Manage employees with a side hustle with a moonlighting policy
Engagement 6 minute read

Manage employees with a side hustle with a moonlighting policy

Andra Mircioiu | June 30, 2020

It’s important for employers to have a clear moonlighting policy that addresses the new gig economy, side hustles, and passive revenue. Read on to learn more about what moonlighting means for you and your team.

The full economic impact of the novel coronavirus COVID-19 has yet to be determined, with many businesses and individuals experiencing financial uncertainty. Many employees are now forced to find ways to generate more income in light of temporary layoffs, reduced hours or companies going out of business entirely. 

Moonlighting—working a second job after-hours or on the weekends, typically in the service industry—is not a novel concept. Most organizations have a moonlighting policy in place that addresses non-interference, namely that an employee’s other job cannot negatively affect their work performance or attendance. Your current moonlighting policy may also include a clause requiring written approval from your company before an employee can accept a part-time job at another company, even if it's not within the same industry. 

However, if you have a moonlighting policy currently in place, it may not specifically address income opportunities created by the sharing economy revolution brought on by Uber, Airbnb and many others. Your moonlighting policy may also not address “side gigs” or the predatory business tactics of multi-level marketing companies, neither of which are part-time jobs at another company.

Read on to learn more about new income opportunities available to your employees and how to update your moonlighting policy to reduce or eliminate any conflict of interest, no matter how your employees are earning additional income. 

But before we start, a quick note: When crafting your new moonlighting policy, it’s always best to consult an employment lawyer who can help guide you on specific wording and local legislation to keep you and your employees compliant with the law. 

The sharing economy, sometimes called the gig economy or collaborative consumption, is a peer-to-peer economy that connects individuals who have services or goods directly with individuals who want said services or goods. 

For Uber, that’s car rides. For Airbnb, temporary lodging. 

Described as “disruptive” to traditional models of doing business, there are now companies that offer everything from parking spot rentals (JustPark) to freelance handyman services (TaskRabbit) to peer loans (LendingClub) and everything in between. 

As you can see, the very definition of moonlighting has changed. Fewer of your employees are supplementing their salary with a part-time job at another company. Instead, many are embracing the entrepreneurial spirit—and the line between side job and day job continues to blur, with smartphones and apps instantly connecting your employees with income opportunities. 

If you’re concerned about moonlighting affecting your employees’ work performance, the easiest solution is to introduce a moonlighting policy that prohibits moonlighting. However, easiest doesn’t mean best. If you outright ban moonlighting or any side income opportunities, you risk losing good employees and alienating talent by appearing rigid and “out of touch”. 

Instead, your new moonlighting policy should make provisions for employee productivity. Empower your managers to recognize and address lowered output or attentiveness on a case-by-case basis, just as they would any other performance issue. By focusing on the outcome (reduced productivity) rather than the cause (moonlighting), you create a fair policy that doesn’t blanket-punish employees who can manage a full-time job and additional income streams on the side. 

The side hustle is on the rise and renting out a place or driving someone around town isn’t the only way your employees can generate side income.

There are opportunities for online tutoring, proofreading/editing work, voiceover recordings, video editing, blogging and more. 

Some income opportunities may overlap with your employee’s career skills and some may rely on completely different skill sets. Your IT technician may be a talented artist on the side, selling their art on Etsy or Society6. Your project manager may have a knack for thrifting and resells vintage items on eBay or Facebook Marketplace for a profit.  

There are also passive income streams, where your employee initially invests time and energy into setting up an online cooking class on Skillshare or a how-to tutorial on Youtube or an original knitting pattern or Ravelry and earns a percentage with each download or view. 

And while outright freelancing falls more under a company’s non-compete clause rather than moonlighting, it’s worth mentioning as it also generates additional income.  

For your moonlighting policy, consider whether employees can market their wares or services within your company. The employee may see coworkers as potential clients or customers; however, your company may not wish for the employee to cross revenue streams, so to speak. If anything should go wrong with a transaction, it could create workplace tension and conflict between coworkers. 

Beware of the multi-level marketing (or pyramid) schemes, or at the very least include them in your moonlighting policy.

You’ve likely heard of Mary Kay and Avon. They’re multi-level marketing companies (MLMs). In other words, they’re barely legal pyramid schemes. Individuals make money by recruiting other people, known as their downline, and only very few individuals at the “top” of the pyramid (who have many downlines and downlines of downlines) make anywhere close to a living wage. 

However, the uncertainty created by COVID-19 has created a resurgence in MLMs, with companies recruiting individuals to sell makeup, skin care, nail polish, essential oils, hair products and even insurance. False advertising leads recruits to believe that they can make a living “on their phone” by constantly promoting the products and either finding customers or recruiting more people. 

Why is this relevant to your moonlighting policy? 

Because some of your employees may consider MLMs to be a viable side hustle. MLMs promote themselves as small businesses, that is, each recruit is made to believe they own a small business through which they sell the company’s products. The best way to protect your employees is to ban any multi-level marketing within your company and as part of your moonlighting policy, and to offer educational resources and help to any employee who has fallen prey to an MLM. The MLM Master List gives you a comprehensive list of MLM schemes. 

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