Working two jobs is a common practice for millions of Americans seeking to increase their income or explore different career paths. While no federal or state law prohibits an individual from holding multiple jobs, the activity is regulated by signed contracts, company policies, and an employee’s ethical obligation to their primary employer. Understanding the constraints that govern outside employment is necessary to prevent an income-boosting activity from becoming a terminable offense. This article will explore the legal and administrative boundaries that define acceptable multiple employment.
The General Legal Status of Holding Multiple Jobs
No federal or state law in the United States makes it illegal for an employee to hold two or more jobs simultaneously. Millions of people engage in multiple employment, confirming its general permissibility. This freedom rests on the principle of “at-will” employment, which exists in most states and permits an employer or employee to end the working relationship at any time for any reason not prohibited by law.
The at-will doctrine makes working a second job a potential risk. Although the act of holding a second job is legal, an employer can legally terminate an employee if the second job violates an established company policy or a signed employment contract. Termination in this context is generally a breach of contract or policy, not a violation of criminal law. Employees must review their employee handbook and all signed agreements to understand the specific restrictions their employer has put in place.
Contractual Obligations and Employment Agreements
The most direct and enforceable restrictions on outside employment are found within an employee’s contractual agreements and company policies. These documents establish the boundaries of the professional relationship and often include specific clauses designed to protect the employer’s business interests. A breach of these clauses can provide a justifiable reason for termination, regardless of the employee’s performance in their primary role.
Non-Compete Clauses
A non-compete clause is a provision that restricts an employee from entering into a similar profession or trade in competition against the employer for a specified period within a geographic area. The purpose of this clause is to prevent an employee from leveraging the training, specialized knowledge, and trade secrets gained at the primary job to benefit a direct competitor. The enforceability of these clauses varies significantly by state, with some states heavily restricting or banning them entirely, while others allow them under specific conditions.
Non-Solicitation Agreements
Non-solicitation agreements are distinct from non-compete clauses because they restrict the pursuit of the employer’s business relationships rather than the type of work performed. This agreement prohibits an employee, during and often after employment, from actively recruiting or “poaching” the primary employer’s clients, customers, or other employees for the benefit of the second job. This restriction protects the employer’s investment in its workforce and its established client base from being undermined by outside endeavors.
Exclusivity Clauses and Moonlighting Policies
Exclusivity clauses are the broadest form of contractual restriction, specifically prohibiting an employee from engaging in any outside work without the employer’s prior written consent. These clauses are typically included in employment contracts or detailed in an employee handbook’s moonlighting policy. Such policies often require disclosure of any secondary employment, regardless of whether it is competitive, allowing the employer to assess potential conflicts before they arise. Violating an exclusivity clause or moonlighting policy can constitute a breach of contract and lead to disciplinary action, even if the second job is completely unrelated to the primary one.
Avoiding Conflicts of Interest and Duty of Loyalty
Beyond explicit contractual clauses, every employee is bound by an implicit “Duty of Loyalty” to their employer, an established principle in employment law. This duty requires employees to act in the best interest of their employer and refrain from conduct detrimental to the business. A conflict of interest occurs when an employee’s personal interests, including their second job, interfere or appear to interfere with the employer’s interests.
Breaching this duty includes using the primary employer’s resources, such as company laptops, phones, or proprietary software, for the second job. An employee also violates the duty of loyalty by working on their secondary job during the hours they are scheduled and paid for their primary employer. Sharing proprietary knowledge, internal strategy, or trade secrets between two employers constitutes a serious breach that can result in immediate termination.
The Importance of Disclosure to Employers
Whether an employee is legally required to disclose a second job depends entirely on the employer’s policies, not on a general legal mandate. While few laws compel disclosure, many company moonlighting policies or exclusivity clauses require it. Failing to disclose when required by policy is often considered a disciplinary matter, sometimes categorized as insubordination.
Proactive disclosure, even when not mandatory, is a prudent risk mitigation strategy. Bringing the second job to the employer’s attention allows them to formally assess any potential conflicts of interest or duty of loyalty issues. Seeking written approval before starting the second job provides the employee with documented confirmation that the employer has reviewed the arrangement and found it acceptable, offering protection against later claims of policy violation.
Legal Considerations for Hours and Wages
The Fair Labor Standards Act (FLSA) governs minimum wage, recordkeeping, and overtime pay for non-exempt employees, but it applies differently across multiple jobs. Generally, the hours an employee works for two separate, unrelated employers do not combine for calculating overtime pay. Each employer is independently responsible for calculating and paying overtime only for the hours worked for their specific business that exceed 40 in a single workweek.
An exception occurs under the principle of “joint employment,” where two or more employers are sufficiently related or integrated in their operations. If the Department of Labor determines that a joint employment relationship exists—due to common ownership, shared control, or an arrangement to interchange employees—the total hours worked for both entities must be aggregated. Any hours exceeding 40 across the combined entities must then be paid at the overtime rate, making this a complex liability for businesses with closely-linked operations.
Tax and Administrative Implications of Working Two Jobs
Earning income from two separate sources significantly complicates tax withholding, often leading to under-withholding if not properly managed. Each employer withholds federal income tax based on the assumption that the employee’s wages from that job are their only source of income, applying standard deduction and tax bracket rates accordingly. This failure to account for the total combined income often results in an insufficient amount of tax being withheld throughout the year.
To correct this shortfall, employees with multiple jobs must adjust their IRS Form W-4 for both employers. The IRS provides a “Multiple Jobs Worksheet” on the W-4 form to help calculate the additional amount that needs to be withheld from each paycheck to cover the total tax liability. If the second job is classified as freelance or contract work, the employee is considered self-employed, adding the complexity of paying self-employment tax, which covers both the employee and employer portions of Social Security and Medicare.