| Moonlighting In These Oppressive
CHRISTOPHER J. PRESTON
JIM BARBER CP Contributing Author
Recently, the U.S. Bureau of Labor Statistics reported that six
percent of America's worlf force holds more than one job In these
economic times it is anticipated that this percentage will only
increase. Moonlighting will likely become the norm, rather than
exception for today's workers. For reasons to be discussed, this
concerns for employers and those employees wishing to moonlight
a means of augmenting their income.
This comment offers an overview of moonlighting with helpful
citations to assist employees, employers, labor and employment
attorneys, human resource professionals, and the general public.
This article will discuss moonlighting and other related areas of
such as the employment relationship, restrictive covenants, employer
restrictions on employee off-duty conduct, lawful conduct statutes,
and arbitration cases.
A. The Employment Relationship
A well-recognized aspect of the employment relationship is the
duty inherent within the relationship. The two most often
recognized duties are confidentiality and loyalty. These duties
uniformly recognized by courts and play a large role in employment
disputes as one or both are often the reason for the employee's
The employment relationship may give rise to confidences,
which impose a duty on past and present employees "not to use
disclose the employer's trade secrets. '' This relationship is sometimes
described as a fiduciary obligations and further, it is the legal
1. DavidKelly, Can YourEmployeesServeTwo Masters,18 NO. 14 EMP.ALERT4,
July 5, 2001.
2. Jennifer M. Chow & Stephen L. Sheinfeld, Employee'sDuties
Protecting Employer Confidences,in WRONGFUL TERMINATION CLAIMS:WHAT
AND DEFENDANTS HAVE TO KNOW 351 (PLI Litig. & Admin. Practice
Handbook Series No. H0-0012,1998).
3. ld. at 352.
120 UNIVERSITY OFDETROIT MERCY LA W REVIEW [Vol. 82:119
recognition of a trade secret as a property right that permits an
employer to entrust confidential information to its employees."'
Employees are under a duty of loyalty to their employers. An
employee is not permitted to undertake or participate in activities
adverse to the interests of the employer during employment. 5 One
such prohibited activity is accepting employment with a competitive
employer during employment. Arbitrator Edgar Jones, Jr., examined
the duty of loyalty owed to the employer in Los Angeles Examiner.
The normal duties of an employee... [include] his
obligation to do his best to act or to refrain from acting so as
to enhance rather than endanger the best interests of his
employer. This is the duty of loyalty.
The most obvious and common instance, shared by
practically all nations, tribes or clans in human history is
loyalty to one's native land. Next perhaps, in terms of the
number of persons affected, is probably the employer-
employee relationship. Certainly this is so in the United
As part of the complex of rights and duties comprising the
employment relationship, the duty of loyalty of an employee
to an employer must certainly be reckoned as an important
aspect of the common enterprise. _
Four types of disloyalty are seen in arbitration cases. First, an
employee who competes with the employer or aids a competitor is
subject to discharge for breaching the duty of loyalty, a In Country
Markets, 9 "a retail meat store was found to have properly
indefinite suspensions on meat managers for opening their own retail
meat store that the employer determined would compete with its
business. ''1° An employee is likely to be disciplined for aiding
employer's competitors as well. H Second, employees are often
discharged or disciplined for making defamatory remarks against
employer. 1_ Third, an employee who disrupts the employer's
customer relations is subjecting himself or herself to discipline.
5. RESTATEMENT (SECOND) OFAGENCY § 387 (1958).
6. 49 Lab. Arb. Rep. (BNA)453 (1967) (Jones, Arb.).
8. LABORANDEMPLOYMENTLAW, 9-12 Laborand EmploymentLaw § 12.04,
9. 85 Lab.Arb. Rcp. (BNA)286 (1985) (Bognanno,Arb.).
10. LABORAND EMPLOYMENT LAW, supranote 8.
2004] MOONLIGHTING IN THESE OPPRESSIVE ECONOMIC TIMES 121
Lastly, employee relationships that create a conflict of interest
employer relationships may become problematic for the employee,
and have led to discharge or discipline. _4
B. Restrictive Covenants - Non-Compete Agreements
Employers use restrictive covenants in employment contracts and
other related documents to limit employee activity the employer
envisions as detrimental to the employer's interests. Non-competition
clauses represent one such tool. Traditionally, these clauses seek
restrict the employee from working for a competitor upon
termination of the employment relationship, t5 Nineteen states
regulate restrictive covenants by statute, and most other states
regulate restrictive covenants by common lawY In DBA Enterprises,
Inc. v. Findlay, _7 the court, interpreting a covenant not to compete
under Colorado law, held that covenants not to compete are contrary
to the public policy of Colorado and are void. 18 The placement
such limitations on restrictive covenants is due in part to the
most employment contracts favor the employerY Although employer
interests clearly need to be protected when the employment
relationship ends, courts traditionally have been reluctant to enforce
"Strict considerations of fairness suggest that it is antithetical
allow an employer to terminate an employee and prevent him from
working in his chosen profession. ''_° The restrictive covenant
achieves more than simply protecting the interests of the employer.
Restrictive covenants may go beyond this scope and significantly
the ability of the ex-employee to obtain gainful employment.
15. Kenneth J. Vanko, You're Fired/And Don't Forget Your Non-Compete...:
Enforceability of Restrictive Covenants in Involuntary Discharge
Cases, 1 DEPAULBUS. &
COMM.L.J. 1, 3 (2002).
16. Id. at 2 n.5.
17. 923 P.2d 298 (Colo. Ct. App. 1996).
18. Id. at 302. The court interpreted COLREV. STAT.Ann. 8-2-113(2)
2003) which prohibits the use of covenants not to compete in certain
(a) Any contract for the purchase and sale of a business or the
assets of a
business; (b) Any contract for the protection of trade secrets;
contractual provision providing for recovery of the expense of educating
and training an employee who has served an employer for a period
than two years; (d) Executive and management personnel and officers
employees who constitute professional staff to executive and management
19. Vanko, supra note 15, at 1.
122 UNIVERSITY OFDETROIT MERCY LA W REVIEW [Vol. 82:119
Non-competition clauses restrict the activities of an employee
upon termination of the employment relationship. "[M]ost states
have adopted a modified version of Section 187 of the Restatement
(Second) of Contracts and require that non-competition clauses be:
(1) ancillary to a valid contract; (2) necessary to protect an
employer's legitimate business interest; and (3) reasonable in terms
of activity, duration and geographic scope. ''_ The inclusion of
competition clause in the employment contract or as an amendment
to the contract often satisfies the ancillary requirement. This
especially true in the case where the parties are on equal footing
relation to their bargaining power.
