With the rise of telework, the gig economy, and the current economic climate, many employees are seeking additional sources of income. This may take the form of a second job, freelance work, or gig positions, which is commonly referred to as “Moonlighting.” Moonlighting presents challenges for California employers, especially given legal restrictions prohibiting employers from interfering with lawful off-duty activities by employees.
Navigating Moonlighting Challenges
Moonlighting can be an important outlet for employees, helping them acquire new skills, pursue personal interests, and supplement their income, giving them the overall satisfaction that comes from added economic security. However, employers may have reasonable concerns about moonlighting, including concerns about employee burnout, loss of productivity, scheduling difficulty, and conflicts of interest. With the rise of telework, employers have also experienced increased concerns regarding use of company equipment for other employment and theft of time from employees maintaining simultaneous full-time remote positions.
California is nominally an “at-will” employment state, but employment relationships are heavily regulated, including regulating what restrictions employers can impose on off-duty conduct. Employees generally enjoy a right of privacy regarding off-duty conduct and California Labor Code Section 96 and Section 98.6 expressly prohibit employers from punishing employees for lawful conduct outside of work hours, including exercising free speech rights, political activity, and moonlighting. Discrimination, suspension, or discharge for lawful off-duty conduct exposes employers to claims for reinstatement and back pay and a civil penalty of up to $10,000 per employee for each violation.
So, what are employers to do? While employers cannot impose blanket prohibitions on outside employment during off-duty hours, employers do not have to alter their policies and performance expectations to accommodate moonlighting. For example, a moonlighting employee who shows up fatigued, arrives late, or develops attendance and performance problems is not protected and is subject to discipline including termination. Similarly, employees are not protected when using company resources for moonlighting, engaging in theft of time by working for another employer while on the clock, or using employer information to support their moonlighting activities.
Employee Handbook Policy
Employee handbooks should include a policy regarding off-duty employment that is announced as part of the hiring process. Such a policy should:
- Require the employee to notify the employer of outside employment;
- Set the expectation that the outside employment is secondary and cannot interfere with their work, including expected availability for meetings, overtime, and performance standards;
- Prohibit the use of company equipment and supplies for outside employment;
- Prohibit the use of confidential company information, trade secrets, or data for other employment; and
- Identify ramifications, including being asked to discontinue conflicting outside employment or being subject to discipline up to and including termination.
Many employers are reviewing their handbooks and policies to ensure compliance with California’s ever-evolving employment laws. As part of their annual handbook review, employers should consult with counsel regarding an outside employment policy that is tailored to their needs.