The Truth About Employers Banning Side Hustles

America is a free country, right? That is what we say. But sometimes we incorrectly assume that the personal freedom granted us by the Constitution can be forcibly applied to private businesses. Take a situation in which an employer bans its employees from taking side hustles.

At first glance, such bans seem to go against everything we know and love about freedom. We just assume that employees should be able to take side hustles as long as doing so doesn’t interfere with their full-time jobs. After all, people should be free to earn a living in any way they see fit.

The unfortunate truth is that employers are allowed to ban side hustles up to a certain point. They can do so based on the concept of at-will employment. In the case of employment secured by a contract, employers can put language in said contracts banning side hustles.

More About At-Will Employment

Visit the Pharma Diversity website and you will find all sorts of open positions in the biotech and pharma industries. Many of those jobs will ultimately be offered to applicants on an at-will basis. What does that mean?

At-will employment is based on a very simple contract that says employer and employee agree to maintain a mutually beneficial relationship only as long as both are willing to do so. In simple terms, this means you can quit at any time and for any reason. Likewise, your employer can terminate your employment at any time and for any reason.

The folks behind the Pharma Diversity website say that the vast majority of jobs in this country are offered at-will. There are no formal contracts detailing salary, hours, and reasons for termination. Hiring managers and candidates simply shake hands to get the deal done.

At-Will and Side Gig Bans

Because at-will employment is more or less based on a handshake, employers need very little justification for terminating workers. They obviously cannot terminate based on age, sex, ethnicity, religion, etc. But they can develop a no side hustle policy and terminate employees who violate it.

As a side note, at-will employers can terminate workers without giving any justification. Even without a ban on side hustles in place, a manager could determine that an employee with a side hustle is no longer beneficial to the company and terminate that person.

Contract-Based Employment

When employment is secured by a formal contract, you are looking at an entirely different relationship. For the purposes of this post, contract-based employment is not freelancing or gig work. It is not subcontracting as a self-employed individual. Rather, contract-based employment is a relationship in which the employer tenders an offer by way of a written contract. In order to accept the offer, the candidate must agree to and sign the contract.

Contracts are legally enforceable agreements between parties. As such, there are very few limits in terms of what employers can include in their contracts. They can pretty much stipulate whatever they want. Why? Because job candidates are not compelled to sign. If they don’t want to abide by contract terms, they can simply refuse the offer and walk away.

It is rare to see contracts tendered for entry-level positions. Even mid-level positions are usually governed by at-will rules. But when you get into highly specialized jobs and areas like executive management, contracts are pretty commonplace.

In such cases, contract language may very well include a clause banning side hustles. But when you are talking positions requiring a contract, you’re also talking about very good salaries. Do the employees who fill those jobs really need side hustles? Chances are they don’t.