The ancillary doctrine is more closely scrutinized in the
traditional employment relationship, since the employee
normally lacks bargaining power that may be present in
these other business transactions. Non-compete litigation
often focuses on whether the former employer is seeking to
protect a legitimate business interest by restraining the
departed employee from working in a similar position for a
Non-compete litigation most often arises when an employee is
discharged from the employment relationship. Courts have used
three t_es of analysis in determining the enforceability of these
The first, as forcefully articulated by New York courts, holds
that such covenants are per se invalid when the employer
discharges the employee without cause. The second line of
cases, representing the majority opinion, adopts a middle
ground; rather than creating a per se rule in favor of either
an employee or employer, these courts require a "plus
factor" to determine enforceability and normally examine
the nature of the employer's conduct in effectuating the
The third and final analysis, which only the Florida courts
have adopted so far, is decidedly pro-employer and holds
that a court cannot consider an involuntary termination in
determining the enforceability of a non-compete clause. _4
21. Id. at 3. See, e.g., BDO Seidman v. Hirshberg, 712 N.E.2d 1220,
22. Vanko, supranote 15, at 4.
23. I& at 9.
2004] MOONLIGHTING IN THESE OPPRESSIVE ECONOMIC TIMES 123
A major factor in most non-compete cases is the court's goal in
balancing "the employee's interest in earning a living against
employer's interest in protecting his business. ''_5-
General principles of contract law have a large impact on the
validity of such agreements, specifically when the essential elements
of a valid contract appear missing from the agreement. The
employer In Lake Land v. Columber initiated an action against its
former at-will employee alleging the employee breached a non-
competition agreement between the parues. After termination, the
employee established a business similar to that of Lake Land. _8
trial court decided in favor of the employee and found the
agreement void of consideration because there "'was no increase
salary, benefits, or other remunerations given as consideration
Columber signing the non-competition agreement' and 'no change
in his employment status in connection with the signing of the non-
competition agreement. '''29
Affirming, but finding a conflict among the courts of appeal, the
appellate court certified the following issue to the Ohio Supreme
Court: "'[i]s subsequent employment alone sufficient consideration
to support a covenant not to compete agreement with an at-will
employee entered into after employment has already begun? '''3°
Based on the employee's ten-year employment after execution of the
agreement, the court held that "forbearance on the part of
employer from discharging an at-will employee serves as
consideration to support a noncompetition agreement. ''sl In essence,
the employer gives nothing and the employee gains nothing under
the court's holding.
In Cameco, Inc. v. Gedicke, s_ an employee and his wife formed a
company3_ which coordinated the shipping of food products to
retailers. Gedicke's principal employer manufactured various food
25. Paul H. Tobias, Restrictive Covenants, in LITIGATINGWRONGFULDISCHARGE
CLAIMS§ 7:53 (2003).
26. 804N.E.2d 27 (Ohio 2004).
27. It/. at 29. The former employee was prohibited from engaging
competitive business with the employer for a period of three years
and not within a fifty-mile radius from the employer.
30. Id. at 29-30.
31. Id. at 31-32.
32. 724 A.2d 783 (N.J. 1999).
33. John A. Boyle, Duty of Loyalty - Moonlighting - EmployeeAssistance
Employer's Competitor, Including Formation of a Competing Business,
May Breach The
Employee's Duty of Loyalty and Require Forfeitureof Compensation
Paid To The Employee
During Periods of Disloyalty - Cameco, Inc. v. Gedicke, 157
124 UNIVERSITY OFDETROIT MERCY LA W REVIEW [Vol. 82:119
products and he was in charge of the shipping of these products.
After Cameco fired Gedicke for poor job performance, Gedicke
signed a non-compete agreement with Cameco in order to receive
money he contributed to the Cameco pension fund. _5 The law
division of the superior court found "that Gedicke's conduct
breached the duty of loyalty owed an employer, that Gedicke had
neither acted on behalf of any party with interests that conflicted
those of Cameco nor acted detrimentally to Cameco .... and that
Cameco had suffered no damages as a result of Gedicke's actions.
The appellate division "reversed the dismissal of the breach
duty of loyalty claim and remanded the case for a new trial. ''sT
Finding "that Cameco had established the prima facie elements
breach of the duty of loyalty claim, the appellate division found
an employee's conduct does not have to constitute direct competition
with his employer to infringe the duty of loyalty. ''_ The court
that mere assistance provided to an employer's competitor would
establish a breach if the conduct of the employee was contrary to
interest of his employer, s9
The New Jersey Supreme Court affirmed and reasoned that
"identifying an employee's breach of his duty of loyalty and
determining the appropriate remedy for such breach are factual
questions that depend on various factors. "4° The court
the socio-economic circumstances affecting families and the need
augment income. The court listed several factors for courts to
consider when interpreting duty of loyalty claims. 41 First, the
the duty depended on the relationship between the employer and
employee. 42 An officer has a higher duty than a factory worker.
Second, many employees are forced to find a second source of
income based on financial reasons. 4_ Third, an employee planning
compete, directly or indirectly, should inform his employer. 44
However, in the absence of an applicable non-competition
restriction, an employee is not barred from establishing a competing
business, or preparing to establish one, as long as the activity
conflict with the employee's duty of loyalty to the employer.
35. Id. at 674.
37. Id. at 675.
39. Cameco,724A.2d at 787.
40. Boyle, supranote 33, at 675.
41. Id. at 675-77.
42. Id. at 677.
2004] MOONLIGHTING IN THESE OPPRESSIVE ECONOMIC TIMES 125
In Simulation Systems v. Oldham, 45 the employee (a computer
engineer) formed a business that directly competed with his
employer. 46 After being questioned about soliciting business away
from his employer, he resignedY The employer later brought an
unfair competition action against the employee to recover past
compensation paid to the employee for the period he was in violation
of the duty of loyalty. The trial court, although finding for the
plaintiff, did not award any past compensation damages because
there was lack of proof as to when, during the employment
relationship, the employee violated the duty of loyaltyY
The appellate court affirmed, but agreed that the plaintiffs
competitive activity while employed was actionable because
"Oldham's preparations for future competition with his employer
were not inconsistent with his employment obligations and therefore
were not 'disloyal' in a legal sense. ''4° However, the court
did find that
"[h]is acts during his employment that were in violation of
duty were his sales and attempted sales of services competitive
plaintiff's. ''5° It was clear to the court that an employee
to compete with the employer until that activity is deemed
competitive enough to sanction termination of the relationship.
A similar situation faced the court in Stokes v. Dole Nut Company.
In Stokes, the plaintiffs made similar preparations to establish
competing businessfl The only issue on appeal was whether Dole
had sufficient cause to terminate the plaintiffsfl The plaintiffs
employed at the employer's almond processing plant and were
planning to start a plant of their own. 54 Upon confrontation by
management, the plaintiffs argued that their source for almonds
not the same as their employers, and theysdid not consider the
project competitive with the interests of Dole. Dole terminated
plaintiffs because "they believed it would be impossible for
to be employees of Dole at the same time as they were in competition
with it, and it was noted that plaintiffs.., had access to confidential
company information. ''56
45. 634 A.2d 1034 (N.J. 1993).
46. Id. at 1035.
48. Id. at 1035-36.
49. Id. at 1037.
51. 48 Cal. Rptr. 2d 673 (Cal. Ct. App. 1995).
52. Id. at 673-74.
53. Id. at 675.
54. Id. at 677.
55. Id. at 678.
126 UNIVERSITY OFDETROIT MERCY LA W REV1EW [Vol. 82:119
The appellate court agreed with the trial court and found Dole
had sufficient cause to terminate the plaintiffs employment. 57
court found that "It]he duty of loyalty is breached, and may
to a cause of action in the employer, when the employee takes action
which is inimical to the best interests of the employer. ''58 However,
different from the interpretation of the duty of loyalty as described
Simulation Systems in New Jersey, the court in Stokes stated "that
an employer seeks to terminate an employee for cause based upon
the employee's activities with respect to an established or prospective
competitor, it is no answer that the employee has not yet tortiously
injured the employer. ''5_
There is disagreement among courts as to when the preparation
to establish a competing business by an employee rises to a level
where the duty of loyalty owed the employer is violated. Depending
on the specific circumstances of the case, the duty of loyalty can
breached at any time between the basic preparations and when the
employee starts competing directly with the interests of the employer.
