When a Side Hustle Becomes Your Problem: What HR Should Actually Do
Hero description: Employment attorney Burt Garland and Phil Brandt on where an employee’s right to earn extra income ends and an employer’s legitimate business interests begin.
Someone on your team has a side hustle. Probably several someones. You may not know about it, and most of the time that’s fine — it’s their time, their income, their business. The harder question is the one that eventually lands on HR’s desk: when does an employee’s second job become your problem, and what can you actually do about it?
Burt Garland, a shareholder with Ogletree Deakins who advises employers on exactly this, frames the answer in a way that saves a lot of wasted effort. The goal isn’t to stamp out outside work. It’s to manage the specific places where outside work creates exposure — and to know, before you act, whether you’re legally standing on solid ground.
Side hustles aren’t new. The scale and the visibility are.
The behavior used to be called moonlighting, and it looked like a second shift somewhere across town. What changed is the barrier to entry. An employee with a smartphone can now generate income in the gaps of a day — rideshare, delivery, resale, tutoring, consulting, content — without ever clocking in anywhere.
The economics changed too. Garland points to the run from COVID into rapid inflation and a difficult economy, a stretch in which a second income stopped being optional for a lot of households. His practical read for employers: assume some portion of your workforce has outside income, and build your approach around that assumption rather than treating each discovery as an exception.
That shift matters because most moonlighting policies were written for the old version of the problem. A policy designed around a night job at a warehouse doesn’t anticipate an employee building an audience on their phone during lunch.
Ogletree Deakins covered the legal architecture of this in a recent analysis by David C. Castleberry and Michael D. Wilson, Jr. The conversation on This Week at Work went somewhere different: what this looks like when it shows up in your building.
The rules aren’t what most employers assume
At-will employment is not blanket authority. Employers routinely assume at-will status lets them prohibit outside work outright. It doesn’t. At-will provides flexibility, but it still operates inside discrimination law, retaliation protections, employment contracts, and state-specific regulation.
Contracts and union agreements cut in opposite directions. This is the part that surprises people. Employees under individual employment contracts — typically white-collar, often executive — are frequently more restricted, because those agreements carry best-efforts clauses, exclusivity provisions, and conflict-of-interest language. Employees under a collective bargaining agreement are frequently less restricted, because CBAs that address moonlighting tend to add protections and limit the employer’s ability to discipline for outside work.
“Almost the opposite situation, when you’re dealing with a white-collar worker versus a blue-collar worker.”
Burt Garland
State law is where this gets genuinely complicated. Federal law imposes no general prohibition on disciplining employees for outside work. State law is far more active. Per the Ogletree analysis, California, Colorado, and North Dakota protect lawful off-duty activities broadly; Washington restricts employers from barring second jobs for employees earning under twice the state minimum wage; other states protect narrower categories of off-duty conduct.
The practical consequence for any employer operating across state lines: a single, uniform moonlighting policy isn’t defensible. Handbook language has to be state-specific, which means this belongs on the list of provisions you review when you update handbooks — not a policy you write once and inherit forward.
Where the actual risk lives
Company time and company resources. This is the clearest ground you have. Employers can restrict the use of company equipment, vehicles, systems, phones, and cameras, and can prohibit performing outside work on paid time. Phil Brandt’s example is the one that recurs: a service technician with a company van full of tools who runs private calls in the evening. The van carries your logo. If something goes wrong in a customer’s home — an accident, a bad repair — the exposure doesn’t stay neatly with the employee.
Confidentiality, not just disclosure. Garland’s sharper framing is that a disclosure requirement isn’t enough on its own. The risk is what walks out with the side hustle.
“They may be making money off of filming themselves at work doing certain things, and not even realizing that while they’re filming themselves at work, they’re actually disclosing company trade secrets.”
Burt Garland
There’s a related version in skilled trades: work the company might have won commercially instead gets performed privately, on the side.
Your brand as the employee’s credential. This one rarely makes it into policy language and probably should. When an employee’s outside work is won because of their title at your organization — paid speaking, consulting, advisory work built on the credibility of their current role — the line between personal enterprise and employer resource gets thin. The thing being monetized is partly yours.
Performance, attendance, and the sick-day problem. The most common failure mode isn’t dramatic. It’s an employee who’s exhausted, late, or unavailable. Brandt described the pattern that turns a side-hustle issue into a discipline issue: the second job offers double time on a given day, the employee takes it, and calls out sick from the primary job. Now it isn’t a moonlighting question. It’s a dishonesty question, with everything that follows.
What to do about it
Write the policy around four things, not around prohibition: conflicts of interest, use of company time and resources (including branding, vehicles, and uniforms), non-disclosure and confidentiality, and a clear statement that this employer is the primary employer. Make the state-specific pieces actually state-specific.
Document behavior, not suspicion. When performance slips, document the performance — dates, times, specifics. Build the record on what’s happening at work rather than on assumptions about what the employee is doing outside of it. That distinction is what holds up later.
Be consistent, because inconsistency is the legal risk. Handle similar situations similarly. Selective enforcement of a moonlighting policy is how a performance conversation becomes a discrimination claim.
Route it through HR. Side hustles vary enormously, and supervisors making case-by-case calls without a center of gravity is precisely how inconsistency happens.
“The goal is not necessarily to eliminate outside employment or side hustles. It’s really to manage risk.”
Burt Garland
Common questions
Can we prohibit employees from having a second job?
Generally you can restrict it, but not universally. Most employees can legally work outside their primary job unless a contract, policy, or state law says otherwise — and several states protect lawful off-duty activity. Check your state before you write a flat prohibition.
Can we require employees to disclose outside work?
Many employers do, often requiring supervisor or HR approval before an employee takes on outside employment. Pair the disclosure requirement with confidentiality and conflict-of-interest language, since disclosure alone doesn’t address what information leaves the building.
What if the side hustle is on social media?
The same principles apply, with more surface area. Employees who reference their employer, appear in company branding or uniform, or film in your workplace create risk that has nothing to do with hours worked. Policies can address use of company name, brand, and merchandise in personal content.
An employee’s second job is affecting their attendance. Can we discipline them?
Usually yes — but discipline the attendance, not the side hustle. Document the absences and performance issues directly, apply the same standard you’d apply to any other employee, and confirm your state doesn’t limit action based on lawful off-duty conduct.
The bottom line
A side hustle by itself usually isn’t the problem. How it affects the primary job — and how consistently the employer responds — is what determines whether this becomes a real issue. Employers that treat outside work as a risk to manage rather than a behavior to eliminate tend to end up with clearer policies, fewer surprises, and better conversations with their people.
If you’re reviewing handbook language across multiple states, or working through a specific situation, AAIM members can reach the Solutions Team at solutions.team@aaimea.org.
Want to hear the full conversation?
Phil and Burt also get into what happens when an employee’s personal brand starts competing with their employer’s — and the one category of side hustle where a company’s own reputation is directly on the line.
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