Peacock Tales • Summer 2019

Managing the Side Hustle - Employer's Take

The term “side hustle” isn’t new, but its meaning has changed significantly in recent years. While in the past the term may have conjured up dubious connotations, it is now used to describe what employees do outside of their regular job to make a little extra money on the side. Although many companies have a “no moonlighting” policy, such policies are viewed as almost quaint these days as employers are beginning to realize that more and more of their employees have a side hustle to supplement their regular income.

The fact that an employee has a side hustle does not necessarily mean that the employee is unhappy at their primary job, and as long as the side hustle does not involve working for a direct competitor, most employers don’t have an issue with employees having a side hustle. However, once an employer knows that their employee has a side hustle, the employer will need to monitor the impact of the employee’s side hustle to ensure that the employee’s participation in a side hustle does not run afoul of workplace policies.

Generally speaking, employers cannot completely restrict an employee from having another job outside of regular work hours away from the employer’s premises. Employers can, however, restrict an employee from working for another employer for legitimate business reasons.

So what should an employer do when an employee makes it known that they have a side hustle? First and foremost, the employer should set reasonable limits by having an open and up front conversation with the employee. The employer should confirm that the employee’s side hustle does not create any conflicts of interest, which could occur if the side hustle is in the same or similar field to the services that the employer provides.

Employers should also establish policies to ensure that they are protected from an employee's conduct both at the workplace and when the employee is working at their side hustle. If, for example, the side hustle involves posting pictures or comments to social media that could have a negative impact on the employer, the employer will need a policy to address this. It doesn’t matter whether the employee posted the picture or comment as part of their side hustle; the employee is still an employee whether they are in the office or working on their side hustle.

Employers can also prohibit the use of work time for the side hustle. Employees who have a side hustle should be held to the same standards regarding performance, attendance and productivity as other employees. For instance, an employee cannot abuse their employer’s Family and Medical Leave Act (FMLA) policy. Both the FMLA and the Americans with Disabilities Act give employees the right to take time off from work for medical reasons and other certain situations. However, these laws do not specifically address whether employees may engage in outside employment or business activities while they are on FMLA leave or an ADA-related leave. Courts are just beginning to weigh in on whether employees on FMLA leave can continue to pursue their side hustles.

Employers also need to emphasize that employees cannot use the employer’s equipment, nor its proprietary or confidential information, to benefit their side hustle. For example, if an employer provides the employee with a list of potential new clients, the employee should not take that information and use it to benefit their side hustle. Doing so could negatively impact the employer’s relationship with potential clients. 

The side hustle isn’t going away any time soon. If you have questions about whether or not your business is protected from your employee’s side hustle, Peacock Keller can help provide you with the legal guidance you need to navigate this aspect of the evolving economy.


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