Do You Need an Employee Moonlighting Policy? 5 Ways to Set Fair Expectations

When one job isn’t enough to cover your expenses, can you balance two? According to the 8.7 million Americans working more than one job, the answer is yes.

While the majority of workers say working multiple jobs makes them more productive, research shows that moonlighting can lead to burnout, mental health issues, and even exhaustion — not to mention the potential legal liabilities and conflicts of interest.

So how can you support your employees’ right to moonlight while protecting your needs as an employer? 

In this article, we’ll cover the various types of moonlighting, the impact they can have on your workforce, and share a sample moonlighting policy to help you craft your own.

Note: This article is not a substitute for professional legal advice. Always consult with a trained legal professional to ensure your company policies are compliant.

What is moonlighting?

Employee moonlighting refers to any situation where an employee works more than one job at the same time. It often comes in the form of a side hustle or part-time job, like a weekend ride-sharing gig. 

According to one survey, more than half of US workers said that they’ve taken on a side hustle over the last 12 months, with 71% of Gen Z, 68% of Millennials, and roughly a third of Baby Boomers taking on new opportunities to make extra money. Most respondents cited the ‘high cost of living’ and ‘not enough income’ as their reasons for taking on a side hustle.

As long as the employee can effectively manage their time, moonlighting doesn’t usually have direct consequences for employers. But if the second job leads to burnout, availability issues, or a conflict of interest, moonlighting could result in lost productivity and increased turnover.

If employee moonlighting is a part of the culture in your company or industry, an official moonlighting policy can help clarify expectations around how employees manage their work outside of work. 

Types of moonlighting

Whether employees are freelancing, Uber-driving, or starting their own side business, each type of moonlighting will fall into one of the following four categories:

• Quarter moonlighting: An employee gets a part-time job in addition to their full-time job and manages both effectively.
• Half moonlighting: An employee devotes more than half their free time to a second job.
• Full moonlighting: The employee manages to work two full-time jobs or professions at once, without sacrificing productivity. The second job may be structured as a flexible side hustle, or starting a small business.
• Blue moonlighting: This is when an employee gets a second job and becomes unproductive at either one, or both.

Is moonlighting legal?

In the US, moonlighting is legal in every state. However, government employees are subject to moonlighting restrictions and many private employers choose to impose their own restrictions as well. 

When crafting your employee moonlighting policy, it’s important to seek expertise from a legal professional in your area as state and local laws can vary. For example, in Washington, an employer can’t prevent employees from getting a second job if they make less than twice the state minimum hourly wage at the primary job.

In countries outside the US, a worker may need to get special permission in order to take on a second job or side hustle. Some countries, like Spain, also limit the number of hours a person can work per day or week.

Is moonlighting ethical?

Honestly, it depends who you ask. In areas with a high cost of living and low wages, some argue that it’s unethical not to let your employees pursue additional income. A highly restrictive moonlighting policy may also encourage employees to lie about their second job, or to leave the company for a more supportive employer.

However, moonlighting can also be unethical on the worker’s part if:

• Moonlighting happens during work hours
• The worker is working with a direct competitor
• It’s hurting an employee’s job performance
• It poses an increased security or privacy risk, such as exposure of client data
• Moonlighters share confidential information or intellectual property with outsiders
• Workers use the company’s logo or branding to get personal business
• Employees distribute company resources (like candidate resumes) to other companies

Unethical examples of moonlighting could include a security guard who works a second remote data entry job from their laptop while on the clock instead of monitoring security footage, or a software developer who works full time at Google while also doing contract work for Microsoft. 

Beyond concerns over potential distractions, it’s the lack of disclosure and clear conflicts of interest that make these scenarios unethical.

“Ethical concerns like data security breaches or working for competitors definitely draw clear lines,” AI startup founder Aditya Malik explains, “but the impact of moonlighting for skill development, purpose, extra income and expanding networks deserves a closer look...exploring its shades of gray seems imperative in today's evolving professional landscape.”

Moonlighting is a multifaceted process, and is generally ethical when the employee discloses it to their employer and when it doesn’t conflict with their duty to their primary employer. Think of a full-time elementary school teacher who works 7 am to 3 pm, and has a retail or gig economy job some evenings and one day per weekend. Or a C-suite executive who teaches a business class at the local college one or two evenings a week. Even full-time fashion copywriters, like Erica Wong, still freelance on the side.

“Freelancing is a place that allows you to build a clientele. I think it’s important for young people, and anyone in this industry, to have a rolodex of clients as work ebbs and flows especially in this economy” Erica explains. Success with moonlighting is about recognizing the benefits and drawbacks for both parties and building a transparent win-win framework.

Pros and cons of moonlighting

While moonlighting has its benefits for employers and employees, it also presents some challenges. Here’s a closer look at the potential pros and cons for each.

5 ways to set the right expectations with moonlighting employees

Open communication is key. Here are some tips to help you start a productive conversation while establishing the right guardrails for moonlighting employees.

1. Set boundaries

The first step is to develop and distribute a clear and unambiguous moonlighting policy. Use examples to make sure employees understand what is and isn’t allowed.

“Even flexible work environments must have reasonable, common-sense limits,” CEO of Cybozu Yoshihisa Aono explains. “For instance, employees still have to abide by national laws regarding work hours. Businesses would also do well to prohibit employees from simultaneously working for a competitor.”

