Do you have a side hustle policy? Clear code of conduct needed, says lawyer

A recent Harris Poll survey revealed that 29% of Canadian job seekers admit to working side hustles during company hours, with 87% having done so at some point in their careers.

This increasing prevalence of employees taking second jobs or gigs in addition to their main job is putting some employers in difficult positions as they navigate a response.

It’s especially complicated when they don’t know what their legal rights are, says Jarret Janis, partner at Levitt LLP in Calgary.

“It’s important for employers not to assume, particularly in this day and age, that an employee is going to be 100% committed, loyal, and faithful to the employer’s time,” he says.

And with the rise of remote work, policies around side hustles during work hours should be established with new hires before they even start – or at least much earlier on in the work relationship than is currently customary, says Janis.

“[It] really boils down to being frank and transparent with new hires, particularly as to what the expectations are for their particular role, and finding out early on enough whether or not they are engaged in a side hustle or some other venture,” he says.

“Having that conversation during the intake or interview process so that everybody first is on the same page, and the employer is aware of any potential conflicts that may arise. But also the employee who will be joining the company has clarity on what it is that they can and cannot do.”

Millennials most likely to have second jobs

Among the younger generations, the trend is even more pronounced, the Harris poll found, with 47% of millennials and 41% of Gen Z job seekers stating they would engage in a side hustle during work hours if they thought they could get away with it, compared to Gen X (25%) or boomers (28%).

“Employers need to establish a clear code of conduct around side hustles. This ensures that employees understand what is acceptable and what is not,” says Janis.

Without such clarity, employers risk losing valuable time and resources investigating misconduct, as well as facing potential legal battles if they decide to terminate employees.

Clear policies: the foundation for managing side hustles

For HR leaders, the solution lies in developing explicit policies that set boundaries and expectations regarding side hustles, says Janis.

“You have to have policies that are clear enough on the type of work that is permissible outside of company hours, but also during company hours, so you can put that before the employee when they start the position, and have that acknowledgment in writing,” he explains.

Such policies not only provide legal protection for the employer but also help ensure that employees know exactly what is expected of them. The lack of clear guidelines often leads to misunderstandings that can escalate into larger issues. Janis highlights a recent case out of British Columbia, Dove v Destiny Media Technologies Inc., where an employee’s side hustle caused missed deadlines and project delays.

“The problem was there wasn’t clarity. They weren’t having discussions. There was no clear policy with respect to side hustles or other business involvement. But the court still found just cause based on a broader policy,” he says.

“The entire thing could have been avoided had these discussions and policies been discussed or canvassed at the start or earlier in the employment relationship.”

Enforcement and consistency: keys to effective side hustle policies

While establishing policies is a crucial first step, consistent enforcement is equally important. Janis points out that many employers make the mistake of assuming their employees will act professionally without setting clear boundaries.

“You assume that this person that you’re hiring is a professional or is going to be professional, and… that they’re going to perform their duties and not take advantage of employer time or resources in the process,” he explains.

However, in today’s remote work environment, monitoring and enforcing policies can be challenging, he adds.

Inconsistency can also cause problems when employers or managers – intentionally or not – play favourites, turning a blind eye to side hustles or “moonlighting” in some cases, and disciplining in others.

“The risk of those employees taking advantage of that relationship and the employer turning a blind eye to that behaviour is certainly much higher in those circumstances,” says Janis.

“Not only does that present an issue for the company concerning that particular employee, but it sends a message to every other employee that ‘We don’t really have to comply with their policy.’”

Balancing economic realities with legal responsibilities

In the current economic climate, many employees are turning to side hustles to supplement their incomes. For HR professionals, this presents a dilemma: how to balance understanding the economic needs of their employees while protecting company interests.

Janis acknowledges that financial pressures play a significant role in the rise of side hustles, but stresses that there are clear legal lines that employers still need to draw; even when economic pressures are considered, employers must maintain boundaries to protect their interests.

“There’s certainly motivation to go and try to find additional income and additional income sources, but you just cannot do that on company time,” he says.

“If there’s a different arrangement and a different understanding or contractual arrangement that can be found … then that is something that each employee can negotiate. But when it comes to the standard employment relationship, it is cause for discharge when an employee is essentially stealing time or stealing resources from an employer.”