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Legal Considerations when Doing 'Side Work'

You’re a lawyer by day and an amateur software developer by night. As the job market becomes more competitive, starting work after your regular 9-to-5 job ends has steadily become more common. Many full-time workers now look for alternative ways to explore personal passions and generate a second income.

However, working a second or third job can quickly become complicated—and even illegal—if it begins to impact your primary work. This is particularly true for individuals who devote time to side projects that directly or indirectly compete with their primary employer’s product or service. Before accepting a side job or starting a personal business venture, make sure that your state laws and company employment policies won’t land you into legal trouble or the HR office.

Daylighting versus Moonlighting

Moonlighting describes the practice of devoting time to second jobs or other activities outside standard business hours. The U.S. Department of Labor estimates that anywhere between 7 and 8 million Americans—roughly five percent of full-time workers—work more than one job while employed at a company. In addition, most company policies consider both compensated and uncompensated activities as moonlighting or outside employment.

For some employers, employees are allowed to work a second job as long as they devote 100 percent of their focus toward their job responsibilities while on duty. Nevertheless, some employees risk reprimand or worse when they take business calls or work on outside business projects during company business hours.

Whereas moonlighting indicates jobs conducted after normal business hours, “daylighting” is the term used for individuals who perform the majority of their second job while at their primary place of employment. Daylighting is a source of annoyance and angst for employers as they strive to boost employee productivity while eliminating redundancies and operating costs in an increasingly competitive marketplace.

Contractual Employment Obligations

To protect the company from risk, some employers exercise authority to prevent employees from engaging in business activities outside their regular work hours. Three factors determine if an employer can dictate your ability to take a second job:

  1. Your employment contract
  2. Your state’s employment laws
  3. Your job position or responsibilities

If you’re thinking about starting an outside business or working for another employer in a similar industry, examine your employment contract closely. Find out if your employment contract contains an expressed (explicit) or implied (implicit) agreement against working second jobs. If your employer has an expressed moonlighting policy, then you face violating your work contract by taking a second job.

Moreover, in explicit contracts, the employment terms around moonlighting are not necessarily contained in one document. The language can pull from a variety of company sources, including:

  • Job advertisements
  • Formal instructions listed on notice boards
  • Office manuals
  • Pay slips, which state the amount of money you have earned and the amount of tax or insurance taken out of your paycheck

On the other hand, implicit contracts contain terms that have not been specifically agreed upon between you and your employer. Instead, these terms are implicit as soon as you begin your employment.

Furthermore, an implicit employment contract may depend on the “custom and practice” of your position or the company. For example, if other employees in the company work second jobs outside the firm, then you should be given the same right as custom and practice of the company.

Your employer should explain either verbally or in writing whether you’re permitted to take a second job outside of regular business hours and if you’re legally obligated to tell your boss. Keep in mind that public employees in government and civil-servant roles may be subject to certain federal laws and agency regulations depending on their role and classification.

Some employers may require employees to disclose their moonlighting practices if they’re working second jobs similar to their employer’s line of business. One of the ways companies protect themselves against existing or former employees sharing trade secrets, intellectual property or other confidential company knowledge with competitors is by requiring them to sign a non-compete agreement. A non-compete clause prevents existing and former employees from working for competitors within a certain region or during a specified period of time after leaving the company.

Discussing Your Second Job with Your Employer

For any professional relationship to thrive and succeed, both parties need to be transparent in their dealings. Speak to your supervisor informally or schedule a meeting with your HR manager if your employment contract is unclear on whether you can work a second job outside your 9-to-5 hours. Being honest with your boss, as well as ensuring that your second job does not interfere with your primary career, can help you succeed regardless if you decide to pursue one or more professions simultaneously.