Moonlighting – legal violations, ethical breaches and good compliance practices
Just in the past few months:
– A police officer was caught allegedly “moonlighting” as a pimp – and was fired.
– A business organization (which was already tainted by a high-profile COI scandal) was discovered to be allowing some of its salaried managers to “moonlight” as hourly workers for the organization – and was publicly embarrassed.
(Also worth noting – but not, in my view, as clearly wrong as the others: a judge in New Jersey is under fire for moonlighting as a stand-up comic.)
Moonlighting has been around for a long time. (For COI history-minded readers, here’s an interesting example involving a 19th century Chilean general who had a second job — as an agent for an arms contractor that sold to the Chilean military.) But due to macroeconomic headwinds, relatively pervasive job insecurity and the expansion of telecommuting the practice seems likely to grow in the future (although this is only a guess).
While the cases we read about tend to involve intentional breaches or stunningly bad judgment, moonlighting viewed more generally can be beneficial, and not only for the moonlighter. Most obviously, the second employer gets the assistance of an employee that might not otherwise be available to it. Less obviously, the first employer can benefit from the employee’s experience at the second job – although this wouldn’t be a factor in all cases. Still, all involved need to be mindful of relevant C&E issues.
First, if you are employed by a governmental body, know the law, as some violations – such as in the IRS case – are punishable by criminal prosecution. (Here is an overview of relevant federal law and here is one regarding employment with NY City.) Similarly, if employed in the private sector, know and follow your company’s moonlighting policy – which is often found in the conflict of interest section of a company code of conduct.
Second, if you are an employer, make sure you in fact have implemented a moonlighting policy – and note that the failure to have one could, in certain circumstances result in a violation of state “lawful conduct” statutes. (I don’t know about laws outside the US on this issue.)
Such policies typically include conflicts-of-interest provisions – barring/restricting employment:
– with a competitor company or a firm that does (or seeks to do) business with the organization – like a supplier or customer;
– in jobs that might entail use of the organization’s confidential information or commercial relationships; or
– where the work could otherwise adversely affect the organization’s image or interests.
Beyond such conflicts, these policies generally provide that a second job shouldn’t interfere with performance of duties required by the first – e.g., by making an employee too tired for the latter or causing her to use time that should be spent on the latter for the benefit of the former.
Third, these policies should be promoted and enforced. They should be the subject of periodic communications – and not just buried in an employment manual that no one reads. There should also be a formal process to help ensure that approvals are documented and justified and, from time to time, the company should check to make sure the policies are actually being followed.
Fourth, whether as a matter of practice or policy, the “second company” (i.e., one that is hiring the moonlighting employee), should enquire of applicants if they have received any necessary permissions from their principal employer. I.e., an ethical organization will want to make sure not only that it is free of conflicts of interest internally but that it is not causing conflicts in others.
Finally, for a post on COI issues potentially arising from service on an outside board click here.
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