Outside Employment and Conflicts of Interest

 

goats-competition-dispute

Employers typically expect employees to be loyal and think of the needs of the employer first. Although they can’t expect the employee to not have outside interests, they also want them to be available as needed and not involved in things or expressing opinions that negatively impact the employer.  These expectations can and often do run head-on into the employee’s freedom to express themselves (freedom of speech) and to their right to have a life outside of their employment; rights provided by the first amendment of the U.S. Constitution.

State laws protecting the rights of employees outside the workplace are varied and do not exist at all in most states. In states where there is no specific protection, the “employment-at-will” doctrine will apply: an employer is free to end the employment relationship with an employee at any time, for any reason, with or without prior notice….and likewise, the employee is free to end the relationship with the employer. However, even if there is no specific state law protecting an employee’s rights outside of the workplace, there are plenty of exceptions to employment-at-will (see the discussion of this doctrine in my previous post).

The best practice for employers is to give employees advance notice of the potential for job loss due to the outside activities and an opportunity to correct the problem. If termination is necessary, the employer should have solid reasons for the termination, such as that the outside activities are adversely affecting their performance or are in conflict with the employer’s business interests.  Here are examples of such solid reasons:

  • there is a requirement that certain employees be available on call on certain days; such immediate availability requirements may make moonlighting at another job problematic for the employer;
  • absenteeism and tardiness in reporting to work;
  • lack of availability for overtime work as needed by the employer.

Conflict of interest is a conflict between your personal interests and those of your employer. In the context of outside employment, this comes up most often when your outside employment is for a competitor or potential competitor, supplier or contractor of the employer.

Taking all of this into account, I have advised employers as a best practice to create a written policy such as the following:

Employees may hold a job outside the company as long as they meet the performance standards of their job here and as long as there is no conflict of interest.  You should consider the impact that outside employment may have on your health and physical endurance. You will be judged by the same standards and will be subject to the same scheduling demands as all other employees, regardless of any outside work requirements.

If we determine that your outside work interferes with your ability to meet your responsibilities, or if there is a conflict of interest that exists due to your outside employment, you may be asked to terminate the outside employment in order to remain employed here.

I believe that this policy is fair in that it balances the business needs of the employer with the employee’s life outside of the workplace. It puts the employee on notice of potential termination of the employment relationship and in what circumstances that would be necessary.

Published by Dave the HR Compliance Guy

Human Resource and legal professional specializing in HR compliance advisory services

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