking accounts on her own. This diverting of revenue has been a silent and potentially fatal killer and I did not take notice until recently. I did find one of her contracts - completely cloned from ours - word for word - with only the company name and bank account information changed to her. Needless to say this is very sad and I am wondering what I did to cause Salesperson A to do this. She has been like a partner to me and many people thought we were married as we have worked together for so long.

      My question is - Salesperson A has a number of leads in the pipeline and through our system that could close any day now. Do I confront her immediately and let her go, or wait to let her go after these leads play out? Also, since she is an independent contractor, does she have any legal right to take our clients and bookings away?

      The fact is when I let her go, this will cause a stir in our industry and no doubt is a major shake up to our small firm. So any educated and experienced thoughts on how to handle this will greatly be appreciated. Thank you for your help as I am perplexed!
        • Re: Self employed contractor - is this considered stealing?
          DomainDiva Ranger
          You need to seek the advice of an attorney. You have to act before these deals close. You may want to have a meeting with her and your lawyer in his office to confront her. That way you are playing on your home turf. Criminal charges could be a part of this.
          For the record, yes she is stealing.
          1 of 1 people found this helpful
          • Re: Self employed contractor - is this considered stealing?
            happybooker Wayfarer
            I truly appreciate your taking time to reply. I am currently gathering data and will speak to a couple of long time clients of our company before going forward to quickly resolve this. I want to have my facts in line and accurate. I am finding myself now hauted and wondering how much revenue has been slipping out the back door, and for how long. It is taking up a good portion of my day when I should be on the phones making sales.

            A friend of mine is business owner and author Jay Goltz - he said it well - there are three parts to owning a small business:

            1. Start up
            2. Throw up
            3. Grow up

            Currently on #3 and appreciate comments from others who are business owners or have experienced the same.
              • Re: Self employed contractor - is this considered stealing?
                DomainDiva Ranger
                Start up -- great idea...team...yay .. yay...rah..rah

                Throw Up...I just borrowed HOW MUCH MONEY????????????????????? (this phase is something I have never grown out of I still wake up at 2AM going OMG what have I done even though we are ready to launch).

                Grow Up...learning to be a leader and taking to heart 'love is love, but business is business. (Or as we day in Texas 'bitniss') Doing SWOT an realizing yeah it IS that bad.... and then living with it while making a way to change things...learning who your friends really are...being responsible for the team...
              • Re: Self employed contractor - is this considered stealing?
                benthere Newbie
                Yes, it is defintely stealing. First of all you should have had a "do not compete" clause in a contract with her. If not you can try to sue her for any profit she made by using your resources or try to prove that she stole your client list. If you can get testimony from a client she "stole" that you had previously done business with. you can fire her but I would get a lawyer's help on preventing her from stealing your client list because once she is on her own she can do business with your client's. We had an employee do the same to us but the lawyer said between the cost of going to court and the money that we would win back from him we would have probably broke even.
                • Re: Self employed contractor - is this considered stealing?
                  happybooker Wayfarer
                  Yes, I most certainly should have had a non compete when I brought her on during the early phases of the company. At that time I was more concerned about handling the sales inquiries with a knowledgable salesperson...and should have been more concerned with the long run. Will never make that mistake again.

                  The question now begs - how long do I torture myself researching and wondering how much money was lost and for how long? This is constantly on my mind now and a person of trust is trustworthy no more. I have left a message for my attorney and do agree that it will probably take a sizable legal fee to fight this, but we shall see what tomorrow brings!
                  • Re: Self employed contractor - is this considered stealing?
                    happybooker Wayfarer
                    Voice mail and email sent to attorney - currently awaiting reply for direction before going forward. Have slipped back to #2 on the Jay Goltz scale of small business ownership:

                    #1 Start Up
                    #2 Throw Up
                    #3 Grow Up

                    Thanks for validating that this is a case of stealing. Especially when times are challenging and our products are discretionary income items (concerts, comedians and speakers for event) - it's a time when a small business like ours needs to circle the wagons and look out for each other's backs. Ok, now back to #3 - grow up - people change Now on to make sales calls...
                    • Re: Self employed contractor - is this considered stealing?
                      happybooker Wayfarer
                      Weekend update - I spoke to an attorney who is very high up in the legal system in California. I described my situation and the fact that I did not have a non-compete signed with my co-worker. He immediately said as soon as I opened my company resources to her - it became embezzlement. He went on to say, strongly, that this was criminal on a civil and federal level and could involve prison time if I pushed this. Again, I repeated that I did not have the non-compete and he was firm with his thoughts. Interesting to hear - more news as I get it.

                      Also yes, your comments on this forum have been very helpful to me as I feel like I am on a desert island. As a business owner, I know I either have employees or competitors to talk to - and we see how the employee thing is not working out at this moment. So thanks for your thoughts and help - it does make a difference!
                      • Re: Self employed contractor - is this considered stealing?
                        r8plica.com Newbie
                        1. Start up
                        2. Throw up
                        3. Grow up

                        www.r8plica.com
                        • Re: Self employed contractor - is this considered stealing?
                          happybooker Wayfarer
                          One other piece of wisdom I just received my personal attorney. I told him I did not have a non-compete with my salesperson - and he stopped me immediately and said that is NOT the issue - the issue IS theft. Just like if I had left the keys to the company safe and the salesperson went in and took from the safe.

                          It was helpful to get this clarification and I hope my postings will help others who encounter the same. As my attorney said - if you have not had a dishonest employee - you haven't been in business for very long.
                          • Re: Self employed contractor - is this considered stealing?
                            DebbyBlitzLoc Adventurer
                            As sad as it is, in a tough economy even people who never would have considered being dishonest or thieves are finding themselves tempted! When the unemployment rates are high so are employee theft instances. We all need to be very diligent and even suspicious of previously trusted employees!

                            Debby