In a recent article, the Globe and Mail reported that an American computer programmer, described by his employer as a “model employee,” had secretly outsourced his own job to a company in China.
The computer programmer, referred to as “Bob” in the news coverage, was earning $250,000 a year to write code, but was secretly paying a Chinese contractor $50,000 a year to do his work for him. This netted Bob a healthy $200,000 annual income for doing nothing except coordinating the delivery of computer code from his supplier to his employer.
The employer had actually commended Bob on the quality of the work, and consistently gave him high praise in performance reviews.
The employer caught wind of the scheme when it noticed suspicious traffic on its computer network, originating from a city in northern China. The allegation is that Bob had been couriering security tokens to a software developer, who was using them to log on to his employer’s computer network and do Bob’s work for him.
So what did Bob do at work all day if a Chinese contractor was writing all of his code? The allegation is that he essentially just surfed the internet, watched cat videos, and at the end of the day he emailed his superiors to give an update on his work.
Some may ask, what’s the harm in this? If Bob’s getting the work done, and if it’s up to standards, why should the employer care where it’s coming from, or who’s actually doing the work?
Part of the answer lies in the nature of an employment contract. A contract of employment is considered a contract for personal service. It’s an express or implied term of every employment contract that the employee is personally providing the services in question. Bob breached this term when he hired an outside contractor, and his employer was arguably entitled to terminate him for cause on the basis of this fundamental breach.
The fact that Bob gave his contractor access to his employer’s secure computer network, also raised serious security concerns.
Bob’s actions breached the employment contract because they breached the employer’s trust and were done in secret. It may have been possible for Bob to ask his employer to switch his status to that of an independent contractor rather than an employee, in which he case he would have arguably been entitled to hire an outside company to perform the work, as long as the employer’s security needs were satisfied. A key difference between independent contractor status and employee status, is that an independent contractor is entitled to hire “helpers” to perform the contract work.
We recommend that independent contractors seek legal advice when negotiating independent contractor agreements, and before retaining third party suppliers or service providers.