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Accounting Firms Allowing Side Gigs: Good Idea or Independence Mine Field?

Posted on by Caleb Newquist

These days, you hear more and more about people juggling multiple projects at once. You know, a day job, the moonlighting gig, a passion project, the "I was just fucking around and it became a thing"1 thing, among others. 

You would think that accounting firms, known for working people so hard that it renders them utterly incapable of even thinking of doing anything else, wouldn't have to worry about employees working outside their jobs. But according to the Australian Financial Review, it's become enough of an issue Down Under that PwC had to address it:

PricewaterhouseCoopers tech consultant Mark Chatterton would have been scared to put "Founder of smart phone app HomeInspectr" on his LinkedIn profile alongside his fulltime gig at the consulting giant three years ago.

Now, it is not just acceptable but embraced as adding to a consultant's credibility with clients.

"People doing these type of things two, three years ago weren't open about it," Mr Chatterton said. "Now it's actively supported."

Mr Chatterton is part of a growth trend that PwC believes will rewrite the rules of engagement with both staff and clients.

PwC used to order recruits to shut down other ventures when they joined the firm under its partnership's terms and conditions. Now that policy is waived.

"Staff have always had interests outside of work, property investment, stock portfolios, restoring cars, that was seen as ok but technology ventures were typically seen as a threat," PwC digital change leader John Riccio said.

During my KPMG days, I had a colleague who ran a small business on the side. This was not some hobby, but a full blown business that had operations and employees in multiple cities. He regularly took calls for this business during the work day, went to meetings over his lunch or when he could get away and, of course, spent nights and weekends on it when he wasn't burning the midnight oil for KPMG. He did inform the managers and partners that he worked for about it, and they were cool as long it never interfered with his Klynveldian duties. The whole situation was on a need-to-know basis, however, as I'm sure if the wrong person heard about what was going on, there would've been some pearl clutching. This went on the whole time he was at the firm.   

These days, I'm not so sure all the whispering would be necessary. In Australia anyway, PwC is developing policy to address it:

We need to prepare not only for a new relationship with our customers but with our people," [PwC Australia head of consulting, Neil Plumridge] said.

Riccio said allowing this shift to occur "naturally" within the organisation rather than "in Black Ops mode" requires policy.

In the case of PwC, the two most significant were waiving the claus that required staff to shut down other commercial ventures, and extending flexible work arrangements to all roles last August. 

Now, this is all very well and good, but I can't help but think that there could be some independence pitfalls around this. We all know that independence is a joke, but for the sake of appearances, firms would have to tiptoe through a few minefields to ensure2 everything is on the up and up. It gets complicated for the two-timing employee, especially if the firm puts their foot down and says cut it out or quit.

A source at PwC, who wished to remain anonymous, said that an employee's side gig, can't violate independence rules or the person's full-time position and has to be approved by the firm's ethics and compliance group. "Once you pass that threshold, you will get written approval," the person said. Maybe the rigamarole isn't that bad and it might even be worth it depending on the situation.

Generally speaking, the gig economy is a good thing. It gives people more control over their careers and they can provide a much needed morale boost when the day job is a grind, but still necessary. Granted, you have to be careful which gigs you pick up; driving for Uber might not turn out so well for you, but if your homemade salsa has been selling out at the farmer's market, that could turn out very well for you. But then again, it's January and most of you are staring busy season square in the eye. The idea of getting home to start job #2 probably sounds like a suicide mission.

Is anyone out there burning the candle at both ends with a startup or other side gig? Have you told your day job about it? Anyone think it's a bad idea, that it's not worth risking the security of your tried and true full-time job? Let's talk it out.