C. Employer Restrictions on Employee Off-Duty Conduct
Employers try to regulate moonlighting in a multitude of ways,
very few of which have come under judicial scrutiny. Some experts
argue that moonlighting should be banned outfight while others feel
the issue should be tackled on an employer-by-employer basis. 6°
author stated that a good policy should cover:
(1) [t]he company's expectations concerning performance,
punctuality and productivity; (2) [c]onsequences for failing
to meet the company's standards; (3) [t]he company's
intolerance of outside employment that creates a conflict of
interest; (4) [t]he importance and sanctity of proprietary
information; and (5) It]he company's position on whether
employees must provide information about outside jobsJ 1
Those who favor the right of an employee to engage in
moonlighting "argue for the asserted right of the employee
what he or she pleases during off hours and to use his or her
knowledge and skill to augment income. ''6_ In Janitorial Services,63
57. Stokes, 48 Cal. Rptr. 2d at 678.
58. Id. at 681.
59. Id. at 680.
60. Kelly, supra note 1.
004] MOONLIGHTING IN THESE OPPRESSIVE ECONOMIC TIMES 127
Arbitrator Whelan stated, concerning the rights of employees to
engage in moonlighting:
It is well established that the time of an employee outside
his regular hours of work and outside the overtime
sometimes incidental thereto belongs to him and may be
used for recreation and work, provided the employee does
not engage in practices or occupations that are detrimental
or clearly prejudicial to the business and interests with
which his duties in the service of his regular employer are
The field of law enforcement represents one area where
employers often try to control outside employment. A township in
New Jersey passed a resolution regulating the outside employment
off-duty police officers as security guards. 65 The president of
officers' bargaining unit filed suit challenging the constitutionality
the resolution. 88 Specifically, the plaintiffs argued that the
violated both the equal protection and due process clauses of the
Fourteenth Amendment. 67 Under the collective bargaining
agreement between the parties, the Township required notice of any
moonlighting activity but allowed security work. 6s
The plaintiffs argued that the resolution impermissibly created
two classes of moonlighting police officers, discriminating against
those engaging in security related work and argued that the
resolution lacked a rational basis and legitimate state interest.
Further, the plaintiffs argued the resolution violated their due
process rights by "depriving them of a previously enjoyed right
work. ''7° The Township answered first, that the court lacked
jurisdiction to hear the claim because of the collective bargaining
agreement, and second, that a legitimate state interest existed
63. 33 Lab. Arb. Pep. (BNA) 902, 907-08 (1959), cited in ELKOUKI&
supra note 62, at 1111 n.387.
64. ELKOURI& ELKOURI,supra note 62, at 1110-11.
65. Bowman v. Twp. of Pennsauken, 709 F. Supp. 1329, 1331 (D. N.J.
The resolution required employers of off-duty police officers to
execute a Hold
Harmless, Indemnification and Moonlighting Agreement. The agreement
the employer to pay the Township an administrative fee, co-insure
the officer on its
workers' compensation policy, co-insure the Township and its off-duty
liability insurance, and required the employer hold the Township
harmless for any
act of the officer while moonlighting.
67. If. at 1333.
70. Id. at 1333-34.
28 UNIVERSITY OFDETROIT MERCY LA W REVIEW [Vol. 82:119
"protecting its taxpayers against the costs of litigation and
Because the collective bargaining agreement failed to specifically
address the issues in this case, and based on other constitutional
considerations, the court chose not to "impose a rule that
plaintiffs from asserting their statutory and constitutional rights.
Accordingly, the court [held] that arbitration is not a prerequisite
filing the instant case. ''7_
In order to recover on the equal protection claim, the court
required the plaintiffs to show that the different treatment of
groups of police officers bore little relation to any legitimate
purpose. The court reasoned that
While it may be true that economic factors have forced
police officers into the practice of moonlighting, a township
has a legitimate interest in regulating its police department,
including the off-duty activities of its officers. It is clear that
such goals as reducing mental and physical fatigue, limiting
litigation and lessening liability insurance expenses serve a
legitimate government interest supporting regulation. 7s
However, the court found the resolution's effect of "shifting
entire burden of litigation and liability onto a third-party employer
[was] not a legitimate government interest. ''7_ Although the court
recognized that under the bargaining agreement the Township could
not prohibit all moonlighting, and this probably acted as the basis
the establishment of certain moonlighting classes, the court
nonetheless found the resolution arbitrary and unconstitutional
its face. 7_
In considering the plaintiffs due process argument, the court
found that the resolution "impose[d] a significant disability
officers' ability to pursue off-duty employment, "76and "by
to shift the entire burden of litigation and liability onto the
party employees, [it] unreasonably interfere[d] with the police
officer s liberty interest in pursuing a common occupation. The
Township was not allowed to get around the language of a collective
bargaining agreement by adopting a resolution that on its face
infringed on the constitutional rights of its police officers.
71. Bowman,709 F. Supp. at 1334.
72. Id. at 1337-38.
73. Id. at 1339.
74. Id. at 1340.
75. Id. at 1343.
76. I& at 1345.
77. Bowman,709 F. Supp. at 1347.
2004] MOONLIGHTING IN THESE OPPRESSIVEECONOMIC TIMES 129
In Cybulski v. Cooper,78 the court found that the revocation of
police officer's moonlighting privilege, as allowed by police
department policy/g did not violate the officer's due process
protections. The plaintiff properly received permission to moonlight
as a security officer, but after allegations that the plaintiff
police department investigation at the site, the chief of police
revoked his privileges, s° The plaintiffs due process argument
because the court found the right to moonlight a privilege, and
temporary and conditional source of supplemental income, plaintiff
had no absolute right nor assured right to the moonlighting. ''s'
conditional nature of the moonlighting policy foreclosed the plaintiff
from demonstrating a property interest in moonlighting, which was
necessary for the activity to qualify for due process protections.
Employer restrictions on the outside employment of their
employees are certainly not limited to the field of law enforcement.
Disputes where the court is required to interpret company policy
relating to outside employment do not always come to the court in
that narrow context but may be wrapped up in other disputes such
employment discrimination claims.
In Chambers v. TRM Copy Centers,82 the plaintiff alleged his
termination was based on his race and national origin. 8s The federal
district court dismissed the case finding that the plaintiff "failed
establish that his discharge occurred in circumstances giving rise
an inference of discrimination. ''s4 The employer hired plaintiff,
black person of Jamaican origin, as a full-time shop technician
of its copy centers. 85 Unbeknownst to his employer, the plaintiff
continued working the graveyard shift at a bank. 86 The employer
discharged the plaintiff informing him that the reason for his
discharge was unsatisfactory performance.S7
78. 891 F. Supp. 68 (D. Conn. 1995).
79. Id. at 69.
The Enfield Guidelines and Application for Moonlighting establish
procedures and require that a police officer must get permission
Police Chief for each employment opportunity. The Guidelines also
indicated that an officer must resign from a moonlighting job if
police work or is contrary to the best interest of the Enfield Police
80. Id. at 69-70.
81. Id. at 70.
82. 43 F.3d 29 (2d Cir. 1994).
