Moonlighting in spotlight with return to office

How should HR treat employees who have taken on second jobs?

Moonlighting in spotlight with return to office

With the “return to the office,” many employees who have taken up extra work or side jobs while working from home might be scrambling for a solution.

But is this allowed? And what should employers do if faced with employees who are “moonlighting”?

“I can perceive some issues that are going to arise there,” says James Heelan, a partner at Bennett Jones in Edmonton. “But what employers are going to have to be careful about is that they remain competitive, and that they remain a desirable place to work.”

“They're struggling with wanting people back in the office so they can have the benefits of that, the cultural benefits, but, at the same time, not alienating their workforce by being too strict when people are now used to a certain degree of flexibility.”

When moonlighting causes a problem

The big question is whether the moonlighting takes away from the main work of the employee, and if it in any way impacts the reputation of the business as well, he says.

“Employers are going to have to be mindful of their ability to ensure that their employees are actually dedicating their full-time hours to the business that they've been paid to be engaged in.”

With technology and the internet, there are just so many opportunities nowadays for employees not only to work somewhere else, but to make money on the side, to monetize their time, says Oren Barbalat, an associate at Hyde HR Law in Toronto.

“That's a fundamental concern for employers,” he says.

“Employers are, understandably, a little concerned or they feel aggrieved or they feel like they're getting a raw deal if they're paying for an employee's time and the employee is spending that time making money doing something else which isn't to the benefit of the employer.”

A bigger concern is if they're doing something similar to their main job, so the employer is losing their competitive advantage or their “secret sauce,” says Barbalat. “Anything proprietary that you've developed and your employee knows about, you want to make sure that they're not using that for someone else's benefit.”

Moonlighting workers who view their second job as a “calling” are often less engaged, according to an earlier study.

Why a policy makes sense

While there are implied obligations in common law, regardless of whether there’s an employment contract, they're not that robust, he says.

For example, even if the employee hasn’t signed a policy of confidentiality or a non-compete — which can be limited anyway — they have an obligation to not compete unfairly and not to improperly use confidential information.

And there are heightened obligations for people who are considered fiduciary employees, says Barbalat.

“If they receive any business opportunity that comes to them in in the course of their employment… they actually have a responsibility to bring that opportunity to the company or to the board, rather than taking that opportunity for themselves to starting their own business.”

But for employers, contracts are king, he says.

“That's the opportunity to set the expectations, it's the opportunity to say, ‘This is what confidential information is, now you're not to misuse it, you're not to disclose it. Just so we're absolutely clear about this, while you're working, you are to devote your full time and attention to the organization. If you intend to work somewhere else, in any job that's related to what you're doing here, you're going to ask us before you do that.’”

It’s so important to be clear about expectations because if it ever comes down to a dispute between what's permitted and not permitted, the employer wants to cite the contract, says Barbalat.

“If there's no contract and there's some ambiguity about what was allowed or wasn’t allowed, then ultimately a judge is going to side — or any decision-maker, frankly — is going to resolve that ambiguity in favour of the employee because the decision-makers are going to assume that the employer has more bargaining power, they have more money.”

Having a contract “gives [the employer] a lot more teeth when addressing it with the employee afterwards rather than just simply relying on what are, frankly, very vague common law obligations.”

The important thing is to have contractual provisions that basically say, “If you're going to have other work, then we expect to know about it and may have something to say about it,’” says Heelan.

The employer doesn’t want to stop someone who's trying to make a go of it from having a second job — as long as it doesn't interfere with their job — and it doesn’t want them to actually quit their job for one that may be more accommodating, he says.

“Ultimately, it comes down to how do you make sure that you're retaining your employees… and ensuring a workplace where people feel engaged and feel that they're being treated fairly. And that you're getting value for what you're paying your employees.”

Having a moonlighting policy is also important because otherwise the nuances may be lost, he says. For example, if someone wants to work at a garden centre after hours and it’s not related to their regular job, that’s not an issue.

On the other hand, there are cases like the 2015 Ross v IBM Canada Limited where a senior salesman was terminated because he was regularly working for his own personal company during IBM time. 

“If you have someone who is expected to be working during the day, and is instead distracted by running their own business, well, that's the kind of thing you want to stop and your policies can have a little more colour to them than a bald contractual provision,” says Heelan.

“[IBM] had clear guidelines, and it was clear that he had breached those guidelines.”

Discipline or dismissal

Often, employers feel aggrieved because there's some element of dishonesty where they didn’t know an employee is working for somebody else. And in that case, an employee could be potentially terminated for cause, says Barbalat.

“The more common situation is with more senior types of employees, and it's a different form of moonlighting where they're either starting up their own business or they're preparing to do something like that, either on their own or with some business partners.”

This involves duties of good faith or fidelity, whether contractual or implied, and if the person is a fiduciary, it becomes a lot more complicated, he says.

“Ultimately, what the employer has to show is some kind of damage, so they'd have to show what their losses were.”

Read more: Discovering just cause after termination isn't necessarily too late

On the other hand, if it’s more of a performance issue where the person’s productivity falters because of the second job, that can involve a performance improvement plan, says Barbalat.

“Ideally, you want the employee to improve — most employers aren't devious, they're not trying to set up employees for failure, they want the employee to succeed — so the way you deal with that is to clearly outline the expectation: ‘These are the expectations, this is where you are and this is where we'd like to see you, let's develop a plan for getting there.’”

It’s also important to give the employee a heads up about the potential consequences if their performance doesn't improve, he says.

“The reason you want to do that is because as an employer, it's quite difficult to let someone go for cause because of performance, but you can if you engage in progressive discipline. So if the employer thinks they might be going down that road, then they'd be well-served to put the employee on notice, essentially, that if the expectations aren't reached, there could be further consequences. And those consequences can or will include termination for cause.”


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