Question: Over the years, I’ve noticed that more of my employees have second or even third jobs, or “side hustles.” Although I recognize it is expensive to live in this area, I am concerned about my employees’ loyalty to my business. What, if anything, can I do to restrict my employees from holding other jobs?
Answer: It seems that the number of employees with side hustles, formerly referred to as moonlighting, has increased. Although the unemployment rate in Monterey County was a relatively low 5.5% in July 2017, many employees are seeking new ways to supplement their income. According to new CareerBuilder research, nearly a third of workers (32%) have a second job, compared to 29% last year. More women than men have side hustles—35% of women vs. 28% of men. Workers under age 35 are more likely to have a side hustle (41%) compared to employees over 35 (27%). The national study was conducted online by Harris Poll on behalf of CareerBuilder from May 24 to June 16, 2017 among a representative sample of 3,696 full-time workers across industries in the United States.
Your concern that employee loyalty may be affected by having more than one job is understandable. However, in California, employees cannot be demoted, suspended, or discharged for engaging in lawful conduct occurring during nonworking hours away from the employer’s premises. Therefore, employers cannot have a policy that completely prohibits employees from having another job.
The freedom to engage in lawful off duty conduct is balanced by the duty of loyalty to the employer. Specifically, an employee has a duty to act in the best interest of his or her employer during the course of the employment relationship. In addition, everything an employee acquires through the employment relationship, except for compensation, belongs to the employer. The duty of loyalty is codified in California Labor Code sections 2863 and 2860.
Employers can prohibit employees from working for another employer for specific, legitimate business reasons. It is important to have a clear and concise policy that informs employees when outside employment is not permitted, and that requires employees to inform you if they take another job so you can determine if the outside employment creates a conflict of interest.
Your policy should be based on business-related criteria and avoid restrictions on employee conduct that are not related to the employer’s legitimate business interest. Some permissible restrictions include:
• prohibiting any employment that creates conflicts of interest, including working for a competitor;
• maintaining trade secrets or confidential or proprietary business information;
• prohibiting outside work during normally scheduled work hours;
• prohibiting employees from acting on behalf of or representing the primary employer when doing the outside work;
• prohibiting the use of work time, resources, and equipment for the side hustle;
• prohibiting outside work that interferes with the employee’s job performance.
Remember, employees who have side hustles should be held to the same standards regarding performance, attendance, and productivity as other employees.
The CareerBuilder survey suggests that holding more than one job does not diminish employee loyalty to the primary employer. 67% of workers with a side hustle do not want to turn their side job into their day job, and 42% stated they are more passionate about their day job than their side hustle.