Don’t assume that everyone knows what a potential conflict of interest or other ethical issue looks like. By clarifying the do’s and don’ts from the beginning, you eliminate the gray area and make it easy for employees to understand the types of moonlighting that will and won’t align well with their primary work.

2. Require disclosure

You can’t have a productive working relationship without transparency. By requiring employees to disclose a second job or outside business, you’ll be better able to align their goals with yours and support their performance as they take on new skills and capabilities.

“Employers should consider implementing a policy that requires employees to disclose any outside work they are doing and obtain prior approval before taking on any new projects,” notes Steve Taplin, CEO and cofounder of Sonatafy Technology.

Depending on the level of competition in your industry, you may also want to add a conflict of interest policy or non-disclosure agreement to help reduce the risk of employees partnering up with competitors in their off hours.

3. Evaluate performance

As with every effective employee feedback system, you’ll want to keep your performance reviews outcomes-focused for moonlighting employees.

“As long as [employees are] meeting their deadlines, not overworking themselves and still have time to rest and spend with their families, then there's no problem,” chief people and operations officer at Checkr Linda Shaffer says. “The issue would be when they start to neglect their responsibilities or fail to follow through with their commitments.”

What are the signs that moonlighting is starting to have a negative impact on performance? Set clear parameters by asking the following questions:

• Does the work still meet our expected standards?
• Is it completed in a timely manner?
• Are there customer or client complaints?
• Is the employee responsive and communicative?

If the answer to some of these questions isn’t what you hoped it’d be, resist the knee-jerk reaction to install employee monitoring software. According to a Harvard Business Review study, over-monitored employees are significantly more likely to engage in rule-breaking behaviors. 

It could also have a negative impact on morale and workplace culture. Instead, keep your one-on-ones focused on real results, examples, and suggestions to improve performance.

4. Establish clear and consistent consequences

If you’re in an organization or industry where you simply can’t allow workers to juggle multiple jobs, make that clear in your interview process and employee handbook..

Let workers know the penalties for violating moonlighting policies, including:

• Penalty for not disclosing second job
• Conflict of interest violation policy
• Penalty for first offense
• Penalty for second offense

When determining consequences, remember that not all infractions require the same disciplinary actions.

"Depending on the circumstances, our actions may vary," says Jon Morgan, CEO of Venture Smarter. "In some cases, it might be a simple misunderstanding or a temporary situation that can be resolved through a change in work schedule or workload adjustment." 

5. Offer support and flexibility

When it comes to employee moonlighting, it’s important to note that imposing a total ban on dual employment can do more harm than good.

“For some people, a ‘no side jobs’ clause may be a deal breaker; for many companies, it may mean shutting out good workers who simply want to cultivate new talents or experience several types of work,” CEO of Cybozu Yoshihisa Aono explains.

That’s why it’s crucial to offer support and flexibility where you can. Whether you give employees more control over their schedules or expand your work from home offerings, even simple measures can work wonders for building trust and loyalty.

Sample employee moonlighting policy

Purpose

This policy outlines [Company Name]'s stance on employees engaging in secondary employment or business activities while also working with our company.

Scope

This policy applies to all full-time and salaried part-time employees of [Company Name].

Policy Statement

[Company Name] recognizes that employees may engage in secondary employment or business activities outside of their regular working hours. While we respect employees' rights to pursue additional opportunities, we must ensure that such activities do not interfere with their primary job responsibilities or create potential conflicts of interest.

Guidelines

1. Disclosure: Employees must disclose any outside employment to their immediate supervisor and the Human Resources department in writing.
2. Approval: Employees must obtain written approval from their supervisor and HR before engaging in external work opportunities.
3. Primary Job Priority: The employee's position at [Company Name] must remain their primary work priority. Other activities must not interfere with the employee's job performance or prescribed work schedules.
4. Conflict of Interest: Employees are prohibited from engaging in moonlighting activities that create a conflict of interest with [Company Name]'s business or operations.
5. Use of Company Resources: Employees are not permitted to use company time, facilities, equipment, or resources for external activities.
6. Confidentiality: Employees must maintain the confidentiality of [Company Name]'s proprietary information and client data in all external activities.
7. Work Hours: External opportunities must be conducted outside of the employee's scheduled work hours at [Company Name].
8. Performance: If employee performance declines or if moonlighting activities begin to interfere with their primary job responsibilities, [Company Name] reserves the right to require the employee to curtail or terminate external activities.
9. Compliance: Employees must ensure that their moonlighting activities comply with all applicable laws and regulations.
10. Regular Review: Approved moonlighting arrangements will be reviewed periodically to ensure continued compliance with this policy.

Consequences of Policy Violation

Failure to comply with this policy may result in disciplinary action, up to and including termination of employment.

Protect employee productivity with Breezy

Moonlighting is a spectrum. However employees make ends meet, consult with your local legal team and aim to build a policy that meets them halfway. By leaning into what employees want, you can build a transparent working culture that attracts the best of the best.

Stay on top of all things HR. Access Breezy’s library of over 400 employer resources, including done-for-you job description templates, interview questions, and guides. Or learn how easy performance tracking can be with Breezy Perform. It’s totally free for up to 10 employees!