Guarantee Performance: A Guide to Moonlighting Policy

  • Legal
moonlighting policy

Moonlighting Policy Definition

The definition of moonlighting is when a person works more than one job, typically the second job is outside of normal working hours. A moonlighting policy is a policy that details that an employee with more than one job, will treat an employer’s business as their primary job. It sets out the employer’s expectation that an employee’s other jobs will not interfere with their job performance.

Moonlighting Policy Example

Moonlighting Policy example

A moonlighting policy can be very beneficial to an employer as it is not uncommon for employees to have more than one job. With a moonlighting policy in place, an employer can regulate the impact of an employee’s secondary job, and guarantee that the employee prioritises their company’s work over others. It also ensures that if an employee happens to be working for a competitor, that they will focus more on work from their primary employer. 

Moonlighting Policy Benefits 

A moonlighting policy is beneficial because it can increase employee productivity. There are several ways that an employee’s external work can negatively impact a business. For example:

moonlighting policy benefits

With a moonlighting policy, as there is a shift in prioritisation, employees will better focus on employer’s tasks which could increase the overall productivity of a business. 

Is a Moonlighting Policy Legal?

The short answer is yes. Moonlighting policies are generally legal, however the best way to ensure that an employer’s policy is legal, is to ensure that it relates to and addresses business-related concerns. There are a series of laws that regulate off-duty conduct, and they prohibit an employer from intruding on an employee’s life outside of work. As such, if an employer aims to establish a moonlighting policy it is key that they remain business focused to avoid infringing these laws. This is especially because most statutes prohibiting employer regulation of off-duty conduct, usually allow prohibitions based on business-related concerns. 

Some examples of business-related concerns include:

business-related concerns of moonlighting policy

The above list is not exhaustive and employers may opt to implement more prohibitions as long as they are related to their business. It must be noted however, that in the United States, laws on moonlighting may vary slightly from State to State. As such, it is advised that if employers want more specific advice on what they are allowed to prohibit, they should consult a local lawyer. For example, some States allow employers to completely ban moonlighting, where some only permit prohibitions on specific actions, such as those mentioned in the above example. Despite this, in general, if an employer sticks to prohibiting actions based on business-related concerns their moonlighting policy will be legal. 

If an employer wishes, they could also have an indirect moonlighting policy. For example, they could institute a conflict of interest policy, or a policy addressing confidential information, or even an overtime policy. To illustrate further, a conflict of interest policy could result in an employee not being able to conduct any activities which could be deemed as against an employer’s interest. Therefore, resulting in an employee being more likely to consider the primary employer as their main responsibility. Employers could also adopt an approval policy for employees wishing to undertake external employment so there is opportunity to determine whether desired work would create a conflict of interest. Either method could afford an employer the same result without breaching any laws. 

Employers must also take precautions to ensure that they are not inconsistently applying moonlighting policies. If they do, and they do so against an employee that has a protected characteristic, they could face a discrimination claim. 

Moonlighting Policy vs Moonlighting Ban

Some employers choose to establish a moonlighting ban (also known as a “no moonlighting clause”) over a moonlighting policy. What is the difference? A moonlighting ban prohibits employees from moonlighting in general, whereas a moonlighting policy can be seen as a guide to moonlighting. Both a moonlighting policy and a moonlighting ban essentially achieve similar goals, they can prevent conflicts of interest and increase an employees focus on work from the primary employer. However, there are some disadvantages associated with banning moonlighting as opposed to developing a moonlighting policy. 

moonlighting policy vs moonlighting ban

As can be seen above, moonlighting bans are illegal in some States, additionally, they can be perceived as hostile and could result in employer’s finding it harder to retain employees. For example, in the case of Nicholson Terminal & Dock Co, the courts struck down a moonlighting ban on the basis that it was too restrictive. Consequently, there tends to be a preference for adopting a moonlighting policy as it can achieve the same results as a moonlighting ban whilst also, in most instances, being legal. 

What Should be Included in a Moonlighting Policy?

The following are the standard sections and terms that you find within a moonlighting policy. An employer does not have to implement all of these in their moonlighting policy, equally, they could opt to have these sections and include additional guidelines. What an employer decides to include is dependent on their circumstance. 

Scope

Firstly, it is important that the employer outlines who will be covered by the moonlighting policy. Typically, employers choose to limit the scope of their moonlighting policy to all full-time employees. However, an employer can decide which employees will be covered based on their business needs. For example, an employer may extend a moonlighting policy to part-time employees who are required to work at least 25 hours a week and are on a salary. 

