The National Labor Relations Board general counsel has issued an advisory taking a strong stance against employer policies that restrict employees from holding outside or secondary employment, i.e., moonlighting.

The general counsel believes that such restrictions could violate federal labor law by chilling employees’ exercise of their Section 7 rights under the National Labor Relations Act (NLRA).

The issue came to light when a regional office sought guidance on a “Duties of Employees” provision in an employment agreement. Employees were prohibited from engaging in activities competitive with or adverse to the employer’s business, whether alone or as a partner, employee, advisor, or investor in another company.

The GC found this provision to be unlawfully overbroad, as it could be reasonably interpreted by employees as preventing them from holding outside employment while working for the employer.

According to the memorandum, the GC’s position is that rules or contract provisions directly or indirectly prohibiting moonlighting are generally unlawful. Such provisions could implicitly prohibit employees from working as paid union salts or engaging in union organizing activities, which are protected under the NLRA.

NLRB reaches beyond union workplaces

This development is significant for employers, including those without unions, as the NLRA applies to all U.S. workplaces. Employers should carefully review their employment agreements and policies in light of the GC’s stance on moonlighting restrictions.

It is important to note that the general counsel’s memorandum does not carry the same weight as an official NLRB rule or decision. The GC’s role is to investigate and prosecute cases on behalf of the NLRB, and their advisories provide guidance on how they interpret the law and intend to enforce it. But the memorandum is significant because it indicates the direction the NLRB may take in future cases involving moonlighting restrictions.

Avoiding blanket bans

While employers may have legitimate concerns about conflicts of interest or the disclosure of sensitive information, the NLRB’s stance indicates that blanket prohibitions on outside employment are likely to be deemed unlawful. Employers should consider more targeted approaches to address these concerns, such as confidentiality agreements, requiring employees to disclose potential conflicts of interest, and/or narrower, role-based restrictions.

As the NLRB continues to scrutinize employer policies and practices, companies should stay informed about developments in labor law and review their employment agreements and communications for potential overbreadth.