Working a side hustle or having a portfolio career has become very commonplace, whether you’re doing odd jobs to make ends meet or expanding your experience despite being a successful professional. But there are many legal considerations that come with a portfolio career, so before you embark on your side hustle, consider these potential conflicts.
Competition with Your Company
The first and most important consideration when pursuing work outside of your day job is whether you’re violating employee guidelines. Consider these factors that can get in the way of pursuing a portfolio career:
NON-COMPETITION AGREEMENT
Chances are that you signed an employment agreement when you started your job. Maybe it was recently, or maybe it was many years ago, but in either case, you probably didn’t read it very closely. There is likely some language prohibiting you from competing directly with your company or taking business opportunities for yourself that would otherwise be available to the company.
An easy example is doing freelance web design work if you work as a graphic designer. It might not be exactly the same industry (maybe a tech company reached out to design some logos for them or rebrand their website, and in your day job you exclusively serve the e-commerce industry) but something that is up the alley of your day job can run in conflict with your employer’s regulations. If you work for a large landlord-developer and are building up a real estate investment company, you might think you’re totally in the clear. Sure, your employer doesn’t even dabble in owning duplexes, but that doesn’t mean you’re not playing in their space. In these scenarios, consider getting HR approval if you think it’s far enough outside the scope that they’d be okay with it.
TRADE SECRETS AND COMPANY CONTACTS
Side hustling in the same circle as your day job also gets hairy when considering how, if at all, you’re utilizing trade secrets that belong to the company. Proprietary data reports that are accessible to you from your day job can absolutely not be used to help you garner business for the side gig. If you’re running in the same industry as your day job, be very careful about what you’re doing, because there are a lot of aspects to your success that could be gained as a result of trade secrets.
Less dramatic, but also worth considering, is utilizing company contacts. You probably have great relationships with vendors that you’d love to work with. In most cases, this is perfectly fine, but do not take special discounts or freebies in pursuit of your side gig. This could be viewed as a financial benefit you received as a direct result from your day job.
USING COMPANY TIME
This should be a given, but when you’re on the clock at your day job, you shouldn’t be working on the side hustle. This includes using your company-issued laptop, cell phone, etc. This is more clear cut when you sit at a desk for your day job, but if you have some flexibility, it gets a little grayer. As tempting as it is to focus on your side hustle as much as possible, don’t let your main gig slip. Side hustles should remain on the side until you’re ready and willing to leave the day job and go all in.
Tax Issues
If you’re already an independent contractor in your day job, adding a side hustle or two won’t require and dramatic shift, but if you’re a W-2 employee, any side hustle cash is likely to be independent contractor income and therefore taxes are not being withheld. Don’t get blindsided by a huge tax liability at the end of the year. Consult a tax professional at the outset to make sure you’re properly accounting for the income and setting up necessary bank accounts.
Is This a Risk You’re Willing to Take?
Ultimately, you’re taking a risk in almost any case where you’re devoting time to another job. Even if you’re doing it strictly off hours and outside of your industry, if your company found out, in most cases, they can let you go as an at-will employee for any reason or no reason at all. Which means if it irks them, they can fire you. So consider the risk before you embark on that side hustle. What’s it worth to you? If it’s in pursuit of your dream job/career, it seems like a great risk to take.
But if you’re happy where you are, can you talk to your employer about what you’re doing and how it won’t affect your job? Maybe it can be net positive for your day job, too. For example, if your day job is in accounting but you side hustle as a lifestyle blogger, it might be useful to your company that you are tech savvy and enjoy writing and public speaking. You can be a great resources to speak at industry events, on panels, and write for internal and external publications.
Obligatory Disclaimer: Did you like what you just read? I’m glad! But please know this post is for information purposes only and is not considered legal advice, nor does this create an attorney-client relationship. Feel free to contact me if you want to discuss your legal needs.