Moonlighting debate: Legal and Ethical considerations

The debate around moonlighting in the technology sector has gained much attention in recent times. To the uninitiated, moonlighting refers to the act of working at an extra job, especially without telling your main employer (Cambridge Dictionary).

Many global technology companies have come out against moonlighting as an issue of ethical and legal concern. Indian IT major Wipro announced in September 2022 that it had terminated about 300 employees who were found to be working simultaneously for their competitors. On the other hand, Swiggy, the Indian online food ordering and delivery platform has come out with a moonlighting policy that officially permits its employees to take up a second job or side hustle, subject to approvals.

Why has the moonlighting debate come to the fore now?

While moonlighting is an age-old phenomenon, it has become a topic of major interest recently, thanks to the COVID-19 pandemic-induced remote working environment, primarily in the tech sector. Until early 2020, working from the office was the norm in most countries and the concept of working from home was almost non-existent. Work from Home was available as an option only under exceptional circumstances for which special approvals from managers were required. In IT/ITES companies in countries like India, employees had to operate from restricted workplaces called Offshore Development Centers (ODC) that prohibit the use of mobile phones and restrict access to the Internet. In some cases, they were continuously under surveillance through Closed Circuit Television (CCTV) cameras.

But the scenario changed upside down in the year 2020, as the COVID-19 pandemic and the ensuing lockdowns prevented employees from visiting their offices. Hence, the companies as well as their clients had to do away with earlier restrictions and remote working became the norm.

This has led to below beneficial outcomes creating a win-win situation for employees and employers:

• Employees now have more time to spare – as there is no need to travel and performance is measured based on work output rather than the number of hours spent
• Flexible work timings – team members have adapted to asynchronous mode of work
• Absence of direct supervision – virtual work setup has made it impossible for employers to directly monitor their employees
• Reduced establishment costs – companies now had to spend less on real estate, transportation, and other utilities since employees were working from home

However, these progressive outcomes were also conducive to the proliferation of moonlighting by employees where they could take up a second job without the knowledge of the first employer. In the pre-pandemic era, for an employee working in the IT/ITES sector in a big city like Bengaluru, the daily commute and long hours in the office ensured that he/she would hardly have any time or energy to spend for his/her family and self, let alone taking up a second job. However, the pandemic-induced remote work setup has created circumstances that make moonlighting a possibility in the IT/ITES industry.

Legality of moonlighting

The legality of moonlighting varies from country to country and state to state. In some places, it is perfectly legal, while in others, it is prohibited or restricted.

In the United States of America, the Fair Labor Standards Act (FLSA) requires non-exempt employees to be paid overtime pay at a rate of one and a half times their regular rate of pay for hours worked over 40 in a workweek. If you work a second job, you may be entitled to overtime pay for hours worked in excess of 40 in a workweek, even if your second job is not covered by the FLSA. However, overtime pay requirements do not cover exempt employees – executive, administrative, professional, and computer employees.

In India, there is no legal bar of dual employment or moonlighting except for those working in factories. Section 60 of the Factories Act 1948 states that, “No adult worker shall be required or allowed to work in any factory on any day on which he has already been working in any other factory, save in such circumstances as may be prescribed.”

For organizations that do not fall under the purview of the Factories Act, 1948, the legality of dual employment or moonlighting will be determined by the nature of the employment contract between the individual and the organization.

If the employment contract and employer’s policies prohibit moonlighting, the company is well within its right to initiate appropriate action for breach of contract which may include termination from the service. However, some companies may have more flexible contracts that prohibit only endeavors that are in direct conflict of interest with the employment and may require prior approvals. If you are an employee planning to take up a second job, it is advisable to review the employment contract and seek clarifications from your HR Partner.

Ethicality of moonlighting

Even if moonlighting is not outright illegal, some organizations view moonlighting as more of an issue of ethical concern than about legality.

Breach of trust

By taking up additional employment without the knowledge of the company while being aware that the employment contract explicitly prohibits it, the employee is not only breaching the employment contract but the trust between employer and employee. This may also lead to a breach of the contract between the employer and clients. By secretly taking up another employment, the employee will not be able to do justice to the responsibilities at both places for want of time and attention.

Denial of opportunity for others

While many argue that the meager salary companies pay is the breeding ground for moonlighting, we should not forget that there are millions of qualified professionals who are unemployed and waiting for an opportunity. Trying to hold multiple jobs means denying an opportunity for the deserving.

Remote/hybrid work opportunities may decline

The act of moonlighting does not merely violate the contract between employee and employer. This will also have wider ramifications for the workforce in general. Such instances of moonlighting will definitely force companies to rethink the flexibility of remote/hybrid working available to employees. Companies may move back to the pre-pandemic era where work from the office was the norm in order to ensure that the employees are not simultaneously working elsewhere.

The way forward

While many predict that moonlighting is the future of work where an individual is not necessarily tied to a single employer, there is still a long way to go. Employees should be mindful of the legal and ethical considerations of their actions. They should not risk their credibility and reputation for the sake of short-term monetary benefits. Having said that, it is also time for employers to revisit their current employment contracts and be receptive to change. They should seek inputs from all stakeholders and come up with policies that clearly communicate their stand on moonlighting that will help build the modern workplace.

The debate over moonlighting is complex and there is no easy answer. However, it is important to have a conversation about this issue so that we can create a workplace that is fair and productive for everyone.