In some circles, side hustles have taken on mythic proportions. They may be a way to demonstrate personal passions and hidden talents, save for a dream vacation or test out a business venture.

On the other hand, side hustles can also be born of stress and financial necessity. The Society for Human Resource Management (SHRM) reports that 50% of people with side jobs said they needed the extra money to make ends meet.

Regardless of the reasoning, many of your employees are likely engaged with outside work. Forty percent of workers have a side hustle, according to a 2022 survey by The Harris Poll. And that number is likely to grow as younger employees enter the workforce. HR Morning reports that millennials and Generation Z employees are most likely to have a side gig.

This growing prevalence is why many employers have chosen not to limit side projects as long as job performance stays strong. By not restricting them outright, you show trust in your employees’ work ethic and judgment.

But given the growth of side hustles and the potential for workplace conflict, a written policy can provide valuable guidance and expectations.

Before deciding on your policy, it helps to understand side hustles and their potential pros and cons.

Common side hustles

Side hustles cut across all demographics and levels of employment. A longtime executive may be just as likely as an entry-level hire to engage in a personal project outside of work.

And there are nearly as many side hustles as there are business opportunities. Examples include:

  • Tutoring, teaching or coaching
  • Selling personal products such as food, jewelry, candles or artwork
  • Freelance writing or graphic design
  • Publishing online courses
  • Delivering food or groceries
  • Driving for a rideshare company
  • Photographing families, weddings or other events

As noted above, the reasons behind side hustles are also varied. Financial challenges such as inflation, high cost of living, student debt, and unexpected health or life events can lead employees to search for new ways to make money. But outside work can also be purely for enjoyment. Employees may monetize woodwork, fitness videos and other personal interests because they offer a creative outlet.

Exploring the potential benefits and challenges of side hustles can help you create a policy that accommodates employee needs and protects your business interests.

Pros

Whether they stem from personal fulfillment or financial necessity, side hustles come with potential benefits for your employees and your organization.

Pros include:

  • Expanding skills such as sales, marketing and time management
  • Improving financial standing
  • Feeling empowered by taking initiative and expanding interests outside of work
  • Being invigorated by new tasks and routines

Side projects can sometimes increase productivity in a person’s full-time job. A study published in the Academy of Management Journal noted that creating new routines and skills outside of work can lead to greater employee engagement at the office.

Cons

In some cases, the reverse can be true. Side hustles can distract and exhaust employees, reducing their engagement and performance.

Other cons include:

  • Potential legal issues regarding conflicts of interest and noncompete clauses
  • Inappropriate pressure on colleagues to purchase products from a side hustle
  • The use of company time or equipment for outside projects
  • Harming relationships with clients or customers by discussing side hustles instead of core business

Is a written policy right for you?

Understanding the pros and cons as they relate to your workforce should inform your written policy on side projects.

Some companies ban side hustles altogether, while others encourage the practice and even allow employees to use company time and equipment. Most organizations permit employees to have side hustles if they don’t negatively impact job performance.

Before you craft a policy, check with your benefits adviser for compliance with state and local laws. Employees have many legal protections for outside jobs as long as they are lawful and don’t interfere with performance.

As with any policy, the determining factor should be employee performance. If an employee is delivering, you shouldn’t restrict outside interests or activities. Aside from the ability to earn money, a side hustle may be no different from other activities and interests that occur outside of work.

But a written policy can provide guidance and set expectations for employees and managers. Details may include:

  • Use of company property such as computers, printers and fax machines
  • Time management, including working on side projects during normal business hours
  • Discussions about side hustles with colleagues, clients and customers
  • Examples of conflicts of interest, such as working with a competitor, using sick time to work on side hustles, or asking clients for business

By setting this guidance, your policy can prevent side hustles from crossing the line. You should also communicate steps you will take when violations occur. These may include a request to end the side hustle, a verbal or written warning, a performance improvement plan or termination.

SHRM recommends creating a stand-alone policy for side hustles so they don’t get overlooked in your employee handbook. Keep your policy short and to the point. Overly burdensome policies may not deter side hustles so much as cause employees to keep them secret.

Given the wide range of side hustles, your policy should be flexible enough to review situations on a case-by-case basis.

Once your policy is written:

  • Have all employees sign it.
  • Include it in your onboarding process for new hires.
  • Store it in a prominent, easily accessible space online.
  • Communicate it to employees yearly.

For more information

To discuss side hustles and their potential impact on your organization, talk with your benefits adviser or legal counsel. They can provide best practices and a sample policy to inform your decisions.