Are your employees working two jobs? Why you may need a policy for side gigs

For many employees, having just one job isn't cutting it anymore. And while many positions don't outright say workers can't hold side jobs, HR leaders are struggling as employees see just how far they can push the envelope in the absence of corporate policies.

Forty-eight percent of HR leaders reported having more employees working side gigs in 2023 compared to last year, according to a recent survey from software insight platform Capterra. And while 54% businesses take a positive stance on side gigs and encourage their employees to make additional income if they need it, close to half of the HR leaders said their employer doesn't have a formal side gig policy, and it has the potential to cost them in both revenue and talent.

"Businesses actually believe that side gigs are a good thing that allow their workers to go out and pursue passions and develop their skill sets that they can then bring back to their primary job," says Brian Westfall, primary analyst at Capterra. "But as more employees work side gigs the possibility of consequences grows, too. Maybe they're using company property, maybe they're using company software technology for their side job. These are really serious things that employers should be making clear in an employee handbook: This is not okay." 

Read more: 10 states where workers crave side gigs

But the cost of living keeps climbing: the average prices for common goods like rent, food, and gasoline rose 3.1% annually in June 2023, according to the Consumer Price Index, while real average hourly earnings only rose 1.2%;and student loan payments hang in the balance, driving more and more employees to take on second jobs to make ends meet. Thirty-nine percent of HR leaders even believe that their workforce is working an entirely different full-time job for a different employer, but only 5% of all employers have a rule banning side gigs altogether.

"Companies recognize that it's tough out there and it's getting expensive and people are just trying to get by day to day," Westfall says. "HR departments also have other priorities and assume employees are smart and should know what is expected for them at work, and what could present a potential conflict with their main job." 

But that's not always the case. More than one in five HR leaders in Capterra's survey said they had to discipline an employee for working a side job in the past year, and for HR leaders at hybrid workplaces, the number jumped to more than one in four. Most often, employees were disciplined because their side gig was affecting performance at their main job, but there were also more serious incidents where employees were found to be doing side gig work while they were supposed to be doing their main job, or even working for a direct competitor.

As a result, 45% of HR departments let employees off with a warning out of fear of implementing harsher punishments, such as putting an employee on a performance plan, asking them to quit their side gig or even firing them. Having a designated policy could eliminate all of the doubt and hesitation both parties may be feeling on the issue. 

Read more: Why Homebase encourages its employees to run small businesses on the side

"If you're a company that has very sensitive company secrets and you want people to come in and be fully focused on their job it is fully within your legal right to ban employees from having side gigs," Westfall says. "But if you're putting together a policy — keep it simple. You do not have to get lost in the minute details, you just have to explicitly state that there are restrictions on work that represents a conflict of interest, work that uses any company IP or technology, any work that's done on company property and any work that affects performance on their primary job. Then deal with the consequences or infractions as they happen." 

Westfall also suggests that employers don't explicitly force employees to disclose what their side gigs are, so as to not accidentally discourage them from having them. He advises that the policy outlines the degree of consequences an employee could face should they not comply with the rules put in place.

"It's just a matter of fact that employees are going to be more fluid with the amount of jobs they have moving forward," Westfall says. "And if that's going to happen, companies can't overreact on this and they'll need to work with their employees and help them in ways that they can while still allowing them to do what they need to do; find balance between compassion and consequence."