“Can an employer require you get its prior approval for a side job or a side business?”

Question:  I am thrilled to have found your blogsite, and I find your questions and answers quite helpful.

I work for a non-profit employer. My employer requires employees to sign an extensive “Code of Ethics” document that states:

“Employees shall not accept employment with, act, or render services to, any business or endeavor, with or without compensation, which competes with or conducts business with the Company. In order to ensure that any outside employment does not conflict with the Company’s interests, you must disclose your outside employment to Human Resources and your Manager before you begin any outside employment.”

I read your post regarding the individual who was terminated from his job because he had opened an unrelated internet business. That is exactly what I have done in order to sell my handcrafts. This is completely unrelated to any aspect of the company I work for as my day job.

I find my employer’s requirement that I notify them of my internet business to be an invasion of my privacy. I would understand a policy that required an employee to give notice of working for a competitor or vendor, but to require company approval of ANY second job BEFORE you begin just seems unfair and extremely invasive.

California, my state, continues to struggle with a severe recession and it seems inappropriate for a company to be able to dictate and/or prevent my ability to earn a living during these rough times.

I appreciate your help.

         Sacramento, California

Answer: C.C., you’ve raised an increasingly common concern voiced by employees: How much can my employer ‘regulate’ what I do on my own time?

More and more employers are putting into place policies like your employer’s requiring their prior approval for any side job or business. Many courts have seen cases like this. All of the court cases I am familiar with have concluded that it is acceptable.

This is the courts’ reasoning: in any relation the two parties are each free to insist upon certain rules, requirements, limits, conditions or terms; if the other party objects to those rules, requirements, conditions or terms, either party is free to end the relation. This applies to friends, people dating, married people, and employees/employers. It may be difficult to find a new friend, date, marriage partner or employer, but “no one promised anyone that life would be easy.”

This is especially the case when employers set limits on the “business” aspects of their employees’ lives. Many states, such as New York, have enacted laws limiting how much an employer can limit employees’ “social or political” lives, but I know of none that has set any limits on the regulation of employees’ “business” lives.

As to whether this is unreasonably invasive, the courts have said that employers may have many different and valid reasons for regulating their employees’ “off-hours business lives,” including these:

a. To ensure that the employee’s view that there is no conflict is the correct view;
b. To ensure that nothing the employee may do during “off-hours business life” offends the employee’s customers;
c. To ensure that the employee’s “off-hours business life” is not one that might take up too much time or energy that should otherwise be devoted to the “day job”;
d. To ensure that you were not engaging in any “off-hours business life” that might pose a danger of acquiring a dangerous illness that could then be passed on to other employees; and
e. To determine whether, in their minds, you would likely be tempted to make phone calls and send and receive emails during your “day job,” a bad habit that many employees get into. 

So, as to “the law,” your employer’s prior approval requirement would in all probability be sustained by a court. That does not mean that you cannot succeed to achieve by “negotiation” what you want. Your internet handcrafts business would not seem to be one that would likely raise special concern.

Go ahead, give it a try: tell your employer you just became aware of the requirement of prior approval, and ask to be permitted to keep the handcrafts work going, and the sale of those products by internet happening. I can’t guarantee anything, but I do believe openness and honesty are almost always the best paths to follow.

Thanks for writing in. I’d love to hear what you decided to do, and how it went.

Best, Al Sklover

P.S.: For those who want to do “Side Work” we offer a “Model Memo Requesting Consent to Do Side Work on Your Own Time.” It offers “What to Say, How to Say It.™” To get your copy, just [click here.] Delivered by Email – Instantly!

P.P.S.: If you would like to speak with me directly about this or other workplace-related subjects, I am available for 30-minute, 60-minute, or 120-minute telephone consultations. (Even 5-minute “Just One Question” calls). Just [click here.] Evenings and weekends can be accommodated.

© 2010 Alan L. Sklover, All Rights Reserved.

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