According to a Zapier survey, 67% of respondents with a side hustle started it within the past three years.

Whether you’re exploring a different career path, thinking of going freelance, or want to get an additional income stream to make ends meet, having a second job is more feasible than ever as more workers are remote. 

Having a second job, or moonlighting, is defined as having another job, whether a full-time or part-time job, outside of the regular 9-5 working hours your first job takes up, such as during the weekend and at night.

For many, having employment relationships with different companies is a natural next step since we are no longer restrained to an office space. With remote work, especially if your main job uses asynchronous communication, arranging your schedule and managing your other job is much easier.

You might be thinking of answering a job opportunity that seems perfect for you, or you might even be thinking about opening your own business. However, before you rush into things, you may pause as reasonable doubt creeps in. What would this look like to your co-workers and employers? Is moonlighting legal?

This article will give you some answers to help you start your second job safely, know where the line is to get adequate protection from future legal issues and calm your anxiety of being found out and sued by your employer.

Am I Required to Tell My Employer About My Second Job?

This answer depends entirely on your company’s policy and the contract you signed with your company. In most cases, you don’t have any obligation to tell anyone at your current job that you’re taking a second job opportunity. However, we suggest ‌you remove any possible misunderstandings between you and the company in the future by being as transparent as possible.

Furthermore, your employers will likely find out due to social media and the internet. It’d be much better for both employers to find out about your side hustle straight from you instead of LinkedIn.

Many companies don’t mind if their employees have another job, as long as it’s not influencing your performance at your day job and there’s no conflict of interest. Besides transparency, consulting your primary employer and your new employer might even result in a more flexible schedule that allows you to manage your time better to facilitate both jobs.

Consulting with your primary employer about your second job might also reveal any conflict of interest between the two companies. While the federal law doesn’t prohibit moonlighting, there is a law regarding conflict of interest. This issue is especially relevant if both companies are in the same industry. Working for direct competitors likely violates the employment contract you signed when you started your primary job. As you may learn sensitive and proprietary information from both jobs, there is no way to prove that you didn’t use your insider knowledge to benefit one of the companies.

That said, some companies do prohibit moonlighting. Consider checking with your HR about the company’s moonlighting policy beforehand, so you don’t get in trouble when either side discovers that you’ve been working two jobs.

Is It Legal to Work Two Full-Time Jobs?

Having a second job doesn’t violate any laws, but it might be a breach of contract with your current employer. Ensure that the company you’re currently working for allows moonlighting and check the company policy and employment contract for guidance. If you can’t find anything, asking the Human Resources (HR) department might be an excellent choice to ensure you’re not violating any employment agreement.

Further, if there are conflicts of interest, you might be suspected of leaking trade secrets or customer information, violating privacy laws. Conflict of interest will happen sooner or later if you’re working in the same field as your current employer.

That said, the employment laws differ from state to state. If you want to cover your bases fully, consider consulting a law firm to verify you’re allowed to pursue multiple opportunities according to local laws and your company policy. 

Some Things to Consider

So now that you know moonlighting is legal according to federal law, you might be tempted to take up a new job right away. However, before you take that offer or even apply for a job opportunity, there are a few things you need to know.

Potential Conflict of Interest

Conflict of interest is one of the most likely restrictions to your side hustle, and it’s also why you should pay special attention to this aspect before chasing an opportunity.

A conflict of interest might be perceived as leaking trade secrets or customer data that can end as a legal or financial disturbance for your employer. Even a whiff of a conflict of interest would give your employers a sufficient reason to terminate your employment or even sue you.

Avoid working with your current employer’s clients, vendors, or competitors to avoid conflict of interest. For example, if you’re working at a software development agency and moonlighting by teaching development at night classes or driving an Uber, there’d be little chance of a conflict there. However, it’d be different if you offer dev services to your current organization’s clients as a freelancer.

Consider disclosing your side hustle plans to your employer so you can discuss whether you can move forward. An open discussion will make it easier for you to report potential conflicts of interest in the future.

Tax Consequences

As you’re adding an income stream, it’s natural that there’d be additional calculations included and payments to be made when the tax season comes.

Reporting your additional payment means that you’d be filling out another tax form depending on your type of business. If you’re an independent contractor or freelancer, there’s a self-employment tax that you need to pay as soon as you make $400 from your side job, on top of your income taxes. Freelancers who work on short-term projects should carefully collect and store their business documents for use during tax seasons.

Failing to do this might result in a serious legal dispute with the IRS. To prevent this and get clarity around how much you need to pay, consider hiring an accountant to help you manage taxes.

Employer Policies

Even when the law doesn’t prohibit you from taking on a second job, you’re still bound by the employment contract you signed with your current employer.

The restrictions and possibilities might differ, depending on your company’s policies. The employee handbook or employment contract will usually describe such limits. If you can’t find anything about starting a second job anywhere, you can also consult your HR personnel to make sure that it’s allowed by your company.

Some companies prohibit employees from taking on additional jobs due to how it might affect their performance at work. For example, if you work in a highly stressful environment, the company might not allow you to take on additional opportunities. Added responsibilities might result in burnout and affect your performance. 

Employer policies might also outline what kind of second jobs you’re allowed to take to avoid potential conflicts of interest. Finally, some organizations might even encourage you to ‌expand your skillset through moonlighting. These companies might offer additional benefits for people with side hustles, such as a more flexible schedule.

State Laws

Just like employer policies, state laws differ significantly. State laws mainly regulate non-compete clauses employers can put into their company policy.

Non-compete clauses restrict employees or former employees from entering or starting a similar profession as the employers after leaving a company or during their period of employment.

Some states, such as North Dakota and California, don’t allow companies to place non-compete clauses, with some exceptions. Massachusetts and Washington both prohibit non-compete clauses for low-wage employees. Other states, such as New York, limit the scope and time of non-compete clauses to a reasonable restriction. Finally, states like Florida and Georgia don’t limit the non-compete clauses employers can impose. For more insight about your state, here’s a list from Beck Reed Riden that shows which states allow non-compete clauses for businesses.

Familiarize Your Team with Your State’s Regulations Through Inspired eLearning

Before starting your new job, check your company’s moonlighting policy to see if you’re breaching your employment contract. Be especially sensitive to any potential conflicts of interest that might happen when you work in a similar field as your current employer because it’s an offense that’s severe enough to lead to layoffs.

If you are still unsure despite your research, it is best to seek legal advice within your state to learn more about your specific situation.

Are you an employer that allows moonlighting? Consider socializing your company’s moonlighting policy through a training program. Additionally, ask your HR department to communicate your moonlighting policy. This information is essential to help employees figure out how to navigate their specific situations, especially if they need additional work to meet their budget requirements. 

Here at Inspired eLearning, we have an HR-specific training program that could give them the tools and insights to facilitate better communication with employees. In addition, we have a range of training for your employees, including modules on security awareness, privacy laws, state-specific regulations, and harassment training for staff and managers alike.

If you’re interested in creating a comprehensive training program for your department on one platform, we’d love to learn more about what you need. Contact us here to discuss how we can create the perfect blend of courses for your employees.