The COVID-19 pandemic will surely be the defining event of the decade. It has presented opportunities for employees and challenges for employers. One area we are seeing more and more is the phenomenon of moonlighting. In the world of remote or hybrid work arrangements, it has become easier and more commonplace for employees to work secondary jobs.
In this blog, we discuss the legal considerations of moonlighting for employers and employees. In and of itself, moonlighting may be a perfectly acceptable practice. Employers beware: it can snowball into a legal problem quickly in some situations.
An employee has to be loyal to their primary employer. It may be in breach of their contract (hopefully you have a contract) if they take secondary employment and:
- their written employment contract has a loyalty provision indicating they must devote their best efforts and attention to the employer’s interests, but the employee is distracted by their second job and therefore fails to deliver for their primary employer;
- their contract states that they cannot moonlight, even in businesses that are non-competitive with their first/primary employer’s business (with or without the employer’s permission).
Despite an employee’s general duty of loyalty to their employer, it is always good practice for employers to include an express loyalty clause in an employment contract.
What about after hours work?
Working a secondary job after the working hours of the first, and that does not interfere with the first job, is less likely to be upheld as a breach of the duty of loyalty if no other issues crop up (e.g., competition, confidentiality, proprietary interests, etc.). However, employees in these situations would be well-advised to remain vigilant and careful in ensuring that these issues continue to remain out of the picture and keep a record of the hours worked for each job in the event the first employer argues the employee did non-company work during company time.
Ultimately, an employee does not generally have a duty to advise their employer that they are working more than one job, especially if the second job takes place after hours of the first job. However, there are steps that an employer can take to minimize the potential issues that can arise out of moonlighting by preparing a robust and enforceable employment contract.
Some contracts will expressly restrict employees from undertaking any other business or employment or even becoming a director of a company that competes with the employee’s duty of loyalty to their primary employer. Employees should ensure they take all reasonable steps to prevent competing with their current employer by being involved with a competitive entity.
Confidentiality and conflicts of interest
As an employer, you may find that your employee’s alternative employment or even their involvement with another organization, such as doing non-for-profit volunteer work, creates a conflict of interest with your business. Or perhaps you discover that the employee has disclosed or used your company’s confidential information or intellectual property in carrying out the tasks of their other job or work with another organization. All employees have a general duty of good faith and loyalty during the course of their employment, which extends to maintaining the confidence of their employer’s confidential information and avoiding conflicts of interest. Nonetheless, it is never a bad idea to set this out in writing in an employment contract to ensure the employee is made aware of these obligations and to ensure you have a signed document on which you can rely should any disputes about them arise.
Similarly, the rules of intellectual property ownership can vary widely, depending on such factors as the nature of the intellectual property. Having an enforceable contract that indicates that the employee must transfer and assign all intellectual property rights developed in the course of the employment with the company can reduce headaches down the road should the terms be breached.
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