83. Id. at 31.
85. Id. at 32.
130 UNIVERSFIT OFDETROIT MERCY LA W REVIEW [Vol. 82:119
During the discovery period, the employer learned for the first
time of plaintiffs moonlighting activities and in moving for summary
judgment stated that this activity violated a company policy against
outside employment. _ The employer argued that plaintiff would not
have been hired had the employer known of these activities or that
plaintiff would have been terminated upon discovery of the
information. 89 The district court ruled that plaintiff failed to
burden on the discrimination claim and "suggested that Chamber's
moonlighting, even though not discovered by TRM until after it fired
Chambers, might help to show that its termination of his employment
was proper if it were undisputed that Chambers had performed his
job poorly. ''9° On appeal, the plaintiff argued the district
of summary judgment was improper because "the court improperly
resolved disputed questions of fact and credited TRM's after-acquired
evidence of moonlighting as a basis for Chamber's discharge. ''9_
The appellate court disagreed with the district court and
remanded the case for trial. However, the decision represents
interesting questions for employers who use an after-acquired
rationale as a defense to a discrimination claim. Regarding an after-
acquired rationale, the court stated, "[e]ven if a strict policy
moonlighting could be established.., we note our doubt as to the
validity of an after-acquired rationale as a defense to a claim
prohibited discrimination. The recognition of such a defense would
not be consistent with the goals of Title VII. ,,92
In Nix v. WLCY, 93the plaintiff brought a Title VII action after
radio station discharged him as a disc jockey. The employer alleged
the firing was for violation of a company rule against competitive
moonlighting. 94 Nix, who was black, alleged the moonlighting
allegation was simply a pretext for the racial discrimination that
actually the reason for his discharge. °h The plaintiff and
employee, who was white, had some involvement with a production
company. The general manager confronted both men about the
activity and decided to keep the other employee. The trial court
88. Chambers,43 F.3d at 40 ("The employee handbook on which
actuallystated that the company 'preferred'that full-timeemployees
not engage in
outside employment, and that an employee should obtain permission
supervisorbefore acceptingsuch employment." Id. at 40).
89. Id. at 32-33.
90. Id. at 35-36. (The defendant submitted evidence that Chambers
performing hisjob poorly).
91. Id. at 36.
92. Id. at 41.
93. 738 F.2d 1181 (llth Cir. 1984).
94. Id. at 1183.
2004] MOONLIGHTING IN THESE OPPRESSIVEECONOMIC TIMES 131
found for Nix, and awarded damages. _ The appellate court
disagreed and remanded the case stating:
Although WLCY's decision to fire Nix, and its refusal to
reconsider that decision, might seem unfair or even
"incredible" to outside observers, Nix cannot prevail
Title VII action for he has not established discriminatory
intent. He has produced neither direct nor circumstantial
evidence sufficient to support such a finding. In the
absence of evidence pointing to race as the explanation for
the employer's conduct, we must hold that Nix has failed to
meet his burden of proof. 97
This case represents the concern that if an employer chooses to
adopt a moonlighting policy, the policy could be used in a
In Matthews v. A-l, Inc., 98the female plaintiff was discharged
violating a company j_olicy prohibiting moonlighting for her sale
Mary Kay cosmetics. However, two male employees engaged in
moonlighting were not discharged. Instead, they were granted an
exemption from the company rule. _°° The employer gave the
male moonlighting employees a chance to ex_01ain their
moonlighting activities and chose not to discharge them. However,
the employer terminated the plaintiffs employment immediately
after discovering she was moonlighting without affording her an
opportunity to explain. _°2 The court agreed that the employer's
policy was discriminatorily applied to the plaintiff, based in part
the employer's accommodation of male employees' moonlighting,
but failure to similarly accommodate the female employee. _°3
Similarly, the plaintiff in Riad v. 520 South Michigan Avenue, TM
hotel general manager, brought suit alleging employment
discrimination. _°_ The defendant counterclaimed alleging the
plaintiff breached his fiduciary duty to the defendant for his work
behalf of Hostmark, the parent of the plaintiffs primary employer.
The plaintiff allegedly took customers away from the Congress Hotel
to other Hostmark properties, solicited Congress employees to work
97. Id. at 1187.
98. 748 F.2d 975 (Sth Cir. 1984).
99. Id. at 976.
101. Id. at977.
102. Id. at978.
104. No. 97C2488,2000 U.S. Dist. LEXIS7646, at "12 (N.D. Ill.
105. Id. at *2.
132 UNIVERSITY OF DETROIT MERCY LA W REVIEW [Vol. 82:119
at other Hostmark properties, and his work on Hostmark projects
displayed an allegiance to Hostmark and not his primary employer,
the Congressfl 6 The characterization of the plaintiffs employment
Congress was complex because of previous relationships with the
The court stated, "as an employee, Riad owed a duty of fidelity
and undivided loyalty to the Congress Hotel and was prohibited from
acting in a manner inconsistent with the interests of his employer.
The court limited the principle finding that Riad did not owe
Congress exclusive allegiance but "he was obligated to act
the benefit of Congress Hotel in all matters connected with his
td09 ttt w
employment, but moonlighting or holding a second job may be
permissible if tt does not interfere with the pnnopal s interests.
The court granted summary judgment based on a lack of
evidence as to the claims that the plaintiff lured away customers
well as those claims relating to his alleged solicitation of employees.
Furthermore, the plaintiffs work at a Hostmark property did not
violate his fiduciary duty or Congress's moonlighting policy. The
court found no evidence that Riad was required to seek approval
non-competitive work and found that Congress failed to point to
financial consequences suffered as a result of this activity, n_
D. Lawful Conduct Statutes
Approximately thirty states have statutes protecting employees in
some way from adverse employment actions for lawful conduct, also
known as "lifestyle discrimination. ''_s
106. Id. at *7.
108. Id. at *8.
109. Icl. at *9.
110. Riad, 2000 U.S. Dist. LEXIS 7646, at *9.
111. Id. at*17-*29.
112. Id. at "30-'31.
113. See ARIZ. REV.STAT.§ 36-601.02(F) (2003); CAL. LAB. CODE
§ 96(k) (West
2003); COLO.REV.STAT.§ 24-34-402.5(1) (2003); CONN.GEN. STAT.ANN.
31-519 (West 2003); D.C. CODEANN. § 7-1703.03 (2001); 820 ILL.
5515 (West 1993); IND. CODEANN. § 22-5-4-1 (West 2003); KV.
344.040(3) (Michie 1997); LA. REV.STAT.ANN. § 23:966 (West
2003); ME. R_V. STAr.
ANN. tit. 26, § 597 (West 2003): MINN.STAT.§ 181.939 (2003);
MISS.CODEANN. § 71-
7-33 (2003); MONT.CODEANN. § 39-3-313 (2003); NEV. REV. STAT.ANN.
(Michie 2003); N.H. P_V. STAT.A._,I. § 275:37-a(1999); N.J.
STAT.ANN. § 34:6b-1
004] MOONLIGHTING IN THESE OPPRESSIVEECONOMIC TIMES 133
Four of these statutes appear to protect employees' lawful off-
duty conductY 4 North Dakota, Colorado, California, and New York
have all passed legislation in recent years providing the employee
with some level of protection when terminated for involvement in
lawful off-duty conduct.
