Employee handbooks help set expectations for your employees. They’re a collection of policies that dictate the standards for employment with your organization—and safeguard you from liability or ill intent. Outside employment policies are just one-way employers can help protect their organization and their intellectual property. But how do they work—and does your company need one?

What is an outside employment policy?

An outside employment policy is a set of guidelines and rules to regulate and manage employees when they engage in work or business activities outside of their primary employment. For example, if an employee freelances for their primary employer’s competitor, that could create a conflict of interest and lead to disclosure of sensitive information.

This policy’s purpose is to ensure that employees’ external commitments do not conflict with their responsibilities to the employer, compromise the organization’s interests, or create situations that may lead to ethical or legal issues.

Does my company need one?

In the growing realm of remote work and distributed teams, it’s becoming more and more commonplace for employees to have side gigs or secondary commitments. Whether you know about them or not, an outside employment policy can safeguard your organization from these peripheral obligations.

Here are some scenarios in which a company might need outside employment policies:

  • Preventing conflicts of interest: If outside employment may create conflicts of interest with an employee’s primary job duties, a company may implement an outside employment policy to manage and mitigate potential conflicts.
  • Protecting company resources: If there’s a risk that employees might use company resources, such as time, equipment or proprietary information, for their outside employment activities, a policy can help set clear boundaries and expectations.
  • Maintaining professionalism: This policy can establish guidelines for appropriate conduct in external work activities. For instance, it may include language about not engaging in discriminatory practices or using hate speech.
  • Compliance with legal requirements: In some industries or jurisdictions, there may be legal requirements or regulations governing outside employment. For instance, someone working at a publicly traded company may not be allowed to offer stock advice about their company, in accordance with FINRA regulations.
  • Preserving intellectual property: If employees are involved in creative or innovative work, a policy may be necessary to protect the company’s intellectual property and ensure that employees do not inadvertently disclose sensitive information in their external engagements.
  • Protecting against competition: Outside employment policies, including non-compete clauses, can prevent employees from working for competitors or engaging in activities that could harm the organization’s interests.
  • Ensuring employee focus and commitment: If there’s a concern that an outside engagement may interfere with an employee’s ability to fulfill their primary job responsibilities or commitments to the company, a policy can set expectations regarding time management and dedication to the primary role.
  • Managing reputation risks: A company may want to safeguard its reputation, especially if external activities could be perceived as conflicting with the company’s values or mission.

What should be included?

As is the case with any company policy, the specifics of an outside employment policy depend on what the organization is trying to achieve or safeguard against. Typically, an outside employment policy includes provisions related to:

  • Disclosure: Employees may be required to disclose their outside employment or business activities to their employer.
  • Conflict of interest: The policy may address potential conflicts of interest that could arise if an employee’s external work is in the same industry or competes with the employer.
  • Time commitments: Guidelines may be established regarding the amount of time employees can dedicate to outside employment to prevent interference with their primary job responsibilities.
  • Use of company resources: Policies may specify whether company resources, such as equipment or confidential information, can be used for outside employment purposes.
  • Non-compete agreements: In some cases, organizations may include clauses preventing employees from working for competitors or engaging in activities that may be detrimental to the company’s business.
  • Approval process: Some organizations may require employees to seek approval before taking on outside employment.
  • Termination consequences: The policy may outline potential consequences, including disciplinary actions or termination, for employees who violate the terms of the policy.

Create your own outside employment policy with SixFifty

SixFifty’s Employment Docs software helps companies generate custom, state-specific employee handbooks, policies and more for all 50 states. Contact us to learn how our tools can help you generate your own outside employment policies and other critical policies that safeguard your organization, your employees, and your ability to succeed.