5 Tips For Managing Risk When Your Employees Have Side Hustles

January 21, 2022

Gig working and side hustling is becoming more commonplace. True crime podcasters are turning their interest in serial criminals into monetized broadcasts made in their basements. Younger employees can earn extra cash on the side to save for a house or a holiday. And at CGL, one of our founders has found her passion doing a death doula certification (read all about that here). But for employers, side hustles pose both an opportunity and a risk. Here’s what employers need to think about when considering employee side hustles:  

How should an employer handle employee side hustles?  

Employers should approach side hustles with empathy and enthusiasm. We’ve said before that we love for our employees to have passion pursuits. We find these team members are more energetic, more driven, and more likely to have a diverse skillset. These characteristics benefit our business and benefit the employee – it can easily be seen as a win-win.   

But employers are right to be wary of employee side hustles that could damage their business. This is more likely if the employee is providing the same or similar services on the side – or if they’re working on developing a competing product or service.  


5 Tips for Managing Risk Stemming from Employee Side Hustles  


Tip 1: Manage Cybersecurity Risk with BYOD Policies 

Cybersecurity risk can be managed through BYOD (Bring Your Own Device) Policies. These are critical for remote workforces where employees are permitted to work on their own devices. They mandate appropriate security measures and usage and can restrict employees from using the device in certain ways, including prohibiting them from uploading documents to the Cloud and preventing them from engaging in non-work-related tasks on the device during work hours. These protections should be built in to protect your business from cyber threats and inappropriate usage. You also want to be sure that your business documents and data are secured by a separate user profile (at a minimum).  


Tip 2: Ensure Your Employee Contracts Outline Your Expectations. 

We see issues arise where an employee’s side hustle infringes on their employment, such as employees calling in sick whenever a freelance opportunity arises or answering calls or emails in such volumes that it impacts their productivity as an employee.   

Your employment contract should detail what you require of your workers, including your expectation that they focus on their duties during the hours they’re being paid for. They should ensure the side hustle doesn’t conflict with the company’s essential business interests or disrupt business operations. These policies should also outline any productivity measurement surveillance or monitoring that is taking place, and the consequences for not meeting them.  

Finally, your employment policies and handbook should clarify that the company assumes no responsibility for such outside employment and that they do not provide workers’ compensation coverage or any other benefit for injuries occurring from or arising out of additional employment.


Young woman with dyed blonde hair and a yellow dress taking a photo of her meal for her side hustle while working in a fashion store

Tip 3: Ditch the Non-Compete Attitude in Favor of Strong IP Protections. 

Non-compete clauses are generally not enforceable in many states in the US, including California. Instead, employers should protect themselves using strong provisions that assign the rights to any IP developed by employees using workplace devices, software or programs or during work hours. This is equally true for your contracts with freelancers.    


Tip 4: Negotiate Thoughtfully with Your Employees About Their Side Hustles. 

Communication around employer expectations should be open, honest, and frequent. You want your employees to understand that, while you appreciate they have a life outside of their work hours, they do need to demonstrate an ongoing commitment to your business too. Striking this balance is critical if you want to get the best out of your busy employees!  


Tip 5: Talk to Your Employees About How They Can Channel Their Ambition Within Your Business. 

Employees who are also entrepreneurs may be incredibly beneficial to your organization. They are likely quick thinkers who are adept at multitasking and problem-solving. Those traits are extremely valuable for workers and leaders and you should work out how you can keep those employees at your company.  

Talk to them about their aspirations and explore whether there’s room for them to grow into a more senior role with more responsibility. If your needs align with theirs, it is worthwhile to consider.  


For assistance drafting your workplace policies to reflect your stance on employee side hustles, get in touch. We’re here to help! 



The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website or any of the e-mail links contained within the site do not create an attorney-client relationship between CGL and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Other Articles

Compliant Cannabis Testing in the California Workplace
In the Wake of Kaseya: 5 Cybersecurity Tips for Your Business
5 Tips for Managing Your Remote Employee Workloads

    Ready to Talk?
    Contact Us

    We would to hear from you

    Please take a moment to tell us a few things about your needs and someone from our team will reach out to you as soon as possible.

    We would to hear from you

    Thank you for reaching out!

    Someone from our team will get back to you shortly

    We would to hear from you