Moonlighting and how to deal with it

Given the current economic decline and the rise of remote and hybrid work, side gigs or "moonlighting" is becoming an increasing topic of concern for workplaces.

What is moonlighting?

The term moonlighting refers to when an employee works another job, freelance or side gig to earn extra income alongside their primary employment.

Is it illegal?

No, so long as it does not violate the employer's policy or contract or the employee's common law obligations.

What are the concerns with moonlighting?

Moonlighting itself is not expressly prohibited by employment laws. There are instances, however, in which it could be offside for employees to take on a side gig, and equally, it could present challenges or concerns for employers.

Conflict of interest/Exclusivity

If an employee winds up working for two organizations, especially if they are in the same industry, they may find themselves stuck in a situation where they have to "choose" between their organizations. This creates a conflict of interest, which may harm either employer's business (or even both). It may also place the employee in a position where they are at risk of breaching their default obligations of loyalty and fidelity to either or both organizations.

With that in mind, employers who are concerned about employees moonlighting may consider implementing a conflict of interest and/or exclusivity provision into their employment contracts, as follows:

• Conflict-of-interest provision: These provisions expressly prohibit employees from acting in conflict with their employer, which may include working for a competing business while being employed with the employer. The provisions can also go a step further and spell out how such a conflict of interest could arise, which would be helpful for the employees to understand what not to do.
• Exclusivity provision: An exclusivity clause is typically "stricter", as it restricts the employee's ability to work anywhere else while employed with the employer. There can be exceptions to this, for example, with the employer's advanced written authorization. This would allow the employer to vet for conflict-of-interest issues before they arise and, if permission is granted, allow the employee to take on the other position(s) with a peace of mind.

These provisions are helpful to provide the employer with protection against moonlighting, well also reinforcing employees' common law obligations, such as the duty of loyalty and duty of fidelity. The scope and nature of these provisions can be adjusted or tailored to the employer's business needs and to help establish expectations about outside work at the get-go.

Please note these important considerations when drafting exclusivity provisions including:

• Exclusivity clauses are generally not recommended for independent contractors, as implementing these in an independent contractor agreement may make such individuals more like an employee rather than a true independent contractor.
• Non-competition clauses, which apply post-termination, are no longer enforceable in Ontario, except in very limited circumstances. Please contact us here if you have questions about non-competition clauses.

Confidentiality

Employees often have access to their employer's confidential information. If working more than one job, there is a risk that the employee may accidentally or intentionally (let's hope this is not the case), use or disclose confidential information to the organization's prejudice. This is especially the case if the other position is in a similar or the same field, where information and industry knowledge may overlap.

Therefore, it is important for the employer to implement a confidentiality agreement (or at least a clause) to prohibit this and provide the employer with remedies should confidentiality be breached.

Monitoring and assessing performance

Needless to say, divided attention between jobs can affect energy levels, in turn impacting the employee's productivity and quality of work. Often this points to performance concerns, such as unsatisfactory response times, missed deadlines, unexcused and/or unexplained absences, and tardiness. Therefore, it is equally important to regularly review employees' performance, especially that of remote workers, to ensure that moonlighting is not occurring.

That said, even if there are signs pointing to potential moonlighting, employers should exercise caution to ensure that they are not jumping to conclusions too quickly or unreasonably. It may be helpful to have a reasonable process in place that would allow employers to speak to the employee directly about any concerns of moonlight, as well as to gather sufficient information related to such concerns. There may be other reasons for declining performance and behavior, so do consider the concerns from a more contextual and wholistic angle. For example, does the employee have a potential accommodation or health related need? Has there been whispers or indications of other health and safety or workplace harassment concerns? Was there a recent organization restructure or business change that may put light behind a change in performance? If you are experiencing concerns like this, please contact us here and we would be happy to help!

Takeaways:

Employees, before you take on that second job or side gig, ensure that there are no prohibitions against doing so. Check your contract and workplace policies to see if you need your primary employer's permission. Even if you do not need their permission, consider carefully if you truly can work both jobs successfully. It is always better to be cautious, as biting off more than you can chew may wind up affecting your performance at work, whether deliberately or accidentally.

Employers, check your contracts. Do they include a clause that prohibits or manages expectations regarding outside work? Do you have an employee who is exhibiting signs of moonlighting with no legitimate justification (e.g., human rights grounds)? Update your contracts if necessary. We are here to help.