Side Hustles: What Employers Should Know
We have recently received many inquiries from clients about their employees working a second job or a “side hustle.” This blog explores side gigs and provides suggestions for employers to revisit and strengthen their outside employment policies.
Side hustles as a result of remote work and inflation
In today’s increasingly remote work environment—and with the pressure of rising inflation—side hustles (also known as “moonlighting” or “outside employment”) have boomed. A recent survey by LendingTree found that 44% of Americans have a side hustle, with Gen Z’ers (ages 18 to 25) being the age group most likely to have a side hustle (62% of them do, according to the study).
In many cases, an employee’s side hustle may not pose a problem for the primary employer: such as when employees take up freelance assignments, consultancy work, etc., and when the subject matter of the side hustle is different from the primary employer’s line of work. In these situations, the employee’s second job may not impact their work obligations in their primary position.
However, side hustles become an issue when the second job is connected closely, or is similar to, the work performed in the primary job, or when the employee’s availability or performance in their primary role is impacted by the second job. Historically, moonlighters generally worked their second job/side gig over the weekends or outside their regular working hours. However, particularly in today’s remote work environment, employees’ ability to multitask and potentially work two jobs at once is easier than ever, at least on its face.
This may make it impossible for an employer to monitor exactly what a remote employee is working on and when. That might not be such a problem with a stellar, exempt employee. For most employees, though, one job or the other will suffer. The problem becomes even more complicated if the person with a second job is a non-exempt employee whose employer must track meal and rest breaks plus overtime.
Employers should consider the following suggestions in light of this growing trend.
Steps for employers to consider
1. Revisit your conflict-of-interest policy. Specifically, make sure to include examples of what a conflict of interest would be, such as:
Working with or soliciting clients or customers of the employer;
Working on a side gig during the employee’s working hours for the primary employer;
Using company resources in connection with a second job (such as time, equipment, software, etc.);
Using company sick time to perform work for a side gig;
A second job impairing the employee’s ability to perform their primary job: such as the second job contributing to performance or attendance issues (i.e., employee being late, fatigued, unable to complete their duties, etc.);
Exposing proprietary information to a third party, or advancing the interests of a competitor by using the employer’s propriety information.
2. Consider establishing a procedure for employees to disclose secondary jobs.
In California, an employer may request that employees disclose any secondary jobs to their primary employer, so that the primary employer can evaluate whether the outside employment violates any company policy.
Employers can request information such as: the name of the secondary employer, the nature of the work, the weekly hours commitment for the employee.
3. Include the following statements in your conflict-of-interest policy:
That failure to follow the policy could result in disciplinary action up to and including termination of employment;
That the policy is not intended to discourage or interfere with employees participating in any protected activity.
4. Review your intellectual property and non-disclosure agreements (NDAs). Revisit your propriety information agreements, NDAs, and any intellectual property agreements to ensure that they clearly explain:
Employees may not use the company’s intellectual property in connection with a second job;
The use of company intellectual property for an employee’s personal gain is prohibited;
Any violation of the policy may result in discipline, up to and including termination.
5. Communicate with your employees about side hustles!
Communicate openly with your employees about your outside employment policy: if you make revisions to your policies, send an all-staff update, and discuss it on a team call.
Make sure that employees understand and sign a copy of any revised policies.
Side hustles and moonlighting can be a great way for employees to pursue passion projects or gain extra income. But following the steps above is important to ensure that employees are not harming your business while taking on a side hustle.
Authors: Diana Maier, Partner, and Emily Harrington, Associate
This article has been prepared for general informational purposes only and does not constitute advertising, solicitation, or legal advice. If you have questions about a particular matter, please contact the Maier Law Group directly.