Key Takeaways

  • Outside employment (or moonlighting) can create legal and operational concerns for employers and employees.
  • Employment agreements and policies should clearly address outside work, including conflict of interest clauses and approval processes.
  • Employers can implement moonlighting policies to protect productivity and avoid legal risks but must avoid overreaching into off-duty conduct.
  • Employees have rights around lawful off-duty behavior depending on the state and context.
  • A well-drafted outside employment agreement helps balance business needs with employee rights.An outside employment agreement establishes company guidelines relating to employees obtaining or engaging in outside employment which may interfere with their primary job responsibilities.

Important Terms to Negotiate in Your Employment Agreement

Before signing an employment agreement, it is important to discuss job duties and obligations to ensure both parties are on the same page. During this time, many individuals forget to inquire about whether or not any outside employment is permitted. This is important because the majority of employment agreements do not allow any outside employment opportunities.

Additionally, some agreements, even prohibit an employee from participating in any activities that may take up too much time and energy. For example, if you are contemplating starting a new business or continuing a side-job that you love, it is best to consult with your employer to ensure these activities are allowed and possibly reflected in your contract.

Also, consider examining your noncompete clause. This portion of a contract may prohibit you from seeking work in the same industry after departing the company. If the clause appears too restrictive, consider asking to have the noncompete clause revised.

Legal Rights Around Outside Work and Off-Duty Conduct

While employers have the right to protect their business interests, they must also be mindful of employee rights when it comes to off-duty conduct. In many states, employees are legally protected from being disciplined or terminated for lawful activity they engage in outside of work. These protections vary by state and may include:

  • Use of lawful substances (e.g., off-duty medical marijuana in some jurisdictions)
  • Political or religious activities
  • Second jobs that don’t conflict with the employer’s business or performance expectations

However, employers may act when outside work causes a conflict of interest, interferes with job performance, or violates company policy. It’s crucial to understand how your state treats employee privacy and lawful off-duty conduct.

Employees concerned about outside employment should review both state laws and the specific language in their employment contract. Consulting a legal professional is advisable to clarify any gray areas regarding permissible outside work.

Do You Need an Employee Moonlighting Policy to Protect Your Business?

As an employer, if you have concerns that an employee's secondary job may interfere with the duties and responsibilities of your workplace, you may want to implement a moonlighting policy. A moonlighting policy doesn't only control outside employment but also prohibits employees from leaving your company to go work for a competitor.

When an employee engages in outside employment, it can burden your business in many ways, such as:

  • Your employee's secondary job may create a conflict of interest.
  • Your employee may be too tired to perform their job effectively due to working late or long hours.
  • Your employee may have scheduling conflicts due to the secondary job requiring similar work hours.
  • Your employee may be using work hours to perform secondary job tasks.

If you decide to implement a moonlighting policy to protect your business, it's recommended not to focus on regulating the off-duty conduct of your employees. Instead, focus on stressing that there should be no interference with your business. Specifically, emphasize the importance of an employee's performance and outline work hours. It is not advised to forbid your employees from having a second job. This is because these rules are difficult to enforce and may result in the loss of respected employees.

Risks of Not Regulating Outside Employment

Failing to address outside employment in a formal policy can expose your business to several operational and legal risks:

  • Increased liability: If an employee causes harm while working a second job and claims to represent your business, you could be exposed to liability.
  • Breach of confidentiality: Employees working for competitors or in similar industries may inadvertently or deliberately share proprietary information.
  • Poor employee performance: Without boundaries, outside work can lead to fatigue, divided attention, and ultimately a decline in productivity.

By clearly defining what constitutes acceptable outside work and requiring disclosure or prior approval, employers can proactively mitigate these risks. It’s also wise to maintain documentation of employee disclosures regarding secondary jobs.

Creating a Moonlighting Policy

Remember, if you decide to implement a moonlighting policy, it does not have to prohibit employees from taking on other employment opportunities. However, it must be clear that having a second job cannot impact work performance in your business. Generally, moonlighting policies typically address the following factors:

  • What are the conflicts of interest?
  • As an employer, where do you stand on the approval of secondary job opportunities?
  • What is considered interference with the primary position?

The main goal for a moonlighting policy is to set clear expectations that an employee's duties at your company should be their primary job and outside work activities should never interfere with job performance. Moonlighting policies are created to protect your business. Conflict of interest policies also helps ensure that your employees don't begin working for your competitors while simultaneously working for you.

In a conflict of interest policy, be sure to state that no employee is allowed to share their time or talent with a company or firm that is a competitor to your corporation. It should also state that employees may not disclose what has been used or learned while on the job with regards to policies, programs, and techniques.

When developing your moonlighting policy, consider including a clause stating that employees must first obtain approval before securing any outside employment. The following are two examples of moonlighting policies that contain sample language that would be appropriate for this type of clause.

  • Example 1: If you are seeking part-time work with another company or firm, please consult with your supervisor before accepting the job. There may be many possible reasons to not accept another position and a potential problem may be avoided.
  • Example 2: Permission to hold business interests or outside employment with another corporation or a firm that is doing business with (your business name) and its suppliers and dealers, must be secured in writing from (your business name). Failure to ensure advance permission may result in immediate termination from (your business name).

Employee Protections and State Law Considerations

Employers must ensure their outside employment policies comply with applicable labor laws. Some jurisdictions have passed laws that restrict how employers can discipline or terminate employees for lawful off-duty conduct. For example:

  • California Labor Code Section 96(k) allows employees to seek relief if they are disciplined for lawful conduct outside work.
  • New York and Colorado have laws prohibiting retaliation based on legal recreational activity outside the workplace.
  • Federal protections, such as the National Labor Relations Act, protect off-duty union organizing and other “concerted activities.”

Therefore, while employers can prohibit activities that directly impact work performance or involve conflicts of interest, they must avoid infringing on rights related to legal outside activities.

Sample Outside Work Policy Elements

An effective outside employment policy should clearly outline the expectations and boundaries for employees pursuing additional work. Common components include:

  • Disclosure Requirement: Employees must disclose any outside employment before accepting another job.
  • Approval Process: Written approval must be obtained from a designated manager or HR before engaging in outside work.
  • Conflict of Interest Clause: Prohibits working with competitors or engaging in work that overlaps with company duties or confidential information.
  • Work Hours Priority: Reiterates that the employee’s primary obligation is to the company and that outside work must not interfere with assigned duties or availability.
  • Performance Safeguard: Specifies that second jobs must not affect the employee’s performance, attendance, or responsiveness.

These policies serve to protect both the organization and the employee by setting clear, enforceable boundaries.

Frequently Asked Questions

1. Can my employer stop me from working a second job? Yes, if the second job interferes with your performance, poses a conflict of interest, or violates a moonlighting policy, your employer may restrict it.

2. Do I need to tell my employer about outside work? Most employers require disclosure and approval for any outside employment. Check your employment contract or company policy.

3. What happens if I don’t disclose my side job? Failure to disclose outside employment could result in disciplinary action, especially if it violates company policy or causes performance issues.

4. Are employers allowed to monitor off-duty activities? In general, employers cannot unreasonably intrude into your private life, but they can act if off-duty conduct negatively affects your job or workplace.

5. What’s the difference between outside employment and a conflict of interest? Outside employment becomes a conflict of interest when it competes with your employer, uses company resources, or compromises job performance or loyalty.

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