By statute, Colorado 1_ restricts an employer's right to prohibit
legal activities by its employees, with certain exceptions. Colorado
makes it a "discriminatory or unfair employment practice ''_
employer to discharge an employee for engaging in lawful off-site
activity. The statute however, affords the employer the right to
such activity if the restriction:
(a) relates to a bona fide occupational requirement or is
reasonably and rationally related to the employment
activities and responsibilities of a particular employee or a
particular group of employees, rather than to all employees
of the employer; or (b) [i]s necessary to avoid a conflict of
interest with any responsibilities to the employer or the
appearance of such a conflict of interest. 117
Colorado courts have yet to interpret this section in the context
of moonlighting but have interpreted the conflict of interest
provision in the statute, finding that the term should be given
usual meaning. More specifically, a conflict of interest "relates
'fiduciaries and their relationship to matters of private interest
gain to them' or a 'situation in which regard for one duty tends
lead to disregard of another. '''_8
NewYork _9 also restricts the right of an employer to discharge
employee for that employee's lawful off-duty conduct. However, this
statute is far more restrictive than Colorado's in that it only
very narrow, specific activities of employees, rather than a broad
application as in Colorado. Specifically, the statute bars adverse
action by an employer against a current or prospective employee
because of that employee's engagement in political activities, _2°use
VA.CODEANN.§ 15.2-1504(Michie 2003); W. VA.Cor_ § 21-3-19(2003);
ANN.§ 111.35 (West2003); Wvo. STAT.A__N.§ 27-9-105(a)(iv)
114. N.D. CENT.CODE§ 14-02.4-03(2003); N.Y. LAB.LAW§ 201-d
2003); COLO.REV.STAT.§ 24-34-402.5(2003); CAL.LAB.CODI_§§
96(k), 98.6 (West
115. COLO.REv.STAT.§ 24-34-402.5(2003).
118. Marsh v. Delta Air Lines, Inc., 952 F. Supp. 1458, 1464 (D.
(quotingBLACK'SLAWDICTIONARY299 (6th ed. 1990)).
119. N.Y.LAB.LAW§ 201-d (McKinney2003).
120. Seeid. § 201-d(2)(a).
134 UNIVERS1TY OFDETROIT MERCY LA W REVIEW [Vol. 82:119
consumable products, 12_participation in legal recreational activities,
and membership in a union.
This bar does not apply when the employee's activity creates a
conflict of interest and in other limited situationsfl 4 Although
statute's application is arguable, the New York Legislature, whether
intentionally or not, has specifically removed moonlighting from
protected activities. Two exceptions with the appearance of applying
to employee moonlighting 1_5appear to be useless when one reads
legislature's definition of recreational activities. Due to the
prohibition placed on employers, one could only argue that
moonlighting fits into the protected activity defined as "recreational
The legislature defined "recreational activities," as
leisure-time activity, for which the employee receives no
compensation and which is generally en_a_ed in for recreational
,1127 v 1, -- v _ ,,
purposes. The mclusxon of no compensauon clearly ehmmates
employee moonlighting from any of the protected activities in section
New York City's City Charter, however, does restrict off-duty
conduct of city employees and has been applied specifically to
employee moonlighting. Two opinions examining acceptable
outside activities of city employees ruled that "if the activity
is one for
which the employee might reasonably have been assigned to perform
on-the-job, the employee may not do it for compensation, even on
own time. ''l_s One city employee was attempting to write a book
his activities at the city agency for which he worked. The Conflict
Interest Board "found that even though his agency had not assigned
him to work on the book, his superiors might have assigned him to
this endeavor. ''1_ Therefore, the employee could write the book
his own time, but not for personal compensation) s°
Two other city employees asked the board for an opinion on
whether they could teach a course related to their work for the
121. Seeid. § 201<1(2)(b).
122. Seeid. § 201<1(2)(c).
123. Seeid, § 201<1(2)(d).
124. Seeid, § 201<1(3)(a)-(e).
125. N.Y.LAB.LAW§ 201-d(3)(e), 201<1(5).
126. Seeid_§ 201<1(2)(c).
127. Seei&§ 201<1(1)(b).
128. 6 Citylaw1 (2000). The applicable Charter provision under review
court provides, "no public employee may be paid for performing
any official duty,
other than by the City."Id.
129. Id. (citing Conflict of Interest Bd. Advisory Opinion No. 93-25
004] MOONLIGHTING IN THESE OPPRESSIVE ECONOMIC TIMES 135
The Board found the high level employee could fairly be
expected to teach or inform the greater public about the
initiatives of his agency and so could not accept
compensation .... The scope of the duties of the second
employee, however, was limited to training agency staff-
not to train the greater public. As such, this person was
permitted to teach for pay.
Similarly, North Dakota has enacted statutes protecting the
lawful off-duty conduct of employees. Section 14-02.4-0$ states:
It is a discriminatory practice for an employer to fail or
refuse to hire a person; to discharge an employee; or to
accord adverse or unequal treatment to a person or
employee with respect to application, hiring, training,
apprenticeship, tenure, promotion, upgrading,
compensation, layoff, or a term, privilege, or condition of
employment, because of... participation in lawful activity
off the employer's premises during nonworking hours which
is not in direct conflict with the essential business-related
interests of the employer. TM
Although not interpreted by North Dakota courts in the context
of employee moonlighting, the statute reads to be in favor of
protecting lawful off-duty conduct. The statutory language
referencing an employee's possible conflict of interest is an example
of the legislature's recognition of an employee's possible off-duty
In Hartt v. Sony, _s3 the court interpreted California Labor Code
section 96(k) in the context of an employee's wrongful termination
suit. In Hartt, the plaintiffs, Sony employees, were discharged
making a commercial DVD, on their own time and not on Sony
property. The plaintiffs based their wrongful termination claim
section 96(k) of the California Labor Code, 's5 which states, "[t]he
Labor Commissioner... shall.., take assignments of... (h ) Claims
loss of wages as the result of demotion, suspension, or discharge
employment for lawful conduct occurring during nonworking hours
away from the employer's premises. ''136 The court disagreed with
131. Id. (citing Conflict of Interest Bd. Advisory Opinion Nos.
99-4 and 99-5, Nov.
132. N.D. CENT.CODZ§ 14-02.4-03 (2003).
133. Hartt v. Sony, No. 02-56046, 2003 WL 21675576, at *1 (9th Cir.
134. Brief for Appellant at 6-8, Hartt, No. 02-56046, 2003 WL 21675576,
(footage used was paid for by Sony).
135. Hartt, No. 02-56046, 2003 WL 21675576, at *2.
136. /d. (citing CAL.LAB.CODE§ 96(k) (West 2003)).
136 UN1VERSITY OFDETROIT MERCY LA W REVIEW [Vol. 82:119
plaintiffs argument that the provision "establish [ed] a general
policy against terminating employees solely for engaging in lawful
activity outside of their regular employment. ''137 The court held
"these provisions do not establish a public policy prohibiting
employers from discharging employees for moonlighting. ''1_
Although an unpublished decision, the court's decision in Hartt
indicate the future direction of the court when interpreting section
96(k) in the context of employee moonlighting.
Similarly, the outside employment of those in the armed forces is
restricted by statute. _39 Specifically the restriction states that
officer of an armed force on active duty may accept employment if
that employment requires him to be separated from his organization,
branch, or unit, or interferes with the performance of his military
duties. ''_4° The statute speaks directly to those members of
forces participating in a civil office function by election, appointment
or otherwise, and reads to prohibit any outside employment while
that member is on active duty.
