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How To Handle Your Employees' Side Hustles

If your employee has a second job, are they dedicating as much time to you as they should be?

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Opinions expressed by Entrepreneur contributors are their own.

So, you’ve just discovered that your employee has a side hustle. Either a second job or just a profitable hobby that they engage in after-hours. Is it any of your business?

The existence of side hustles is a controversial topic, especially for business owners who operate with a small, tight-knit team. After all, if your employee has a second job, are they really dedicating as much time to you as they should be? And if that side-hustle turns into a more profitable opportunity than what you’re providing, aren’t you just setting yourself up to lose an employee if you let it continue?

The reality

We live in an increasingly expensive world and many business owners can’t afford to continually increase wages to meet the rising cost of living. It’s not ideal, and there is a myriad of contributing factors that we won’t delve into in this article — but it is the case. And the solution, like most things, is to compromise.

Should we allow our employees to have side hustles? If that’s your question, then you need to reframe your thinking. Even in a position of power as the employer, we don’t let our workers do anything. They are not servants and we can’t expect complete and total fidelity from them 24 hours a day. If your response to finding out one of your staff has a second job is to instantly give them an ultimatum, you’re not going to win in that situation — they’re either going to leave right then and there or start planning their escape.

One of the key things to realize is that if you can’t pay adequately for your employee’s time, then you don’t own all of it. We get around 45 to 50 hours a week out of them, and that’s — in most cases — all we’re owed. What they do off the clock, so long as they aren’t undermining us or selling company secrets, is none of our business.

Related: 18 Stress-Free Side Hustles For Introverts

When you should be concerned

But, what if they’re working on their side projects while on the clock? Then you’re within full rights to confront them. 

One option, if you demand full loyalty, would be to let your employee go. I would not advise this. First, it’s a petty and emotionally based decision and is just going to hurt both you and the employee. Second, it doesn’t actually solve the problem, does it?

In my personal opinion, every employee should receive at least one warning before being let go (some obvious exceptions apply). In all likelihood, your employee knew that what they were doing was wrong and that while they’re on the clock they owe their time to you, but sentencing them to corporate capital punishment and firing them shouldn’t be the go-to solution. After all, the reason they’re doing it is that they think they can get away with it. So in a way, your failure to set expectations is as much at fault as they are.

Related: Stop Calling It a Side Hustle

How to solve the problem

One thing I do is encourage open dialogue on the topic, beginning during the hiring phase. We discuss it, let them know that we don’t prohibit it, but ask that they keep us in the loop, and let them know what is and what isn’t acceptable. This includes punctuality, excellent communication and maintaining performance. If the side hustle is in our industry, we also discuss things like non-disclosure, confidentiality and client poaching.

I’ve never had a problem with employees sneaking around and working on a side hustle during working hours because I use productivity tools to track their time and they know it’s not acceptable.

Now, there is also the question of how much you should support your employees’ side hustles. Do you let them have a flexible schedule so they can easily hold both jobs?  That’s entirely up to you. If you’re paying them more and are supplying them benefits, it’s okay to want them to focus more on their work for you than their gig at Starbucks. I would suggest a case-by-case policy: If the worker is an exemplary employee, grant them flexibility. If there’s room for improvement, let them know that.

You’re going to get the best result the more open you are to compromise. Take the mindset of "If all their work is done, it’s not my business" and wait for them to lose that privilege rather than try and fight them over their side job. Or, if their loyalty means that much, bribe them with a pay raise. When you extend yourself to meet halfway, the employee will likely rise to meet you. And if they don't, no one can say you didn’t try.

Related: 5 Simple Steps to Start Your Side Hustle

Christopher Tompkins

Written By

Entrepreneur Leadership Network Contributor

Christopher Tompkins is the CEO and founder of The Go! Agency and an internationally renowned expert in digital marketing. With more than two decades of experience, he has turned The Go! Agency into a top-ten marketing agency in Florida and a top-25 digital marketing agency nationwide.