Employers and workers should handle ‘moonlighting’ with care

It’s not uncommon in these challenging times for people to take a second job on the side – or even spend time outside of work trying to create a new business venture of their own.

Employers’ reactions to moonlighting run the gamut: Some couldn’t care less, while others consider it a firing offense. Many employers have no problem with a second job as long as the employee’s work performance remains solid, and as long as nothing the employee does for an outside company compromises the employer’s business interests.

If you’re thinking of moonlighting, it’s certainly wise to review whether what you’re planning to do violates any written policies of your employer, or your own employment agreements. Even if it doesn’t violate a written policy, moonlighting can still be illegal (and can get you sued) if it violates a “duty of loyalty” to an employer – for instance, if you use an employer’s ideas or customers to start your own business.

If you’re an employer, it’s a good idea to have a written moonlighting policy. Such a policy can provide guidance to employees, and it can also make it easier to take disciplinary (or legal) action if an employee steps over the line.

Here are some things to consider:

An employer can absolutely ban moonlighting in many cases. But it’s seldom a good idea. Prohibiting someone from pursuing their dreams or taking a second job to support a family, even where it doesn’t actually harm the employer, can hurt morale and recruitment. In addition, if an employer fires someone for outside work that didn’t harm the company, a jury might later suspect that the employer was actually motivated by some form of illegal discrimination.

On the other hand, employers have every right to object to moonlighting if the employee’s performance at his or her primary job suffers.

Employers also have a good reason to object to moonlighting if it affects the employer’s business interests. For instance, employers might certainly want to prohibit workers from moonlighting for a competitor, or even in a related business. And they might want to prohibit workers from using company time or resources to pursue side activities.

Employers might also want to require workers who moonlight to inform the employer of the fact that they’re moonlighting, along with what sort of work they’re doing and for whom they’re doing it. This gives the employer a chance to figure out whether what the employee is doing is actually detrimental to the company.

And certainly, employees can be prohibited from stealing trade secrets or customers.

One of the more contentious issues involves what happens if a moonlighting employee invents something or develops a new process that is of value to the employer. Some employers specifically say that if an employee develops “intellectual property” on the side – a new invention, technique, process, software, etc. – the employer has the legal rights to it.

This is a very important issue for employees who are thinking of starting their own business while working for someone else. In fact, there are many instances where a start-up company was unable to obtain financing because there was a legal cloud over whether the company’s ideas actually belonged to a founder’s previous employer.

Whether you’re an employee or an employer, it’s a good idea to speak to an employment lawyer about any moonlighting concerns. Clarity about what your rights are now can prevent lawsuits and other problems down the road.