Is it possible to prohibit employees from working a second job?

Having motivated workers isn’t always a negative thing, but when they’re also working for someone else, restrictions may be required. Further information may be found here.

What you’ll discover:

Is it lawful for me to forbid my workers from doing a second job or to fire them if they do?
What protection do at-will employment rules provide me if I prohibit my workers from doing second jobs?
How can I safeguard my trade secrets and keep my staff from competing with my company?
How can I legally prevent my staff from working extra hours?
What are off-duty behavior restrictions, and do they limit workers’ ability to perform second jobs?

Employees with full-time employment may now perform second occupations or side hustles more easily than ever before. This is particularly true when more options for remote employment and the gig economy become accessible. Yet, as an employer, you may be afraid that side gigs or second employment would divert your workers’ attention and time away from their core job working for you. These are some often asked questions concerning whether companies may limit workers’ capacity to work a second job.

Is it lawful for me to forbid my workers from doing a second job or to fire them if they do?

Yes. Companies may legally restrict their workers’ rights to perform a second job (also known as moonlighting), particularly if such employment significantly interferes with or competes with the tasks of their main job. But, depending on state labor regulations, there may be certain restrictions on what sort of employment you may restrict and when you can do so.

For example, an employee may be forbidden from working on their second job within the hours agreed upon with you. Workers may also have issues if they allow their second job to deplete their energies to the point that their work for you suffers. Workers might be prohibited from working for a rival, stealing your customers, or establishing their own firm that competes directly with yours. This might be true both while they are working for you and after they leave.

In even the most restricted work conditions, such as unionized positions, doing any of these actions may be deemed just grounds to penalize or dismiss the employee. Remember that, unless the employee’s behavior is exceptionally serious, you may be obligated to offer them with an Employee Warning Letter and an opportunity to address their wrongdoing before terminating them in certain cases.

Most jurisdictions enable companies to impose a blanket prohibition on moonlighting as part of their corporate policy. Doing a second job is against company policy in many cases, which may offer legitimate grounds to terminate the employee even if it has no effect on their job performance or your business interests.

What protection do at-will employment rules provide me if I prohibit my workers from doing second jobs?

At-will employment rules enable an employer to terminate an employee at any time and for any cause other than discrimination or retaliation that is not specifically prohibited by law. In general, these laws provide employers the authority to terminate or reprimand workers who moonlight.

Except for Montana, every state is an at-will employment state, however most states offer at least one sort of exemption from at-will employment legislation. These exclusions are broadly classified into three categories:

Under the public policy exception, an employee may not be dismissed if doing so would contravene well-established state public policy. This exception often prohibits employers from terminating workers for acting in accordance with federal or state law, or for refusing to act in accordance with federal or state law.
An employee normally cannot be dismissed at will under the implied contract exemption if their contract or other employment agreements clearly express or suggest that the employee cannot be fired at will. This exception usually applies to contracts that say that an employee cannot be dismissed for “just cause.” Yet, it may also apply when an Employee Handbook specifies disciplinary processes to be followed before dismissing an employee, since a court may conclude that the procedures in the handbook establish (or suggest) the existence of an employment arrangement other than an at-will one.
An employee cannot normally be dismissed for malice or ill intentions under the covenant of good faith exemption. Whilst some argue that this exception requires employers to have just cause to terminate an employee, it does not always need the kind of employee wrongdoing that is normally required to fulfill the just cause threshold. Rather, this exception is primarily concerned with the employer’s intentions. It aims to ensure that the employee was not fired unfairly, for example, because their stock options were going to vest.

How can I safeguard my trade secrets and keep my staff from competing with my company?

Safeguarding your company’s intellectual property frequently starts with robust data security and clear regulations requiring absolute confidentiality from your workers and contractors. Asking your staff to sign a Non-Disclosure Agreement may give these regulations legal heft. It may also allow you to get a court order prohibiting workers from disclosing sensitive information or requiring them to compensate you if they do.

A Noncompete Agreement may legally bar your workers from working for rivals or launching a firm that competes directly with yours for a certain period of time. Most states require these agreements to be fair in terms of how long they continue after an employment connection ends, the geographical region in which the employee cannot work, and the breadth of the job the employee cannot conduct. Noncompete Agreements are not commonly enforced in three states: California, North Dakota, and Oklahoma, as well as Washington, D.C.

How can I legally prevent my staff from working extra hours?

The core of the employer-employee relationship is the Employment Contract. To prevent workers from moonlighting, clarify in their employment contracts that they are at-will employees and expressly forbid them from moonlighting while working for you.

In addition to a clear Employment Contract, you may wish to include the restriction on moonlighting in your Employee Handbook to ensure that workers are aware of the policy. Consult a lawyer if you need assistance drafting the appropriate wording for your contracts or policies.

What are off-duty behavior restrictions, and do they limit workers’ ability to perform second jobs?

Off-duty behavior rules are state laws that prohibit employers from interfering with their workers’ personal life outside of work. While private employers may not be subject to the most stringent constitutional privacy provisions, preserving your workers’ privacy as much as possible is typically a good idea.

Employers may generally penalize or dismiss an employee for off-duty behavior in three situations:

When an employee’s off-duty behavior affects their work performance.
When off-duty behavior makes the company seem bad in the eyes of the public.
When an employee’s actions may be detrimental to the company.

If any of these scenarios apply, employers may have justification to terminate an employee for moonlighting. In other words, if an employee’s second job interferes with or jeopardizes their work for you, you may be able to lawfully penalize or terminate them. Off-duty rules differ from state to state, especially when it comes to moonlighting.