E. Arbitration Cases Concerning Conflicts of Interest, Moonlighting
The grievant in Swift-Eckrich, Inc. v. Teamsters Local 364 TM was
discharged for an alleged violation of the company's "Conflicts
Interest ''_ policy. The grievant, a grocery route salesman for
company, purchased and began to operate a grocery store that was
on his route. '43 The grievant's supervisor reported the acquisition
the district manager who ordered the grievant to either sell the
or keep the store and resign. TM After refusing either option, the
district manager terminated the grievant's position. The arbitrator
noted the grievant's history of loyalty to the company and the
company's knowledge of the grievant's past business interests. 145
139. 10 U.S.C.§ 973 (2000).
140. Seeid. § 973(a).
141. 98 Lab.Arb. Rep. (BNA)361 (1991) (Wolff,Arb.).
142. Id. at 361 (The company'sconflict of interest policy states
in part: "[t]he
policyof Swift-Eckrich,Inc. is that its employeesnot engage in anyactivitywhich
cause a conflict of interest with the Company'svarious business
companyalso had a policystating:"[e] mployeesmay be allowedto
so long as the activity does not conflict with the Company'spolicy
Interests'or this policy." Id. at 362).
143. Id. at 362.
144. Id. at 363.
145. Id. at 366. (The grievant'shonesty or integrityhad not been
twenty-twoyears of service. The grievant'sother businessesthat he
2004] MOONLIGHTING IN THESE OPPRESSIVEECONOMIC TIMES 137
Finding for the grievant, the arbitrator found, "the mere
purchase of the relatively small store ... did not violate any part
the CIP, either expressly or by reasonable implication, and that
Company's effort to apply its CIP here to Grievant was unreasonable
and unjustifiable. '''_ The arbitrator applied logical principles,
looking to the effect that the grievant's moonlighting actually
his employer, and found for the grievant and upheld his right to
In Montgomery Ward v. Teamsters Local 767,147 the grievant,
employed as a field service technician, filed a grievance after
discharged for allegedly violating a company policy forbidding field
service technicians from making off-duty repairs to company
merchandise. 14s The grievant-signed agreements forbade off-hour
repair of Ward's products by service technicians. The Union argued
that "the mere operation of a private repair business on his
does not constitute any violation of negotiated work rules. ''_49
arbitrator disagreed with the Union's argument that the work rules
signed by grievant did not apply, reasoning that "if the Arbitrator
were to accept Union's contention that Management has no power or
authority to unilaterally adopt rules of conduct, I would render
work place virtually chaotic based upon the absence of any
constraints or limitations on the behavior of the bargaining unit
The arbitrator ordered the grievant to surrender his repair
business. The arbitrator based his decision on many factors,
including that the businesses were in most respects identical, the
Company had a right to protect its legitimate business interests,
"[b]y his decision to use the knowledge and skill that he gained
working for Company for some 18 years, it can be said that Grievant
used his position as a Company employee to capture a portion of
business which could have been performed on Company's behalf. ''_5_
A majority of the employment disputes reaching arbitration
consider employee off-duty conduct in the context of conflicts of
interest. In this class of arbitration decisions, the disputes are
governed considering the collective bargaining agreement and the
provisions therein relating to off-duty conduct. However, the
objection of the company could have similarly affected his employment
company but were allowedwithout objection.).
146. Id. at 369.
147. 98 Lab. Arh. Rep. (BNA)597 (1992) (Nicholas,Arb.).
148. Id. at 598 (The agreement provided in part: "[n]o repair
work is to be done
by a Ward's technician on any merchandise during the technician's
149. Id. at 600.
150. Id. at 601.
151. ld. at 602.
38 UNIVERSITY OFDETROIT MERCY LA W REVIEW [Vol. 82:119
decisions do represent the vast majority of treatment of such
employment practices as most employment disputes rarely reach a
tribunal beyond arbitration. Therefore, although the precedential
effect of these decisions remains unclear, their applicability in
regards to principles and tribunal rationale remains important.
Without a provision in the employment contract prohibiting
outside employment while on leave of absence, arbitrators have
found in favor of the employee.
The termination of an employee on leave of absence after
suffering a heart injury, unable to perform his job for the primary
employer, was determined as an unjust discharge) A lack of
evidence of economic injury to the primary employer and no
applicable contract provision prohibiting such activity were the
determining factors in Arbitrator Purdom's decision to sustain the
grievance and order the employee back to work9
Arbitrators waver in their decisions, which are largely based on
the specific activity being questioned by the employer, when the
employment contract contains a provision goveming off-duty activity
while on leave. In one such instance, the language prohibited
employees from engaging in planned acts of business while on
leave. TM Investigators hired by the primary employer observed an
employee, on sick leave suffering from an eye ailment, plowing his
personally owned fields) 5_ Arbitrator Hutcheson disagreed with
Union's argument that "the sick leave policy does not restrict
all physical activity of an employee on sick leave but merely prohibits
engaging in a business activity for profit or gain while on sick
and "the mere act of plowing up his yard is not an act inconsistent
with the treatment of his eye ailment nor an act for which the
Company has a contractual right to impose discharge. ''_57
Arbitrator Hutcheson, in upholding the discharge stated,
"[p]reparing fields for spring planting is engaging in a business
152. Am. Bakeries Co. v. Int'l. Bhd. of Teamsters, 43 Lab. Arb.
Rep. (BNA) 1106
(1964) (Purdom, Arb.) (Employee, employed as a baker delivery driver,
requiring heavy lifting, suffered a heart condition after which
a doctor determined
he was temporarily unable to return to work. To augment his income,
took a job at an indoor theatre, a job not requiring heavy lifting.).
154. Farmland Foods Inc. v. Amalgamated Meat Cutters and Butcher
of N. Am., Local 440, 67 Lab. Arb. Rep. (BNA) 606 (1976) (Hutcheson,
applicable contract provision stated: "eaves will not be
granted for the purpose of
any other employment or business venture of an employee.., and any
leave who engages in such other employment or business shall not
be entitled to
return to hisjob and seniority." Id. at 607-08.
155. Id. at 607.
156. Id. at 608.
enture for profit and clearly prohibited by the contract."'5!
