Employees’ Side Hustles Raise Legal Questions for Employers

Quick Hits

• Side gigs supported by digital apps are becoming more common.
• State laws may regulate whether an employer can fire a worker for moonlighting.
• Most employees are considered at will, but some have job protections from a union contract or individual employment contract.

It is becoming more common for employees to have side gigs, particularly in roles like food delivery, ridesharing, online tutoring, social media management, creating content as a social media influencer, and reselling goods on online marketplaces.

Several factors govern whether an employer can legally fire or discipline a worker for moonlighting, including whether a union contract, individual employment contract, or noncompete agreement is in place. Without a contract, most employees are considered at will, meaning they can be fired for any reason or no reason at all, unless it constitutes discrimination or retaliation.

Many employers maintain written moonlighting policies, which may require workers to get HR or supervisor approval before starting any outside employment. Likewise, many employers have language in their employee handbooks to bar conflicts of interest or working for a competitor. For example, it may create a conflict of interest if an employee for a well-known multinational hotel chain becomes a popular travel influencer earning money by commenting on a range of hotels, destinations, and tourist attractions.

The purpose of these corporate policies is to prevent damage to the employer’s brand, public reputation, and trade secrets. Companies also may have concerns that outside employment will compromise an employee’s duty of loyalty or create problems related to scheduling, absenteeism, tardiness, and using work time and/or work resources for a side gig. It is generally legal for employers to have policies that prevent workers from using company resources or company time on their outside employment. Some employers’ policies also prohibit employees from mentioning the company’s name or brands, or wearing company merchandise, on personal social media posts without prior written approval.

However, some states have laws that restrict employers from firing or disciplining workers for legal off-duty activities, which may include moonlighting, unless there is a conflict of interest. California, Colorado, and North Dakota protect all lawful off-duty activities, while other states protect certain types of lawful off-duty activities, such as serving in the state legislature, working as an election official, or owning a gun. Washington State has a law stipulating that employers “may not restrict, restrain, or prohibit an employee earning less than twice the applicable state minimum hourly wage from having an additional job, supplementing their income by working for another employer, working as an independent contractor, or being self-employed.”

Frequently, religious and political employers are exempt from these types of provisions. For example, a church could legally fire a pastor for having outside employment that conflicted with church doctrine.

Next Steps

Employers may wish to include clear language in employee handbooks about what types of outside employment and conflicts of interest will not be permitted. If moonlighting causes an employee to be late, absent, or less productive at work, it may be helpful to carefully document the dates, times, and other details related to work performance. If employers handle employee discipline and employment termination decisions in a fair and consistent manner, it may reduce the risk of discrimination lawsuits based on race, gender, or other legally protected characteristics.

Ogletree Deakins’ Employment Law Practice Group will continue to monitor developments and will post updates on the Employee Engagement and Employment Law blogs as additional information becomes available.

David C. Castleberry is a shareholder in Ogletree Deakins’ Salt Lake City office.

Michael D. Wilson is a shareholder in Ogletree Deakins’ San Francisco office.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

Follow and Subscribe
LinkedIn | Instagram | Webinars | Podcasts