Outsourcing work to another Web programmer and Legalities.

outsourching

[eagle]

I had a client that needed some OSCOMMERCE work done, and I outsourced it to another company, on the condition that he is my back office, and represented himself as working for me. The arrangement was that I had to approve all work and set the prices and when the client was happy, I would pay the programmerthat I outsourced the work to, and the client would then pay me, I paid the programmer, but due to him working a few extra hours on the agreed work, I needed to know exactly how many hours he worked, he kept avoiding me saying he's very busy, and will e-mail it to me soon as soon as he goes back and adds up the hours, meanwhile I am still owed close to $1500 by the client, and to make matters worse, when I called the programmer to ask him for the final time, the hours he worked, I noticed that additional work was done on the site I hired him to work on, I confronted him on this and he admitted that the client asked him to cut me out of the loop and go directly through him, and that he is very sorry bla bla, It was clearly understood that he would not do any work directly with the client without my knowledge,in fact he told me many times that the client keeps asking to cut me out, and he keeps telling the client , "No that would be unethical", Why he suddenly decided to cut me out of the loop and avoid me is beyond me since I was only profiting a mere 5% on top of the work that he did, work that he would not have had without me.

so my questions are,

1. Do i have any legal recourse against him, We had a clear understanding he woould not cut me out of the loop, what are the laws or practices when it comes to outsourcing, from what I have heard, its like a employer , employee relationship.

2. Should I continue to work with this programmer, I have a lot of work coming in everyday, or is it better to cut my losses and cut him loose.

3. What is the fair market value for outsourcing, In my opinion, handing him work and giving him 95% is a pretty sweet deal for him

4. Should I ask the programmer for a portion of the profit he made, off this client.

Thanks in advance

Tiffany

[JasonHamilton]

did you have the developer sign any legal agreements?

When I worked for companies like AT&T, part of the papers I had to sign includes statements that I couldn't work for any client or competitor of AT&T for a period of 2 years after my employment with them was terminiated.

[eagle]

No, it was all orally agreed upon, ofcourse from now on I am strictly working with written contracts, however the questiosn still stand, anyone have any thoughts to share? what would you do if you were in my position.

[Fortune Hunter]

Tiffany:

Without a written agreement you are probably out of luck. If you tried to file legal action both of the parties you were dealing with would deny any wrong doing, since there is two of them and it would be your word against theirs you couldn't prove anything. However more importently even if you could prove it they didn't do anything wrong from a legal perspective since you didn't have a written non-compete agreement.

My suggestion would be to always use a contract. If you go to your public library or order online from Nolo.com, which is a company that sells lots of legal do it yourself books. They have one for Web and Software development and the disk has a contract for working with sub contractors. I took that agreement and modified it a little to include a non-compete clause for two years after the project. I have all my subs sign it or we don't do business. This way I have a solid contract that I can use in a court of law if they try to cut me out.

Also I don't think your price is out of line. I actually charge a much higher rate on my sub contractors. I add $10-20 to the rate the contractor charges so I make money for every hour they end up working on the project. I even list this in the agreement so just in case they were to go around me for some reason I not only have legal recourse, but I also have documentation that says the contractor owes me this $10-20 per hour.

Last, I would definately cut this contractor out of all future projects and work. I would find another contractor. However as an added twist I would tell the contractor who messed you out of the money that you have a lot more work coming in and as a result of their un-ethical behavior you not only will never use them again, but you will suggest to everyone you know that they not use them either. That might cause him/her to have a pang of conscience and pay you the 5% they ripped off, but even if they paid I would never use them again. They have already proven they are capable of unethical behavior and would cut you out if the opportunity arose. As a result you probably would have it happen it again, only next time you might not be lucky enough to find out.

Fortune Hunter

[eagle]

I was also thinking of threatening him that id post that he was a bad businessman on several forums, especially #*$!, because he is also a host, and he started hosting the client, instead of referring the client to my hosting.

[jd01]

Eagle,

It is my understanding, enforcability of a verbal agreement varies from state to state and country to country... Using CA as an example, where a verbal agreement is binding, if there is a witness to a convesation... a legal agreement is established.

In reading your post, I believe, you can obviously establish there was a verbal agreement, simply, that the work was done on a job that you originally had, would appear to easily establish some form of an agreement. Any money changing hands from you to the 'sub' I believe, would further establish this.

I also believe, the real question from a legal stand point would be how far do you want/need to push things and what backing do you have?

A question which might be asked is, 'Are there others who have worked with you in the past who could back up what you say?' EG Is this an agreement you have had with more than one 'sub-contractor'?

Please, note the ambiguity of this post, because, these are my understandings, beliefs and opinions only... I am not a lawyer, please consult your own, before deciding on any appropriate course of action.

Justin

[jamesa]

>> 2. Should I continue to work with this programmer, I have a lot of work coming in everyday, or is it better to cut my losses and cut him loose. <<

CUT HIM LOOSE. Never work with someone you can't trust. Never, ever, ever.

[Fortune Hunter]

Eagle:

As tempting as it is to trash this person all over the Internet I would refrain from that course of action. First doing such a thing creates written records that can be referenced in a court of law. That being said he could probably file a libel suit against you for trashing his "good name", which would put you on the defensive. Even if you could win such a claim you would still be out all the money for lawyers.

Not to say that he would do this, but he could and you don't want to lose even more then you already have. I would simply cut both of them loose and never do business with either one again and never refer anyone to either of them again. Consider it a lesson learned the hard way.

Fortune Hunter

[chaplin]

Tiffany, my advice is not to work with this programmer anymore. You don't need unhonest persons. Your cut is pretty small - i often outsource jobs at 50% of what i take for it and sometimes other people outsource job to me with also abotu 50%. This is fair as the one who find the client and manages the job is the more important. Just find someone else and leave this one.
And try to avoid direct contacts between the clients and the outsourced programmers.

[Sobriquet]

I have been taking the outsourced work from many people. OsCommerce installations, customizations and more similar work comes to me from many web development companies.

Normally, we sign a contract that what I do is just 'JobWork'. Its a jobwork contract and not an employee employer contract.

This keeps things hassle free and my clients happy too.

Infact, I live my life on works outsourced to me by other web companies. Its been almost 7 years now.

Send a sticky for any info you need.