Is it legal to prohibit my employees from working a second job, or fire them for doing so?
Yes. Employers may legally limit the rights of their employees to work a second job (often called moonlighting), especially if that work substantially interferes or competes with the duties of their primary job. Depending on state labor laws, however, there may be some limits as to what type of work you may restrict or when you may do so.
For example, an employee can be prohibited from working on their second job during the hours in which they have agreed to work for you. Employees might also encounter problems if they allow their second job to drain their energy to the point that their work for you suffers. Employees can be limited from working for a competitor, stealing your clients, or starting their own business in direct competition with yours. This may be the case both while they are employed by you, or even after their employment ends.
Doing any of these things may be considered just cause to discipline or fire the employee under even the most restrictive employment situations, such as unionized jobs. Note that in these situations, unless the employee's conduct is particularly egregious, you may be required to provide them with an Employee Warning Letter and a chance to correct their misconduct before firing them.
Most states allow employers to institute a more general ban on moonlighting as part of company policy. In these situations, working a second job is against company policy, which might provide just cause to fire the employee even if it does not affect their job performance or your business interests. A Rocket Lawyer network attorney can help you determine whether you can adopt a company policy that bans moonlighting in your location.
How do at-will employment laws protect me if I prevent my employees from working second jobs?
At-will employment laws allow an employer to fire an employee at any time and for any reason not expressly forbidden by law, such as discrimination or retaliation. Generally speaking, these laws give employers the right to fire or discipline their employees for moonlighting.
Every state except Montana is considered an at-will employment state, though most states have at least one form of exemption to at-will employment laws. These exemptions are generally grouped into three broad categories:
- Under the public policy exemption, an employee usually cannot be fired if doing so violates the state's well-established public policy. This exemption typically prevents employers from firing employees for taking an action that complies with federal or state law, or for refusing to take an action that violates federal or state law.
- Under the implied contract exemption, an employee usually cannot be fired at will if their contract or other employment documents clearly state or imply that the employee cannot be fired at will. This exemption typically applies to contracts that state an employee cannot be fired without "just cause." But it may also apply when an Employee Handbook sets out disciplinary procedures to be followed before terminating an employee, since a court may determine that the procedures in the handbook demonstrate (or imply) that an employment arrangement, other than an at-will one, was in place.
- Under the covenant of good faith exemption, an employee usually cannot be fired out of malice or bad intentions. Though some say this exemption requires employers to have just cause to fire an employee, it does not necessarily require the kind of employee misconduct typically necessary to satisfy the just cause standard. Rather, this exemption is mostly about the employer's intentions. It seeks to make sure that the employer did not fire the employee for unfair reasons, for example because their stock options were about to vest.
How can I protect my trade secrets and prevent employees from competing with my business?
Protecting your business's intellectual property often begins with strong data security and clear policies that require your employees and vendors to maintain strict confidentiality. Requiring your employees to sign a Non-Disclosure Agreement may add legal force to these policies. It may also permit you to get a court order that forbids employees from revealing confidential information or requires them to pay you if they do.
A Noncompete Agreement may legally prevent your employees from working for your competitors or starting a business that directly competes with yours for a certain amount of time. Most states typically require these agreements to be reasonable about how long the agreement lasts after an employment relationship ends, the geographic area in which the employee cannot work, and the scope of the work the employee cannot do. However, three states, California, North Dakota, and Oklahoma, and Washington, D.C., generally do not allow Noncompete Agreements to be enforced.
How do I legally prohibit my employees from moonlighting?
An Employment Contract is the heart of the employer-employee relationship. To prohibit employees from moonlighting, you may want to specify in their employment contracts that they are at-will employees and clearly prohibit them from moonlighting during their employment with you..
In addition to a clear Employment Contract, you may also want to publish the moonlighting ban in your Employee Handbook to ensure employees are aware of the policy. If you need help developing the right language for your contracts or policies, ask a lawyer.
What are off-duty conduct laws and do they restrict employees from working second jobs?
Off-duty conduct laws are state laws that prevent employers from regulating their employees' lives outside of work. Although the strictest constitutional privacy rules may not apply to private employers, respecting your employees' privacy as much as possible is usually a good idea.
Generally, employers may discipline or fire an employee for off-duty conduct in three cases:
- When the employee's off-duty conduct is related to their job performance.
- When the off-duty conduct makes the business look bad to the public.
- When the employee's conduct might harm the business.
If these situations apply, it can give employers good reasons to fire an employee for moonlighting. In other words, if an employee's second job affects their work for you or risks your business interests, you may be able to legally discipline or fire them. The laws on off-duty conduct are not the same in every state, particularly for moonlighting.
If you have questions about your state's labor laws, or other employment questions, reach out to a Rocket Lawyer network attorney.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.