Employee Rights Attorney
Mission Viejo, California
Q: “A friend of mine was recently hired by a company that is not based in the United States. One of the items on the employment agreement says that while employed by the company, you will not, except with the written consent of the company, devote any of your time to any other business or profession.
“I can understand where they would not want you to be in a competing business, but if you have some other part-time venture that does not infringe on the company’s interests, how could that item be enforceable?”
A: “A company cannot unreasonably invade the privacy of its employees. Companies not based in the United States must also comply with U.S. law in this regard.
“The courts have held that companies can prohibit employees from engaging in outside employment that is in competition with its own business. If the outside employment is not in competition with the company’s business then there must be some other legitimate reason for the restriction for it to be legally enforceable. If an employee is a part-time employee, it would be very difficult to justify any restriction on outside non-competitive employment.
“The key is whether or not the outside employment unreasonably affects the work performance or other relevant factors within the company. Some of the factors that would have to be evaluated on a case-by-case basis include the following: effect on employee absenteeism, harm to the company’s reputation (especially if the outside employment is disreputable or illegal), and the extent to which other employees fear or refuse to work with the employee because of outside employment or activities.
“Unfortunately, employers sometimes put provisions in employment agreements or employee handbooks that have the legal effect of an unenforceable suggestion. Your friend may have a legal claim against his employer if he is fired or suffers retaliation because of his refusal to submit to unreasonable intrusions into his private life.
“On the other hand, rather than complaining about an unjust policy and possibly suffering retaliation or fighting a battle over the problem, he might be better off by simply keeping his outside employment quiet and dealing with the improper policy if the employer discovers his violation of it.”