Self-employment is becoming more common as new technology makes it easier than ever to be self-employed — and economic changes make entrepreneurship a necessity. People now frequently have or wish to have part-time jobs or ‘side hustles.’
Furthermore, the full economic impact of the novel coronavirus COVID-19 is unknown, with many businesses and individuals facing financial uncertainty. Many employees are now being forced to find alternative sources of income due to reduced hours, temporary layoffs, or companies going out of business entirely.
The success and viability of these side hustles differ. While some remain small and only generate extra income for their owners, others prove to be profitable and expand to a larger scale, allowing the owner to focus on it full-time.
Employers must therefore have a clear moonlighting policy in place that addresses the new gig economy, passive revenue, and side hustles.
What Is Employee Moonlighting?
Employee moonlighting is when an employee works more than one job. The moonlighting employee typically works full-time and part-time jobs, though some people use the term to refer to any situation in which a person works for more than one company. Some moonlighting situations that make it necessary for an employer to impose a moonlighting policy include when the moonlighting employee has a usually full-time, part-time, secondary, or primary position.
Moonlighting- Good or Bad?
Can an employer stop an employee from moonlighting?
The answer depends on whether you have a policy prohibiting moonlighting. If you do not have a moonlighting policy, or if you do, and your employee’s work performance at your company is unaffected by their second job, you have no recourse to keep them from working elsewhere. If your company has a moonlighting policy that states employees have to meet certain specified standards in order to continue working for you, and the moonlighting employee is not able to catch up to those standards, you may ask the concerned employee to give up their second job.
Popular Perspectives on Moonlighting
There are both positive and negative perspectives on moonlighting. The best route to action might be the middle path.
Arguments in Favor of Moonlighting
Working a second job after hours or on weekends, usually in the service industry, is not a new concept.
Dr. Adam Grant, an organizational psychologist, shared some insights based on applied research in his book Originals. He mentions that side jobs allow people to become more innovative and prepare them to take more calculated risks because they aren’t relying on the business to cover their monthly expenses. The relative security of knowing you have a good day job can apparently lead to innovation. More importantly, starting a side hustle is 33% less likely to fail than starting full-time from day one.
Also, if you outright prohibit moonlighting or other forms of side income, you lose out on good employees and alienate talent by appearing rigid.
Arguments Favouring Moonlighting
Arguments Opposing Moonlighting
Many times, business coaches refuse to work with side hustlers. They claim that those entrepreneurs do not have enough skin in the game to succeed. People who hold this viewpoint will argue that part-time businesses are not “real” businesses because there is simply not enough time available in the evenings and on weekends to be successful.
In some cases, employees may be allowed to market their services or wares within your company. They might see coworkers as potential customers or clients, but your company may not want the employee to cross revenue streams. If something goes wrong with a transaction, it may cause workplace tension.
Then there are multi-level (or pyramid) schemes that must be avoided. The best way to protect your employees is to prohibit multi-level marketing within your company and as part of your moonlighting policy and provide educational resources and assistance to any employee who has fallen victim to an MLM.
Most organizations, therefore, have a non-interference policy in place, which states that some other job of an employee cannot negatively impact their attendance or work performance. Your current moonlighting policy may also include a provision requiring written permission from your company before an employee accepts a part-time job at another company, even if it is not in the same industry.
If you are concerned about moonlighting negatively impacting your employees’ work performance, the simplest solution is to implement a policy that prohibits moonlighting.
Moonlighting Policy Agreements
Considerations for implementing an Employee Moonlighting Policy
The majority of employee moonlighting situations are beneficial to both the employee and their employers. However, some situations do not work and may necessitate implementing a moonlighting policy for your business. Consider the following factors when deciding if you must have a moonlighting policy for part-time employees:
- Fatigue: Depending on the hours and nature of the employee’s second job, they may be too tired to perform their job duties for your company.
- Hours: Hourly workers, in particular, may be limited in the number of hours they are available to work for your organization due to their second job.
- Distraction: While working for you, some employees may be distracted by tasks related to their other position, reducing their on-the-job productivity.
- Conflict of interest: In some cases, the employee’s second job may be a source of conflict of interest for your company.
Improper Sleep, fatigue, confusion, lack of clear-headedness, and stress are some factors when it is important to intervene
If you notice that these factors are affecting the productivity and work performance of moonlighting employees, it’s time that you must consider implementing a moonlighting policy. Strong moonlighting policies emphasize specifying your expectations for your employees while they work for you rather than restricting what they do outside of work. For example, your moonlighting policy may require employees to be available to work during specific hours each week.
Types of Moonlighting Policies
- Non-Compete Policy
Non-compete agreements are legal documents signed by both the employee and the employer that restrict the employee from working for or providing some information to the competitors. These agreements are more common for employees who work in senior positions and have essential important internal information about the company than for entry or mid-level employees.
- Moonlighting Policy
Moonlighting policies are a part of the company’s collection of employment policies, typically included in the employee handbook. These policies usually describe the situations under which an employee may or may not be allowed to have a secondary job. Or whether the employee must ask for approval before committing to any second job. The policies also specify the companies, industries, or roles in which the employee will not be permitted to work a second job.
Consider a Moonlighting Policy
Benefits of a Side Hustle that may not be immediately apparent
There are many benefits of moonlighting. The most basic one is the freedom to pursue what one feels is important in life, bringing out leadership qualities, creative decision making and problem-solving attributes.
Benefits of moonlighting
The following are some benefits of moonlighting:
- Developing Skills Outside of the Workplace
Full-time jobs occasionally help you pay your bills but do not provide opportunities to develop new skills or abilities. Side hustles can enable you to do more strategic work, creative work, public speaking, and other things. Once an individual hones up their skills and abilities, it is up to them to decide where and how to use them. It could be a springboard for a full-time business, a career change, or a promotion.
- Built-in Resistance
Often many good employees lose their jobs due to restructuring/downsizing, ageism, scapegoating, the glass cliff, and other factors (e.g., automation). Self-employment may be wise depending on the age and skill set of the client. In some fields, having a simple side job in place creates a natural backup plan so that you’ll still have something to work with if things ever take a dramatic turn for the worse at work.
- A Solution to Unemployment
There are times when we work in a position for which we are overqualified. When this happens, and someone is pigeonholed into a specific role, one way to break free is to find measurable and concrete ways to demonstrate their worth. Earning money and testimonials is an excellent metric because these are natural byproducts of a viable side hustle.
Employers must take precautions to protect their company’s interests while also ensuring that employees devote their full time and energy.
Should you permit your employees to work a second job? Is it illegal to prohibit moonlighting?
Many employees must work multiple jobs to meet their financial obligations. While you might consider and respect your employee’s desire or need to work more than one job, there are some instances where moonlighting can be detrimental to your company. Understanding your rights as an employer when it comes to moonlighting can help you manage employees who work multiple jobs more effectively. Keeping this in mind, stay open to the following possibilities:
- What if one of your employees’ side projects assisted them in realizing something that improved your office’s workflow?
- What if one of your employees’ investigations resulted in a better flashing detail?
- What if encouraging “moonlighting” increased employee retention?