Employers May Restrict Employees' Moonlighting, NLRB Rules

Author: Robert S. Teachout, XpertHR Legal Editor

August 10, 2020

Employers may lawfully maintain a rule or policy against moonlighting under a recent ruling by the National Labor Relations Board (NLRB), provided they do not use the rule to prohibit protected concerted activity or to discipline employees engaged in protected concerted activity. "Moonlighting" happens when an employee works another full-time or part-time job in addition to their regular full-time job.

In Nicholson Terminal & Dock Company, the NLRB overturned an administrative law judge's (ALJ) finding that a maritime cargo company's rule against moonlighting was unlawful. The rule stated that employees were expected to devote their primary work efforts to the company's business and to not take an additional job that:

  • Could be inconsistent with the company's interests;
  • Could have a detrimental impact on company's image with customers or the public; or
  • Could require so much time and effort that the employee's work would be adversely affected.

The ALJ had held that the rule could have a chilling effect that would restrict employees from engaging in their rights under the National Labor Relations Act (NLRA) to engage in union and other protected concerted activity.

The NLRB examined the rule using the balancing test outlined in the Boeing decision. Under the test, the Board first determines whether the rule, as interpreted by an objectively reasonable employee, would potentially interfere with the exercise of NLRA rights. If not, the rule is lawful.

If, however, the rule could be reasonably read to restrict Section 7 rights, the Board then evaluates:

  • The nature and extent of the potential impact on employees' rights; and
  • Any legitimate company justifications associated with the rule.

The NLRB analysis focuses on the balance between the rule's negative impact on employees' Section 7 rights and the rule's connection to employers' right to maintain discipline and productivity in their workplace.

In Nicholson, the Board found that the moonlighting rule was lawful because a reasonable employee would understand the rule's stated objective of preventing employees from taking outside employment that would adversely affect their work for the company. It held that an employee would not conclude that the rule would prohibit engaging in the narrow type of work that might involve protected activity, such as being a part-time union salt or organizer.

The NLRB also held lawful on the same grounds a rule stating that inappropriate conduct included "calling, participating in or encouraging others to call or participate in an illegal slowdown, strike (including a sympathy strike) or walkout." The Board stated, "We do not see why [an objectively reasonable] employee would construe a prohibition against illegal activity as contrary to its plain meaning."