It must also be noted that it is good practice for employers to also state that their policy applies to legal activities. Further, it is not uncommon to state that legal action may be taken against employees that use their employer’s resources to conduct illegal activities. 

Definitions 

It is useful for employers to outline what type of work will be covered by their moonlighting policy. Will volunteer work qualify? Will working for a coffee shop? A good moonlighting policy outlines and defines what they consider a secondary or side job. 

Some employers choose to define a secondary job as regular, paid work (permanent or temporary) that has specific responsibilities. Under this definition an employee that works at a coffee shop that expects them to work regularly, would be covered by a moonlighting policy. On the other hand, work such as volunteering, freelancing, or working occasionally at a friend’s or family business would not be covered by the moonlighting policy. That said, if a freelancer often works regular hours, or works hours that clash with normal working hours they may fall under this policy. 

If the above definition does not suit an employer’s desired policy, they may choose to define a secondary job differently. That said, employers must remember to ensure that any restriction placed on employees fit within the intention of managing business-related concerns. It is important that when developing a moonlighting policy an employer can justify their decisions on the basis of mitigating negative effects on their business. 

Policy Elements 

The following are examples of some protections an employer may like to include in their moonlighting policy.

Prohibition on working for competitors: 

This provision is one of the most common terms in a moonlighting policy. This will ensure that there is a significantly reduced chance of employees benefitting competitors by divulging any of their employers trade secrets. Equally, employees will be unable to use training gained at their employers workplace to benefit their employer’s competitors while they are under their employ. 

It is also advisable for an employer to highlight who they consider to be a competitor. Typically, this is limited to competitors that an employer directly competes with.

Moonlighting Policy Example:

moonlighting policy example

Prohibit employee taking up a job that clashes with working hours: 

This will ensure that an employee prioritises work at their primary workplace over their secondary job. 

Moonlighting Policy Example:

moonlighting policy example 2

Prohibition on Taking a Job that has a workload that is too demanding: 

This will ensure that an employee’s performance at their primary workplace is not negatively impacted due to them being too tired or distracted as a result of their secondary job.

Moonlighting Policy Example:

moonlighting policy 3

Prohibition on Accepting a Job that could result in a Conflict of Interest:

This provision covers any activity that could be construed as creating a conflict of interest. This would ensure that employees are prohibited from taking part in any activity that will interfere with their overall service to their primary employer. 

Moonlighting Policy Example:

moonlighting policy example 4

Prohibit Employee from Using Primary Employer Resources for secondary Job: 

Employers may choose to define what equipment can be used by the employee for external activities. In general, employers do not permit employees to use their resources for any external activity, but in the case of a company car an employer may choose to allow an exception for example. An employer should detail what, if any, resources may be used for external purposes.

Moonlighting Policy Example:

moonlighting policy example 5

Requirement for employee Accepting a new job to request approval from employer:

This section of a moonlighting policy is typically associated with the requirement not to work for competitors. The purpose of this section is to give an employer the opportunity to ensure that the secondary employment an employee wishes to undertake does not present a conflict of interest, or negatively impact the employer. 

Moonlighting Policy Example: 

moonlighting policy example 6

Intellectual Property Considerations:

In some cases employees create policies and procedures for their employer that are considered the employer’s intellectual property. In such circumstances the employer may want to prohibit the employee from producing intellectual property for other businesses while they are under their employ. 

Moonlighting Policy Example:

moonlighting policy example 7

Moonlighting Policy Sample

You can find moonlighting policy samples here:

What should Managers Do?

When managers receive notice that an employee is moonlighting, it is advised that they document this information and check to see if any rules have been breached. For example, an employee may unknowingly take up employment with a competitor. Breaches may not be intentional, so it is good for managers to cross-check. If employees are moonlighting based on financial issues, it may also be good for managers to see if there is any way they can assist the employee. One possible solution could be offering an employee more hours if they get paid for each hour of work they do. If an employee is considering external employment due to better promotional possibilities, a manager could advise them on how to obtain a promotion within their company. 

What if an Employee Violates a Moonlighting Policy?

Employees typically face some sort of disciplinary measure if they breach moonlighting policy. This action would be based on the extent of the breach, and should be outlined in the moonlighting policy. Some examples of disciplinary measures are as follows:

employee violates moonlighting policy

In some cases an employees breach can be so significant that termination of their employment may seem like an insufficient disciplinary measure. In such instances, if the employee has breached their contract, the employer may be able to bring a claim. However, damages are calculated to place the employer in the position they would have been in had the employee not breached their contract. This means that the employer is only able to claim the amount of money they lost as a result of the direct breach by the employee. The result of this is that claims for financial loss are hard to ascertain.