Allowing your employees to freelance on the side

If it seems like everyone has a side hustle, second job, or started freelancing, you’re not wrong. According to a 2019 Bankrate survey, over 40 percent of full-time employees have secondary employment, and after the economic downturn of 2020, about two million more full-time workers started freelancing.

As an employer, you have concerns about your team picking up second jobs, but can you ban your employees from moonlighting? We’re taking a closer look at the legality and ethical aspects of the issue as well as the benefits you may be missing out on.

Why Are More People Freelancing

First, why are more people choosing to take on more work in addition to their full-time career?


The number one reason people are tapping into the gig economy is money. Student loans and the rising costs of both housing and healthcare have more people scrambling to make ends meet, and often, the only way to do this is to freelance on the side.

Gain Experience

Freelancing offers people the opportunity to gain experience in areas where they may not be traditionally trained. For example, if you have a marketing strategist on your team who has learned graphic design skills, they may create a Fiverr profile and offer logo design to start building a portfolio in a low-risk manner.


Freelancing offers people the opportunity to try something new and take on different challenges. If your company offers a fairly niche service, like web design and digital marketing for dentists, your employees may choose to pick up freelance projects to break out of a rut and flex their creative muscles.


For some people, freelancing allows them to fulfill their passions. While the full-time job pays the bills, they can pick up projects on the side doing what they truly love, like working in the nonprofit sector or assisting a startup.

Employer Concerns About Freelancing

Though there are several benefits to the employee, employers often see challenges caused by members of their team picking up second jobs and side hustles, which is leading to them wanting to ban employees from freelancing.

Working for Competition

Most people want to stay in their industry when they’re freelancing, so your employees may end up working for your competition, sharing insider information, and even taking clients.

Diminished Job Performance

The extra time and hours spent on a second job or project can lead to a deterioration in their work performance for you. Whether they’re overly tired or they have simply made their project a higher priority for their time and resources, it’s not uncommon for performance to suffer when an employee starts freelancing.

Using Company Resources

If you supply a computer, software, and other items designed to help your team do work for your company more effectively, and they’re using it to do work for someone else, this isn’t just unfair, it could end up costing you in the long run.

Can You Ban Freelancing?

So these issues all lead to the big question: Can you ban your employees from freelancing? The short answer is no, but let’s look deeper.


The main reason you prevent your employees from freelancing is because it’s generally not legal. You, the employer, have limited say on how your people spend time outside of work, and this factor was decided in court when an administrative law judge for the National Labor Relations Board struck down a ban on employees of Nicholson Terminal & Dock Co. having second jobs or freelancing.

The ban stated employees couldn’t take additional jobs that were “1.) inconsistent with the company’s interests, 2.) detrimentally impacted the company’s public image, or3.) required so much time and effort that they would adversely affect employees’ work.” While the third aspect of the ban was upheld, the first two were determined to be too restrictive and intruded upon employee rights.

Morale and Career Satisfaction

Even beyond a legal issue, telling someone they can’t work on a freelancing project or pick up a second job can lead to poor morale and higher turnover. If they are freelancing because they need money, are bored, or feeling unfulfilled, and you shut down their ability to meet their goals with a freelancing project, they may leave your company altogether.

Reaping the Benefits

Additionally, you, the employer, may see benefits from your team members freelancing. They can be learning new, industry-related skills that they then apply to your company, they’re gaining experience, and, depending on the situation, are happier or less stressed. All of these can be good for your company.

Creating a Freelancing Policy

Instead of an outright ban for employees moonlighting, consider creating a freelancing policy. If you have legitimate concerns, you can create a legally compliant policy that looks out for your business.

This could include having clauses like:

Instead of an outright ban for employees moonlighting, consider creating a freelancing policy. If you have legitimate concerns, you can create a legally compliant policy that looks out for your business.

This could include having clauses like:

  • Communicating to management when you are taking on a project or second job;
  • Setting expectations in writing that the employee must meet the demands of the current job before other forms of employment;
  • Not using company property for another company.

Non-Compete Clause

If your concern is your employees freelancing for the competition, this would go into a non-compete clause, not your freelancing policy. A non-compete clause is a legal contract that prevents your employees from working with a direct competitor and should be drafted by a member of HR or your legal team. Also, be sure to check your state laws to determine if non-compete clauses are legally binding.

Let Us Know Your Thoughts About Employee Freelancing?

With the economic landscape shifting and more people turning to the gig economy, the amount of people freelancing will only increase in the foreseeable future. How do you feel about your employees freelancing? Have you seen challenges or benefits we haven’t written about? Leave a comment below and keep the conversation going.

About the Author: Dave Sweeney

Dave is an Emmy-Award® winning web designer/developer and has worked in the digital media industry in both newspaper and broadcast television since 1999. He has also worked as an Art Director for a medium-sized advertising agency in the South Florida market and TheeDigital's customers' are benefiting from his talent these days.

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