"Legal" question - employee vs subcontracor owned by employee

[<MADDOG>]

A question for our legal minds out there..

Is it illegal for an employee of a company to subcontract his own LLC to his employer?

As an added caveat, said employee is selling the "work" that in turn is subcontracted to the LLC.

[def90]

So you are saying an employee has a side company and his employer is buying product or a service from that side company?

i doubt it?s illegal, there are worksheets out there that the government has for determining whether work being performed for a company by an individual falls under being an independent subcontractor vs employee when it comes to taxes and so on.

[BladesNBarrels]

So you are saying an employee has a side company and his employer is buying product or a service from that side company?

Sounds like the employee is charged with doing the work and is turning around and contracting to his own LLC to do that work.
As long as the employer has full knowledge of it and has approved it, I guess there would be no problem.
I am trying to envision a circumstance as an example.

[def90]

Sounds like the employee is charged with doing the work and is turning around and contracting to his own LLC to do that work.
As long as the employer has full knowledge of it and has approved it, I guess there would be no problem.
I am trying to envision a circumstance as an example.

Yeah, that was one thought I had, as long as employer knows where the product is coming from.

[<MADDOG>]

Employer does not know.

[Wulf202]

Conflict of interests are usually only an issue if they are hidden. As above, of they know about it, its condoned.

[SideShow Bob]

Not unless there is a self-interest or conflict of interest clause in his terms of employment.
It may be unethical as hell, and is a form of “double dipping” the company, but as long as it is all above board and in full knowledge of his superiors, and is approved.



You posted the statement “Employer does not know” after I had written this,
This action would be most likely a violation of his employment and grounds for immediate dismissal without any benefits, termination of the contract with the employee’s LLC and possible prosecution for damages.

[ray1970]

Illegal? Probably not.

Immoral or unethical? Maybe.

Might also depend on whether the industry is regulated (FERC, PHMSA, DOT, etc.) which may factor in as well.

Disclaimer- I am definitely not a lawyer and have little to no legal experience so take my comments for what they?re worth.

[<MADDOG>]

Thanks gentlemen!

[SouthPaw]

Nothing illegal but probably goes against company policy.

I knew someone that did this exact thing. When he got ?caught?, the company did not have anything in writhing saying that he couldn?t use his own company to support his job and he knew this. HR tried to fire him by saying he was using his company first, without following protocol for pricing. They had a policy that three quotes had to be sent prior to purchasing/renting. Since he was the one bidding the job for the company, and having access to everyone else?s pricing; he always made sure his company was the cheapest prior to sending it in. It was a really screwy situation and the guy was try to sneak one in any chance he could. IIRC, he even had the LLC setup in someone else?s name. He eventually left on his own terms, but they didn?t make it easy for him once this was out.