The Second Job Question: When Should Employers Care?

More than five percent of employed Americans hold more than one job, according to the U.S. Bureau of Labor Statistics. For employers, outside employment may raise concerns related to employee performance, competition, and confidential information. A carefully drafted outside-employment policy can protect legitimate business interests without unnecessarily controlling employees’ conduct during their personal time.

What is Moonlighting?

“Moonlighting” describes an employee who holds a second job, performs freelance work, or operates a business while continuing to work for a primary employer. Employees may engage in moonlighting for several reasons, such as to supplement their income, develop new skills, or pursue personal interests. Moonlighting is not new; however, employers may encounter it more often as employees seek additional income or use online platforms to offer freelance or other professional services. The challenge for employers is balancing employees’ interests in pursuing outside work against the need to protect legitimate business interests.

Generally, moonlighting does not automatically create a workplace problem. For example, an employee may work weekends for an unrelated business or operate a side business without affecting the employee’s primary job. In some cases, moonlighting may even benefit the primary employer, such as when the employee develops new skills, expands their professional experience, or gains knowledge that improves their performance.

Employers may have legitimate concerns, however, when an employee’s second job interferes with the employee’s existing responsibilities. For example, an employee may begin arriving late to work, miss shifts, struggle to meet performance expectations, use company equipment for a side business, or offer competing services to the employer’s customers. Outside employment may also create safety concerns if fatigue affects employees in positions that require them to operate machinery, provide critical patient care, or perform other safety-sensitive work.

Employees also generally owe duties of loyalty and confidentiality to their employers. Those duties become especially relevant when an employee works for a competitor, uses confidential information to benefit another business, or diverts customers or business opportunities from the employer.

When outside employment causes workplace problems, employers should address the specific impact with the employee. For example, repeated tardiness or absenteeism presents an attendance issue, fatigue creates safety and performance concerns, and using a company laptop to operate a side business constitutes misuse of company property. Employers should address those specific concerns rather than assume every second job creates a problem. A policy that prohibits all outside employment may unnecessarily restrict employees whose outside work does not affect the workplace. A more tailored policy should focus on the actual risks that outside employment may create.

Set Clear Expectations

Employers may address moonlighting in their employee handbook through a clear outside-employment policy. The policy should explain when employees may pursue outside work and identify the circumstances in which that work conflicts with the employer’s legitimate business interests.

Policies should generally require employees to:

• Continue to meet the employer’s performance, attendance, scheduling, productivity, and safety expectations;
• Avoid outside work that competes with the employer or creates an actual conflict of interest;
• Protect the employer’s confidential, proprietary, and trade secret information; and
• Refrain from using the employer’s time, property, facilities, equipment, supplies, or other resources for outside work.

The policy should also state whether employees must disclose outside employment. Employers should avoid vague provisions that allow them to prohibit any outside activity that could “reflect poorly” on the business or bring “unwanted attention.” Such standards provide employees with little guidance and may lead to inconsistent enforcement.

The policy should also reserve the employer’s right to reassess outside employment if circumstances change. A second job that initially creates no conflict may later interfere with the employee’s schedule, performance, or responsibilities. Finally, employers should apply any outside-employment rules or policy consistently. Selective enforcement may allow an employee to argue that the employer relied on the moonlighting policy as a pretext for discrimination or retaliation.

Bottom Line

Outside employment does not necessarily affect an employee’s primary job and may provide employees with additional income, skills, and experience. Employers may nevertheless address outside work that creates a conflict of interest or affects attendance, performance, safety, confidentiality, or other workplace responsibilities. A clear outside-employment policy can help employees understand when disclosure is required and help employers evaluate potential concerns consistently based on the specific circumstances.

This article, slightly modified to note recent updates, was featured online in the Great Lakes Employment Law Letter and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.