5 (More) Tips For Managing Employee Side Hustles

The number of employees with side hustles has been increasing steadily over the past years, with a significant jump in 2023. Last year, 44% of entrepreneurs who started a business did so while employed elsewhere, which is up from 27% in 2022. Given this jump, we decided to revisit and add to our tips for managing ever-growing employee side hustles.   

A slight digression: We are pleased to note that 49% of new business owners are women – which is a big shift from 2019 when just 29% of new business owners surveyed were women. There has also been an increase in Black and Latinx business owners.   

Our Initial 5 Tips for Managing Employee Side Hustles 

We previously provided five tips for managing side hustles, and the tips remain relevant today. We recommend reviewing that post for more detail, but here are the main concepts:  

1. Manage cybersecurity risk with BYOD policies.
2. Ensure your employee contracts outline your expectations.
3. Ditch the non-compete attitude in favor of strong IP protections.
4. Negotiate thoughtfully with your employees about their side hustle. 
5. Talk to your employees about how they can channel their ambition within your business.  

5 (More) Tips for Employers to Manage Employee Side Hustles 

Understand the reasons your employees take on side hustles

While some companies have a culture that embraces (or at least tolerates) employee side hustles, others are less accommodating. Whichever end of the spectrum your company I on, it can be beneficial to understand why your employees are taking on side hustles.  

There are a range of motivations: upskilling, paying off debt, passion projects, or building a business for the future are common reasons. In today’s economy, many employees are taking on side hustles simply to adjust to the increased cost of living or to meet their goals (like saving for a car or down payment).  

Knowing why your employees are taking on extra work can better position your company to meet those needs (if you can or choose to). For companies with many employees working on the side for financial reasons, it’s likely best not to clamp down too hard. If your employees need additional money beyond their salary, it’s likely they’ll look for another full-time job if they aren’t permitted to have a side hustle.  

Publish a procedure for disclosing side hustles and outside employment

Your company might consider having a clear and easy-to-understand policy for disclosing side hustles. If you want to introduce a disclosure policy:  

• Clearly define which side hustles need to be disclosed (e.g., all side hustles, only those in related industries, only those that exceed a certain number of hours per week). 

• Share details about information employees must disclose (i.e., expected hours, plan for ensuring the outside work does not impact the employee’s performance, industry/type of work, etc.)  

• Outline the steps involved in reviewing disclosures and assessing potential conflicts, including the criteria that will be used and who will be involved in the review. 

• Detail the steps to be taken if a conflict of interest is identified, including potential options for resolution (e.g., modifying the side hustle, adjusting work responsibilities, seeking legal counsel). 

• Clearly communicate the potential consequences of failing to disclose a side hustle/outside employment or engaging in a conflicting activity. 

Set clear expectations about job performance and deliverables

This is generally a good business practice in any event, but companies with employees who have side hustles should be very clear about job performance expectations and work deliverables. There is a risk that a side gig could decrease productivity, either through distraction, fatigue, or burnout. So, setting clear expectations with your employee can help them appropriately manage their time and resources to avoid declining productivity or scheduling conflicts.  

Define unacceptable side hustles in a documented policy 

If there are any side hustles you would not accept your employees taking up, they should be documented – likely in a conflict of interest or similar policy.  

Common side hustles that employers consider unacceptable include work that:  

• Directly competes with your company.  

• Involves working with a direct competitor or supplier/vendor.  

• Uses the company’s resources, tools, equipment, or intellectual property. 

• Creates a perception of bias.  

• Impacts primary job performance.  

• Is illegal.  

• Could impact the company’s reputation or brand image.  

Depending on your industry, you may wish to expressly prohibit side hustles that involve the creation or distribution of sexually explicit content, including engaging in sex work, performing in adult entertainment, or producing content for OnlyFans. There has been a spate of terminations across the US relating to workers creating OnlyFans content on the side.  

Conduct regular check-ins with your employees.  

Regularly checking in with your employees engaged in side hustles can help you detect issues early, manage performance, provide support and guidance, identify internal opportunities for growth, and leverage the skills they are developing through their side gig.  It can also be a powerful tool for building trust and understanding.   

Again, this tip can apply more broadly and can be a good business practice in any event.  

If you need help developing or improving your side hustle policy, reach out. Our employment attorneys would love to work with you. 

• Employment Law