Earlier:
Should You Be a Freelance CPA?
Let's Talk About Accountants Getting Some on the Side

1 Pretty much explains how I got this job.
2 Or, at least, make a halfassed argument. 

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Oral Arguments Heard in Campbell v. PricewaterhouseCoopers

~ Update below with link to audio of the proceedings

Last month we caught you up on Campbell v. PricewaterhouseCoopers, the wage and hour lawsuit filed by employees of the firm, claiming to be non-exempt and thus available for overtime. Oral arguments were heard today at the 9th Circuit Court of Appeals in San Francisco and it marks the most recent step in a case that could have wide repercussions in California. Francine McKenna has a good rundown over at Forbes, including sta��������������������rshaw, the plaintiffs’ attorney. PwC and their lead counsel, Dan Thomasch of Orrick, have declined to comment at this time.

In today’s proceedings, both sides were allowed to make their arguments and answered questions from a three-judge panel. We’ve obtained the briefs for both sides and we’ll give you a taste of each. First, from the plaintiffs:

PwC argues that Attest Associates satisfy the Professional Exemption because—notwithstanding the routine and nondiscretionary nature of their work—PwC claims that they are functionally indistinguishable from fully licensed accountants, doctors, lawyers, and engineers. As a matter of law, however, the text, structure, and drafting history of the Professional Exemption limit its application to licensed accountants, and Associates are not licensed. Second, PwC argues that Attest Associates satisfy the Wage Order’s Administrative Exemption because they work “under only general supervision” despite up to six layers of managers who are responsible for Associates’ work. That argument fails, however, because PwC has not pointed to sufficient evidence to create a triable issue of fact that Associates “work along specialized or technical lines”—much less that they do so “under only general supervision”—as required by the Administrative Exemption.

The argument goes into detail from there addressing three key arguments: 1) The Professional Exemption Does Not Apply to Attest Associates; 2) The Administrative Exemption Does Not Apply to Attest Associates; 3) The Rules Governing Professions Other Than Accounting Do Not Help PwC. You can see the brief in its entirety on the next pages.

PwC addresses all three arguments in their brief; this is a portion from the brief’s introduction:

Put simply, nothing in the Wage Order precludes unlicensed accountants from being shown to be exempt under subsection (b) of the Professional Exemption. Plaintiffs’ argument that the “drafting history” of the wage order at issue shows an intention on the part of the [Industrial Welfare Commission] to prohibit unlicensed accountants from being professionally exempt should be rejected, because the language and structure of the Professional Exemption are not ambiguous, and contain no such prohibition. Even the District Court did not accept Plaintiffs’ tortured reading of the text of the Professional Exemption, or claim to find unambiguous intent on the part of the [Industrial Welfare Commission] to exclude from eligibility for the Professional Exemption all unlicensed members of the accounting profession — and inevitably by extension, all unlicensed lawyers, doctors, dentists, optometrists, architects, engineers, and teachers. Doing so is flatly contrary to the overriding principle governing application of exemptions from overtime provisions, which is to consider individual employees’ work duties.

And their brief outlines a direct counter to the plaintiffs’ brief: 1) Plaintiffs’ Argument That Accountants Can Only Qualify for a Professional Exemption Under Subsection (a) Is Unsupportable 2) PwC Is Entitled to Show That Its Attest Associates Satisfy the “General Supervision” Requirement of the Administrative Exemption; 3) The Impact of the District Court’s Order Is Not Limited to the Profession of Accounting.

So what we’ve got here is…failure to agree on how the ambiguous (or not) California law is and how it applies specifically to unlicensed audit associates. Are they really just cogs in the wheel, bowing to their superiors as the plaintiffs argue? Or are they responsible professionals who are engaged in a challenging occupation that warrants exemption? The 9th Circuit will have transcripts and audio from the proceedings available on its website at some point tomorrow and we’ll update this post with them when they’re available. As for a resolution, it will be several months before we find out what the 9th Circuit rules and then, there’s still a trial to be had. Stay tuned.

UPDATE: Audio is now available for those interested. You can listen to the proceedings here.

2010 01 29 Br of Appellees

Efiled Reply Brief