Arbitrator Williams, hearing an employment dispute regarding an
employee who was not granted a requested leave of absence, stated,
"[g]rievant's economic situation, and the necessity for him
his crop, does not mitigate the fact that he blatantly refused to
out specific instructions given him by his employer. ''_g The rationale
and possibly necessary reason for an employee to engage in outside
employment was held as no excuse when an employer orders the
employee otherwise. 16°
It is not rare for an arbitrator to grant reinstatement to the
employee even with the existence of a contract provision regulating
off-duty conduct during a leave of absence. An employee, on a
regularly scheduled leave of absence to recover from the effect
fever, was discharged after a customer of the primary employer
discovered the employee working while on leave. The employment
contract provided for the loss of seniority for employees who worked
for another employer while on leave of absenceJ el Arbitrator
Williams, in analyzing a similar contract provision, 16_found the
a prohibition on dual employment and the language of the provision
determining factors, stating, "[s]ince the Company cannot forbid
employee to work at a second job during his off-duty hours, so long
it does not impair his job performance for the Company, it cannot
object to the continuation of such employment during a leave of
absence. '"6_ Arbitrator Kossoff in applying Arbitrator William's
analysis to the facts at hand, stated:
The principal purpose of a rule prohibiting an employee
from working for another employer during a leave of
absence is (1) to precent [sic] employees from taking off
work for unacceptable reasons in the first instance and (2)
to prevent the prolonging of employees leaves after they
have once been granted. Common examples of how leaves
might be abused in the absence of such a rule would be the
taking off work in order to try out for a new job; taking off
159. In re SCAServ. Inc., 66 Lab. Arb. Rep. (BNA) 1071, 1073 (1976)
161. In re Mercoid Corp., 63 Lab. Arb. Rep. (BNA) 941, 942 (1974)
162. A_vnstrongRubberCo.,57 Lab. Arb. Rep. (BNA) 1267, 1269 (1972)
Arb.) (The contract clause provided for the loss of seniority, "[w]hen
employee ... works on another job while on leave of absence, exceptions
made by the Company.... " ), citedin In re Mercoid Corp., 63
Lab. Arb. Rep. (BNA)
163. ArmstrongRubberCo.,57 Lab. Arb. Rep. (BNA) at 1269, citedin
Corp., 63 Lab. Arb. Rep. (BNA)at 945.
40 UNIVERSITY OFDETROIT MERCY LAW REVIEW [Vol. 82:119
work in order to earn more money for a temporary period
than an employee can earn on his regular job; and engaging
in work during sick leave instead of resting, thereby
prolonging the recovery period, t6_
Even considering the stated reasons for such a rule, Arbitrator
Kossoff, deciding in favor of the employee, stated:
Where, however, there is no rule against dual employment
and the employee involved has held the second job for
many years without its interfering with production or
efficiency in any way, there is no reason to fear that an
employee on a legitimate leave of absence, obtained without
deceit, is abusing that leave by continuing on his second job
during the period of his leave. This is especially true, where
the second job is a part time job, performed only on
weekends, and during hours when the employee would not
be scheduled to work on his regular job. _6_
Similarly, Arbitrator Trotta granted reinstatement to an
employee although that employee worked at a tavern while on sick
leave from the primary employer, x_8 A provision in a document
similar to an employee handbook barred such activity. _67Although
the company had no reason to doubt the employee was working at a
second job while on sick leave, the arbitrator ordered reinstatement
because of mitigating circumstances. The employee and the owner
of the tavern in which he allegedly worked had a unique relationship,
leading the arbitrator to find that the employee "did not accept
employment while on leave of absence."
Arbitrator Kelliher granted reinstatement on the condition that
the employee dispose of his outside business, after the employer
terminated the employee for allegedly operating the outside business
while on leave for illness from the primary employer, t69 The
employee's employment record indicated frequent absences, leading
the arbitrator to state that "[a]lthough this Umpire recognizes
right of an employee to carry on other activities beyond his normal
work hours either by way of other employment or a business, there
a recognized limitation that those activities should not interfere
his regular job. ''_7° Finding an adequate amount of interference
164. In re Mercoid Corp., 63 Lab. Arb. Rep. (BNA)at 945.
166. In re Standard Brands, 52 Lab. Arb. Rep. (BNA)918 (1969) (Trotta,
167. Id. at 919 (The provision stated, "[a]n employee who accepts
employment while on leave of absence shall be terminated from our
168. Id. at921.
169. In reMicrodot Inc., 66 Lab. Arb. Rep. 177 (1976) (Kelliher,
170. Id. at 180.
between the employee's outside activity and his duty to his employer,
the arbitrator upheld the discharge on a conditional basis.
The discharge of a previously laid-off employee, who obtained a
temporary replacement job and thereafter kept both jobs, was found
to be unjust by Arbitrator Kates. 17_The grievant, maintaining two
time jobs, was discharged from the primary employer after he
received a reprimand for sore. _ damage he caused on thejobY _ The
company discharged the employee after learning of his second job,
attributing the damage caused to the second job. The company
presented charts and tables attempting to show the relationship
between the employee's moonlighting and the damage. The
arbitrator found this evidence insufficient, but agreed "that
employer has the right to adopt a rule prohibiting outside activities,
such as holding a second full time job, which would have a natural
tendency to interfere with an employee's work. '''_5 However, without
a rule prohibiting moonlighting, and a lack of sufficient evidence
showing a relationship between the employee's inadequacies and the
second job, a grievance such as this could not be sustained.
Arbitrators most often find employee off-duty conduct
unacceptable when the conduct consists of operating, working for,
establishing a competing interest with the primary employer.
An arbitrator found an employee in violation of a company
conflict of interest policy TM for selling a product of one of the
employer's direct competitors. Although the arbitrator sustained
grievance because the employee lacked sufficient knowledge of the
company policy, the arbitrator determined the policy an appropriate
restriction in stating, "[u]nder its reserved management rights,
Company is charged with the responsibility and duty to manage its
plant in the best interests of its stockholders to achieve the maximum
return on it's investment. To carry out this management purpose,
has the authority to adopt and follow reasonable rules and
regulations. "_75An employee clearly violates the duty of loyalty
to the employer by selling even a small amount of a competitor's
product even though the employee's business may not be judged as
Off-duty employment can be deemed to create an indirect
conflict of interest by the possibility that the employee's activities
171. In re United Eng'g. & Foundry Co., 37 Lab. Arb. Rep. (BNA)
173. Id. at 1098.
t74. In re Phillips Petroleum Co. and Oil, 47 Lab. Arb. Rep. (BNA)
(Caraway,Arb.) (The policy prohibited "an employee from engaging
in any outside
interest or activityin direct competition with the interest of the
175. Id. at 373-74.
42 UNIVERSITY OF DETROIT MERCY LA W REVIEW [Vol. 82:119
be connected to the employer. A newspaper employee was deemed
to be in violation of the newspaper's outside activity policy because
she took temporary employment as a press agent for a local theatre
production. '76- The arbitrator upheld the discharge and found it
determinative that the employee's name became recognized in
connection with her column in the newspaper and therefore her
name appearing asTa press agent for the theatre company created
conflict of interest. The arbitrator found the employee's argument
that her economic need forced her to accept dual employment
unpersuasive because that need failed to mitigate the creation of
conflict of interest and violation of a company policy9
The arbitrator deemed the discharge of two publishing company
employees unjust where the employees allegedly violated a company
policy by owning a nearby lounge. 179 The company argued
unsuccessfully that it could decide the detrimental effect of outside
activity arbitrarily and even if not, this specific activity was
detrimental. The arbitrator found that allowing the company to make
arbitrary decisions without specific standards violated the purpose
having an employment contract and the ownership of a lounge does
not, without more evidence, rise to the level of detriment expressed
in the employment contractfl °
Arbitrators often give weight to the subjective intent of the
employee in determining whether the outside activity violates
company policy. A television engineer was alleged to be in violation
of company policy for three separate acts of outside employmentfl
The employee performed engineering services at professional
basketball games for the employer's competitor. When speaking to
the employees engineering work for a competitor, the arbitrator
found persuasive the employee's excellent work record and the
176. In reTribune Publ'g. Co., 42 Lab. Arb. Rep. (BNA) 504 (1963)
("Without permission in writing from the publisher, no employee
shall use the name
of the publisher or his connection with the publisher or any featured
title or other
material of the publisher to exploit in any way his outside endeavor.").
