(pictured, Nicaila Mathews – Chief Side Hustle Pro)
You’re sitting at your 9-5, but daydreaming about your passion. You want to change the world with your gift. But, before throwing all caution to the wind, you want to test out a few things, get your feet wet.
Enter. . . the side hustle.
Side hustling is great for a few reasons; it gives you a taste of what it’s like to start and grow a business, it helps you figure out if your idea is marketable, and is a great outlet to fuel your passion.
But, is it legal? It depends. Below are some legal considerations.
Is it legal to side hustle? Short answer: yes. But within certain boundaries. States vary on this law, but for the most part, employees have a duty not to compete with their existing employer (no additional agreement needed for this to apply). And depending on your job or your industry, you may have signed some form of non-disclosure agreement
So your threshold question when starting your side hustle should be: Am I starting a business that is related to or competitive with what I currently do?
- IF THE ANSWER IS NO: If the answer is no, and your side hustle is not related to or competitive with your job, then, it’s less likely that your employer has claims to your business. But you still have to use your own time and your equipment to reduce your risk any legal issues with your employer.
- IF THE ANSWER IS YES: If the answer is yes, then, there’s more risk, even if you use your own equipment and build your business on your own time. You have to take more precautions to show a clear separation between the resources and skills you’re using for your side gig and your job as well as your new business or new development could be at risk. This risk increases depending on your field, your work location, and the skill you’re using. But understand that nothing can eliminate the risk of your current employer coming after the fruits of your side hustle.
For example, let’s say you work in marketing and communications for a software company. Let’s say you want to use that skill on the weekends to help a beauty product company market their brand. That’s related, but that’s not competitive, even though you’re helping each company market their product. But let’s say you were helping another software company, the risk of impropriety increases.Check out these legal tips from @artsteele_esq to see if your side hustle is legal. #sidehustle #legaltips… Click To Tweet
One field that’s highly sensitive to side hustles is the technology field. You can imagine why – it’s difficult to separate using the knowledge you gain at your job (not necessarily trade secrets, such as systems, processes, or methods) for developing software or hardware for your job and using that same knowledge on nights and weekends to develop your own app or program. It gets tricky. And as a matter of fact, most companies in the technology industry will have you sign a proprietary information and invention agreement. These agreements give the employer certain ownership rights to any inventions, designs, work, etc., created or conceptualized while you were in their employ. The agreement will also ask you to list any inventions created prior to or that you’re currently working on; that way you’re putting your employer on notice that this is something you were working on before working for them – and basically, exclude it from your employer’s reach.In the technology field? @artsteele_esq shares tips on how to protect your side hustle. #creativebiz… Click To Tweet
Your employer may also have you sign a non-compete agreement before or at the time of your separation from the company. The Non-compete restricts your future employment to some extent (can’t work for a competitor, within a particular geographic area, in a certain field, for a certain time). These agreements, however, are subject to public policy considerations and could be considered overreaching.
Bottom line: it’s not as clear-cut as you may think. It’s legal, but it’s risky. There’s plenty you can do to lower that risk. The more unrelated to your current job, the lower the risk. The more you separate your time and resources, the lower the risk. Below, I’ve listed some general tips on how to make sure you keep your side hustle separate from your full-time job.
Review your offer letter or any documents you sign. We’re all excited to get that offer letter. Don’t only check to make sure they got the pay right, make sure to check your offer letter for any non-compete or non-solicitation agreements. It may be a bit awkward for you to bring this up with a new employer (hi, at some point I’d like to work on my side hustle so can we fix this language? – doesn’t look good). But at least this gives you an idea of how careful to be with your side hustle.
Nights and weekends are made for side hustles. I always like to say, use your weekends to build wealth and that’s even more important if you have a side hustle. The key to keeping your 9-5 plus building your side hustle is great time management skills. In order for you to keep your job, you’ll have to be focused on your job and perform well. You have to be very careful about using your work time to perform side hustle duties. That doesn’t mean you can’t do anything for your side hustle at work; you can do it on your lunch break or other breaks. But one way to lower the risk of your employer claiming rights to your side hustle is by using only using your easily identifiable personal time (night and weekends) for working on your side hustle.
Do not use your employer’s equipment. You’ll be surprised how many people use their work email to conduct personal business – even if it’s unrelated to your side hustle. Use your personal email account for non-employer related business. When I worked a traditional 9-5, I used my email and work computer with the assumption that someone was already reading my emails and could look at an image of my hard drive at any time – because, legally, they can. Don’t use your office phone, office fax (if people still use that), computer, laptop, hard drive – to conduct any personal business and definitely not your side business. If you want to check and respond to email, post on social media, use your smart phone or your personal laptop (may be a little suspect to do at your desk).
Keep good records. Keeping records of your night and weekend works is even more important if your side hustle is related to your 9-5. You want to keep time records of when you started to work (should indicate time away from the office). It would also help to show when your files for created, saved and last modified. Get into a routine and document it. These issues may not come up for years, and you may not remember what you did on X day. Showing that you had a particular routine can help explain what you likely would have done.
Should you tell your boss? C’est la question! No right answer here. Unless otherwise stated in any employment agreement (including the offer legger), you are not required to tell your boss about your side hustle. As I mentioned earlier, you have a duty not to compete with your employer, but even if you do, you aren’t required to tell them (not saying you should lol). So no, you don’t have to tell them, but they may find out, and it could be an awkward conversation. And if you do want to tell them, there’s obviously risk in being seen as not being dedicated to your job or that you have one foot out of the door. That’s why it’s important to stay on top of your duties at your 9-5 so that your boss has to reason to be concerned about your side hustle. And in some cases, it’s just better to beg forgiveness than to ask permission, right?
So there you have it. Now you get back to your side hustle.
Legal disclaimer: This blog post is for your informational and educational purposes only. While I am a lawyer, I am not your lawyer. By reading this blog post, you are not establishing an attorney-client relationship with me or my law firm. For specific questions, please consult an attorney authorized to practice law in your jurisdiction.