In recent years, the rise of remote and hybrid work arrangements has brought increased attention to "overemployment," the practice of employees simultaneously working multiple jobs for different employers. While outside employment, sometimes referred to as "moonlighting," is not inherently improper, it can create significant challenges for employers to navigate.
Outside employment may raise concerns related to employee timekeeping practices, confidentiality obligations, and overall job performance and productivity. In some cases, outside employment may also present actual or perceived conflicts of interest, particularly where employees are effectively "two-timing" an employer by performing competing or overlapping work during company time or using company resources for another employer's benefit.
Given these risks, employers should proactively determine their approach to outside employment, clearly communicate policies to employees, and be prepared to address situations in which outside employment conflicts with work obligations. This article discusses three practical steps for employers managing overemployment in their workforce.
Step One: Decide Whether to Permit or Prohibit Outside Employment
Employers must first determine their stance on outside employment. Some employers may choose to largely prohibit outside employment, subject to applicable legal limitations, while others may permit outside employment but establish policies creating clear parameters and expectations for employees.
Employers considering a blanket prohibition should be mindful that applicable state and local laws, including those governing non-competition and lawful off-duty conduct, may limit their ability to restrict outside employment altogether. For example, some jurisdictions, including the District of Columbia, impose limits on an employer's ability to prohibit certain employees from working for another employer, subject to limited exceptions.
Employers may also determine that different approaches are appropriate, depending on both the type of employee involved and the nature of the outside employment. For example, employers may impose more stringent restrictions on full-time employees than on part-time employees or adopt different standards for employees working in executive, sensitive (with access to proprietary information), or client-facing roles.
Employers should likewise consider whether certain types of outside employment present heightened legal or operational risks. For instance, outside employment involving competitors may create actual or perceived conflicts of interest, while employment with affiliated entities, staffing agencies, contractors, or related business partners may create joint employment risks that could expose employers to shared liability for employment-related claims.
In addition, employers should consider whether employees will be required to proactively disclose outside employment and obtain approval before accepting additional work. Requiring written disclosures, periodic certifications, or advance approval may help employers identify potential concerns before they become larger issues.
Step Two: Establish Clear Rules and Expectations for Employees
If employers permit outside employment in some form, they should establish clear written policies governing employee expectations. At a minimum, employers should consider implementing or revising outside employment policies to identify when outside employment is not permissible or creates a potential conflict. Policies should make clear that employees may not allow outside employment to interfere with their job duties or overall work performance, including attendance, productivity, responsiveness, or availability during work hours. Policies should also generally prohibit outside employment that conflicts with an employee's ability to act in the employer's interests. The policies should expressly state that the evaluation of these issues is at the employer's sole discretion.
Employers should also separately evaluate whether their conflict of interest policies adequately address outside employment concerns. For instance, conflict of interest policies should clearly prohibit employees from using company time, equipment, materials, systems, or other employer resources or relationships for the benefit of another employer or outside business activity. This prohibition should also extend to employer-provided subscriptions, software, and licenses. In addition, employers should ensure their confidentiality and proprietary information policies broadly define confidential information and prohibit employees from using or disclosing such information to third parties in connection with outside employment.
Beyond enacting policies governing outside employment, employers may also consider whether requiring employees to enter into separate nondisclosure or non-solicitation agreements relating to employees, clients, customers, or business opportunities may provide additional protection. Any such agreements, however, should be reviewed for compliance with applicable state and local laws that may limit the enforceability of restrictive covenants, particularly for lower-wage employees, who are often among the employees most likely to engage in outside employment.
Step Three: Enforce Overemployment Policies and Address Performance Concerns
If an employee's outside employment violates company policy or begins to interfere with the employee's performance, employers should be prepared to appropriately address the issue. Depending on the circumstances and applicable law, outside employment may warrant corrective action, including requiring the employee to discontinue the outside employment or resign from their position. As with any employment action, employers should ensure outside employment policies are enforced consistently across similarly situated employees. Inconsistent enforcement may create perceptions of favoritism or increase the risk of discrimination or retaliation claims.
Employers with questions regarding overemployment or looking to develop policies addressing overemployment issues, including those referenced in this article, may contact the authors of this article or any other attorney in Venable's Labor and Employment Group.