Getting Fired because of your Side Hustle

Explosion by Charles Dyer from Flickr (Creative Commons License)

Don’t Blow Up Your Master Plan | “Explosion” by Charles Dyer from Flickr (Creative Commons License)

When I was on one of the weekly calls with my mastermind group last week, one of my fellow Shankminders asked me to comment on a phenomenon amongst entrepreneurs – working on your side gig while at your full-time job.

Wait . . . what?! There are people out there sitting at their desks, and while they are supposed to be working for their employer, they are working on their side hustle? I was incredulous, but the members of my group knowingly nodded their heads.

I thought my head was going to explode. How can anyone think this is ok?

Am I the only person who read in their employment contract? What are you supposed to do on the first day of work besides read the company handbook? Even before I went to law school, I remember signing off on company policies that said employees couldn’t use company time or company resources to run a side business. At the time (2005ish), I assumed this policy primarily applied to people who might be realtors or the like on the weekend, but now I see how this applies to anyone who has a side business – including bloggers and other social influencers.

The notion that people are running their side gig during regular work hours raises a lot of red flags for me.

  • If you are an at-will employee, you can be fired for any reason, or no reason at all. Working on a side project when you’re supposed to be doing your work tasks seems like a good reason to fire you, especially if you’re neglecting your work duties to do it.
  • Employers can easily track what employees are doing at work with technology like keystroke trackers. You may be telling your employer a lot more than what websites you’re visiting – like passwords and your company’s trade secrets.
  • Your contract may have a provision that says anything you create during company time or using company resources is owned by your employer. If your contract has this provision, you may unwittingly forfeit your business to your employer, without any options for recourse.

Some employees have a provision in their contract that says that anything they create during the ten-year of their employment that is related to the work of their employer, is owned by the employer. This could apply to projects done even outside the office.

In general, I am an advocate of employer’s staying out to of employees’ business – personal or otherwise – and that comes with the obligation that employees keep non-work issues out of the office. I understand why it makes sense for someone to occasionally check social media at work, or like during their lunch break. And unless there is a security reason to prohibit it, employees should be allowed to have their phones at their desks to take phone calls or respond to text messages related to their families, permitted it doesn’t interfere with doing their jobs.

But work on a side gig while at the office? No no no. (At least, not without permission.) There are too many risks, the least of which is losing the job which is paying your bills while you’re getting your side hustle off the ground.

If you don’t know what the rules are at your office, go back and read them. Ignorance of the company rules, particularly the ones you signed off on, will not save you from discipline or worse. If you need help understanding how to work on your side gig while at your current employment, talk to a business attorney her knee or a resource that helps entrepreneurs in your community. If you want to see me pontificates more about this and related topics, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

Is Your Non-Compete Agreement Enforceable?

Spider-Man vs. Batman by JD Hancock, Non-compete Agreements

Spider-Man vs. Batman by JD Hancock

When you started your job, did you read your employment agreement before you signed it? What about the employee handbook – did you read it or just sign the form that says you read it? There’s a good chance one of those documents contained a non-compete agreement (NCA).

NCAs are a necessary evil, especially in this day when employees are less likely to stay at a company for their entire careers. These are contracts that restrict your ability to work in a similar position for a specified amount of time and geographic area if you leave the company.

When someone’s thinking of leaving their job, they often review their NCA and ask if it’s valid. A lot of companies won’t hire you if it would violate your NCA. If you think your NCA is invalid, you can go to court and ask a judge to invalidate it.

The court will have a hearing and weigh your interests against your employer’s. On one hand your employer doesn’t want to train someone and give them access to company information to lose them to their direct competition.  On the other hand, you have a right to choose where you work and you shouldn’t become unemployable because of a NCA.

The validity of a NCA is governed by state laws and decisions from previous court cases. There was a great article in the September edition of Arizona Attorney Magazine by David Bray and David Ferrucci about the enforceability of NCAs. Here are some of the highlights.

Courts generally want NCAs to have clear and reasonable provisions. If your NCA can interpreted in two ways – one that narrow and enforceable one that is overly broad and unenforceable and in the ex-employee’s favor – the court will usually rule in that it’s too broad and thus unenforceable. The court will look at whether you negotiated your NCA. Many new hires are given a nonnegotiable NCA as part of their employee handbook and they can either accept it as written or work somewhere else. If the NCA was negotiated, the court will be more likely to try to determine the parties’ intent when they wrote the contract.

There’s also something called the blue-pencil rule in Arizona. This allows a court to excise “grammatically severable” and unreasonable provisions from a contract but keep the reasonable provisions. This keeps the whole contract from being invalid because of one invalid provision.

You can also have step-down provisions in the contract.  An example of this would be, “This non-compete agreement will be in place for 12 months after the employee leaves the company. If a court finds this duration to be invalid, then the duration will be 9 months. If a court finds this duration to be invalid, then the duration will be 6 months.”

A valid step-down provision will only have 2 or 3 choices and be written in good faith. A 2006 Arizona case said that good faith step-down provisions must be:

  1. Definite,
  2. Consistent with the underlying provision,
  3. Easily severable from unreasonable provisions,
  4. Have a narrow duration range, and
  5. Have a reasonable geographic scope.

A valid NCA might result in you not being able to work for a direct competitor or in the physical vicinity of your previous employment, but your skills are likely transferable to other jobs or you can do the same job if you’re willing to do it far enough away from your previous employer.

Read your employment contract carefully. If you’re an employee, get a copy of it before your first day on the job so you can review it and possibly have a business lawyer review it. If you’re an employer, hire a lawyer to write your NCA for you so a court will be less likely to rule that it’s overly broad or otherwise invalid.

One word of caution: In contract cases, Arizona is a “loser pays” state. If you go to court to dispute a NCA and you lose, you’ll be paying for your attorney and the other side’s attorney.

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