177. Id. at 506.
178. Id. at 507.
179. In re Memphis Publ'g. Co., 48 Lab. Arh. Rep. (BNA) 931 (1967)
Arb.) ("Employees may engage in activities outside of working
hours, such activities
shall not be in competition with the newspapers nor its affiliates,
but no employee
shall exploit his connection with the newspapers, such activities
shall not be of a
nature which would be detrimental to the proper performance of his
180. It. at 932-33.
181. In re Nat'l. Broad. Co. Inc., 71 Lab. Arb. Rep. (BNA) 762,
(Gentile, Arb.) ("No employee shall directly or indirectly
maintain any outside
business or financial interest, or engage in any outside business
or financial activity,
which conflicts with the interests of the Corporation or its subsidiaries
interferes with his ability to discharge his corporate duties.").
004] MOONLIGHTING IN THESE OPPRESSIVEECONOMIC TIMES 143
reason given by the employee that the work was "used... as
to gain entrance to the games on a temporary basis and not as a
means to permanently augment his income and compete against his
Employer; this did not justify a violation of the outside activity
policy. ''m However, the arbitrator required the employee to
discontinue working as an engineer for the competitor, but found
Arbitrator Dworkin found valid a company policy against outside
employment posted in the plant even in the absence of a specific
clause in the labor agreementJ s4 Such a rule must be reasonable,
consistent with the contract, and fairly applied9 The employer
discharged an employee welder for working at his brother's
competing business. The employer's concerns stemmed from the
possibility that the employee could steal trade secrets and pass
on to his brother. Arbitrator Dworkin stated that "it is true
general proposition that an employer may not regulate an employee's
personal activities while away from the plant, this rule has several
exceptions and qualifications. ''_s_ First, the outside employment
cannot adversely affect the employer's interest9 Second, the outside
employment may affect the quality of the employee's work for the
primary employer, justifying some sort of action by the employerJ
The arbitrator concluded:
The nature of the grievant's employment with his principal
employer provided him with the skills, techniques, research
data, and customer information, which were of a
confidential nature, and the grievant's association with the
competing enterprise was such as would reasonably be
calculated to make the information available to the
competitor, and would tend to adversely affect the
employer's interests; . . . the posted rule which prohibited
employees from indulging in business which was
competitive with the company's product was reasonable, and
was not in conflict with any of the provisions of the labor
182. Id. at 770.
184. In re Ravens-MetalProd., Inc., 39 Lab. Arb. Rep. (BNA) 404,
189. I& at 411.
144 UNIVERS1TY OFDETROIT MERCY LA W REVIEW [Vol. 82:119
Depending on the circumstances of the off-duty conduct,
employers should give the employee a reasonable opportunity to rid
himself of activity that conflicts with company rules) _° The
chose this resolution where the employee, a field operator for an
electrical company, performed work in conjunction with the
construction of a solar greenhouse at a residence he had previously
audited) 9_ The company's business consisted of providing energy
audits to customers of public utilities. '9_ The arbitrator found
persuasive that the employee worked for the employer for ten years
and determined that under the circumstances of this case, the proper
resolution was for the employer to give the employee an opportunity
to divest himself of conduct in conflict with work rules as opposed
Without an express company policy prohibiting competition, a
grievant's competitive off-duty conduct may be allowed by the
arbitrator. An employee established an engine overhauling business
allegedly in competition with his employer in the engine
remanufacturing businessff 4 The arbitrator reasoned that there
types of misconduct where, if engaged in by the employee, discipline
is presumed. However, there are other types of misconduct where
presumption is not clear in the event an employee engages in such
activity. Specifically, there are rules "which prohibit off-duty
which is not directly related to work performance and production.
According to the arbitrator, the grievant's conduct fit into the
category where articulation of the rule by the employer is necessary
and not presumed. When there is a question regarding the indirect
or directly competitive effect of the activity, a company policy
prohibiting any competitive activity is necessary to determine the
proper scope of discipline. Without such a policy, an employee lacks
notice of any such prohibition and is potentially at least free
engage in indirectly competitive conduct.
Arbitrator Oberdank stated, "[i]t is an established rule of
employment law that an employee may not use for his own benefit,
and contrary to the interest of his employer, information obtained
the course of the employment. '''9_ Two employees of a truck repair
business were found to have solicited company customers in need
190. In reVolt Energy Sys.Inc., 100 Lab. Arb. Rep, (BNA)212 (1992)
193. Id. at 216.
194. In reN. RebuildersCo., 96 Lab.Arb. Rep. (BNA) 1, 3 (1990) (Kanner,
196. In re Ala. Sales and Serv. Co., 73 Lab. Arb. Rep. (BNA) 164,
004] MOONLIGHTING IN THESE OPPRESSIVEECONOMIC TIMES 145
repairs for their own business in direct competition with the
employer. The arbitrator did not find persuasive the employees'
argument that this was a simple case of occasional moonlighting
they did not establish an actual business legally.
In Continental Telephone Co. of Virginia7 the employer discharged
a thirteen-year employee for allegedly selling and installin_gsphones
during off-work hours in violation of company policy. The
employee disputed these allegations in testifying "that his
were not on company time, and that he never used Company
equipment. '"99 The arbitrator found that the employer lacked
cause to discharge the employee and reasoned, "as much as the
Company may dislike the activities of grievant outside of his working
hours and off the plant and its customers' premises, it is quite
that 'It]he right of management to discharge an employee for
conduct away from the plant depends upon the effect of that conduct
upon plant operations. '''2°° Arbitrator Rothschild found
the evidence that the employee's activities were not on compan_
and were conducted outside of the employer's franchised area. The
arbitrator found the company policy not applicable in that there
no policy prohibiting employees from reselling purchased phones,
the employee's specific conduct was not in conflict with any activities
of his employer, and the emplo0_ee's activities did not injure the
employer's reputation in any way.
The foregoing cases and comments show that labor and
employment issues involving moonlighting are diverse and require
review on a case-by-case basis. Practitioners in this area must
continuously watchful of the ever-evolving trends and changes, which
make up the practice of labor and employment law. Moonlighting
will no doubt be increasingly tested by legal theories, which may
place new requirements upon employers and employees alike. Well-
197. 86 Lab. Arb.Pep. (BNA)274 (1985) (Rothschild,Arb.).
198. Id. at 277. ("5.01 - No employee shall have a direct or
indirect interest in
anybusiness enterprisewhich is a competitor of the Company,supplierof
or services,contractor, lessor or lessee of the Company.").
199. Id. at 275.
200. Id. at 279. (quoting EDNAELKOUI_& FRANKELKOURI,HOWA_ITP.ATION
WORKS/ ELKOUm&ELKOURI656-58 (4th ed. 1985)).
202. Id. at 278-81,
146 UN1VERSITY OF DETROIT MERCY LA W REVIEW [Vol. 82:119
grounded doctrines may very well become ungrounded in these
oppressive economic times.
* The Author wishes to thank Professor Nick Kyser for his assistance
comment. The Author would also like to thank Jim Barber for his
support with this endeavor.
** Jim Barber, a contributor to this article, is an accomplished
ardcles published in various legal pubUcadons and journals. Jim
is also a certified
paralegal (CP) with the law offices of Christensen & Jensen
in Salt Lake City, Utah.
Jim has over seventeen years experience in litigation, corporate,
insurance, labor and
employment law and real estate law.