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Extra Jobs and Small Businesses: Things to Consider Before Moonlighting

By Caleb Groos | Last updated on

Tough times have many people trying to pick up extra work where they can find it. Some have a job but take another (or 2) on the side. Some start up small businesses on the side. Others already run small businesses and take an extra job to bolster fallen income. Here are a few legal considerations to keep in mind if thinking about moonlighting.

Today's Wall Street Journal reports on a handful of small business owners and their recent experiences moonlighting. These are folks with established small businesses who have seen their income plummet and take a job on the side.

In the reverse direction, many whose jobs have ceased to exist or whose hours have been cut have started up a small or micro business. And then there are the many people with jobs who add additional jobs to make ends meet. All of these groups should keep a few legal issues in mind before moonlighting.

1. Is there a moonlighting policy in place or required for any of the jobs? If so, does it ban the additional job or business on the side?

Moonlighting policies set out what types of employee off-time activity are banned. State laws vary on moonlighting policies. Some (like California) come close to banning them. Other states restrict moonlighting policies to banning only work that creates a conflict of interest.

Small business owners looking to moonlight should also look at whether they've put a moonlighting policy on their own employees. It could be a bad idea to moonlight in a way you've forbidden your employees from doing.

2. Does either job involve a non-compete agreement?

Properly drafted non-competes can (in almost all states) restrict an employee from competing with their employer. If someone has a non-compete in place at an existing job, or the additional job asks for one, moonlighting with a competitor could lead from 1 job to 2, and quickly to 0 jobs.

3. Does the moonlighting create any conflicts of interest?

Even if there is neither a moonlighting policy nor a non-compete in place, in most states employees owe a duty of loyalty to their employer. In many cases, the duty of loyalty would forbid an employee from moonlighting for a competitor or running a business that competes with their employer.

Those running a business (or already working for one) need to look not only at whether their business or existing job would compete with the additional job, but also whether the interests of one employer could ever conflict with those of the other. For example, in Georgia, a school superintendent is being investigated due to the side business she started. It wasn't a competing business school district, but rather a grant-writing company which contracts with the county. Some fear this could create ethical conflicts for the superintendent at her two jobs.

Before moonlighting, ask yourself whether your decision-making would change at either job due to the fact that you also work the other one.

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