Quick Article Summary

Texas employers can legally restrict employees from working a second job, but doing so requires clear policies, solid reasoning, and thoughtful enforcement. This guide explains the legal landscape of “moonlighting,” how to create enforceable policies, what risks to look out for, and when discipline or termination may be justified.

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What Is Moonlighting?

Moonlighting refers to employees working a second job outside their primary employment. For Texas businesses, this can raise questions about:

• Performance issues from fatigue or divided attention
• Conflict of interest if the second job is in the same industry
• Use of company resources for outside work
• Violations of confidentiality or non-compete clauses

Is There a Texas Moonlighting Law?

No, there is no, “Texas moonlighting law.” Texas law does not prohibit employees from moonlighting, but employers are allowed to restrict or prohibit it through clearly written policies.

Texas Is an At-Will Employment State — But Policies Still Matter

Texas follows the doctrine of employment at-will, which means an employer can terminate an employee for any lawful reason. However, to enforce restrictions on outside employment, your best defense is a clear, signed policy stating:

• Whether second jobs are permitted
• Whether prior disclosure is required
• What types of outside employment are prohibited (e.g., competitors, vendors, conflicts of interest)
• How violations will be addressed

Without this kind of policy, disciplining an employee solely for having a second job could expose your business to wrongful termination or discrimination claims — especially if similar situations were handled inconsistently.

Common Risks of Moonlighting

Performance Decline

Fatigue from working multiple jobs can lead to poor performance, absenteeism, or safety issues — especially in physically demanding or safety-sensitive roles.

Best Practice: Monitor performance based on objective metrics. If issues arise, address them through your normal disciplinary process. Don’t assume the second job is the problem without clear evidence.

Conflicts of Interest

Employees who moonlight for a competitor — or operate their own business in the same field — could put your business at risk.

Best Practice: Prohibit outside work that directly competes with your company or creates conflicts. This includes side gigs that may benefit from insider knowledge, client lists, or processes.

Use of Company Resources

Employees may misuse company time, email, vehicles, or supplies for outside work.

Best Practice: Your employee handbook should already ban the personal use of company resources. If not, update it to include a technology and property use policy.

Confidentiality & Intellectual Property Risks

Moonlighting can increase the risk of data breaches or trade secrets being shared — intentionally or unintentionally.

Best Practice: Have a signed confidentiality agreement in place. Consider including non-solicitation or non-compete language where legally enforceable. (Note: Non-compete laws in Texas are enforceable only under specific conditions.)

Can You Legally Fire Someone for Moonlighting?

Yes — but only if:

• You have a policy prohibiting it or
• You can prove the second job is directly impacting performance, safety, or trustworthiness

If you take disciplinary action, you must show that your response was fair, consistent, and based on objective evidence. Make sure:

• You’ve applied the rule evenly across employees
• You’ve documented performance or policy violations
• You haven’t violated any protected rights (e.g., retaliating against whistleblowers or employees using protected leave)

Remember: under TWC unemployment guidelines, the reason for discharge affects whether the employee can receive unemployment benefits. Terminating for clear, policy-backed misconduct like dishonesty, theft of time, or conflict of interest is generally considered “misconduct connected to the work” — which can help deny benefits.

Should You Require Disclosure of Second Jobs?

Requiring employees to disclose secondary employment is a common practice — especially for:

• Healthcare
• Finance
• Government contractors
• Safety-sensitive roles

This doesn’t mean you’re denying them the right to earn extra income — only that you want to evaluate any potential risks or conflicts.

Make sure your policy clearly states:

“Employees are required to notify Human Resources of any outside employment to ensure it does not interfere with job performance or present a conflict of interest.”

What About Independent Contractors?

The rules are different for 1099 independent contractors. They are not your employees, and unless your contract includes exclusivity or non-compete language (which can create misclassification issues of their own), they are generally free to work for others.

If the contractor’s side work creates a conflict of interest, you may have grounds to terminate the contract — but you must review the terms carefully.

How to Create a Moonlighting Policy

Your employee handbook should include a section on outside employment that covers:

• Definition of moonlighting
• Whether it’s allowed or restricted
• Requirement for disclosure
• Prohibited types of second jobs (e.g., competitors, vendors)
• Consequences of violations

We recommend having all employees sign an acknowledgment of your handbook and any updates made to it.

Example Policy Language

“Outside employment is not prohibited, provided it does not interfere with the employee’s ability to perform their job duties or present a conflict of interest. Employees must disclose any outside work and obtain written approval from HR before accepting such work. The Company reserves the right to prohibit outside employment that is determined to interfere with business interests, performance expectations, or pose a safety or confidentiality risk.”

How The Texas HR Experts and The Unit Consulting Can Help

We assist Texas businesses in building clear, legally sound employee handbooks that cover second jobs, conflicts of interest, time theft, and more. Whether you need on-demand HR guidance or full-scale compliance management, our team is ready to support your growth and protect your business.

Reach out today — and let us help you handle the night shift with confidence.