Side hustles are increasingly common in Toronto’s employment market. Employees may freelance, consult, sell products online, create content, drive for app-based services, tutor, coach, or build a small business outside their main job. Some do so for financial reasons. Others are testing a business idea or developing skills.
Outside work is not automatically a workplace problem. However, it can raise employment law issues when it overlaps with an employer’s business, affects performance, uses company resources, involves confidential information, or creates a conflict of interest.
For both employees and employers, the key issue is often not whether a side hustle exists. It is whether the outside activity interferes with the employment relationship.
Why Side Hustles Can Become Workplace Disputes
Remote work, digital platforms, and financial pressure have made second jobs more visible. Many employees can now operate a small business from a laptop or phone. However, this means that employers may be more alert to productivity, data security, reputation, and competition.
Disputes often arise because expectations were unclear. An employment contract may contain clauses about conflicts of interest, confidentiality, outside work, or use of company property. A workplace policy may require employees to disclose secondary employment. Employees may not realize those provisions apply until an issue arises.
A side hustle that is completely unrelated to the employer’s business may create little concern. A side business involving the same clients, industry, or services may be viewed very differently.
What Is a Conflict of Interest?
A conflict of interest can arise when an employee’s personal or financial interests may interfere with their duties to the employer. This doesn’t need to be direct competition; it may involve divided loyalty, improper influence, confidential information, client relationships, or the appearance that the employee’s judgment could be affected.
For example:
- An employee may perform freelance work for one of the employer’s clients
- A manager may hire a family member’s business
- A sales employee may operate a similar business targeting the same market
- An employee may use inside knowledge to support an outside venture
It’s important to note that not every outside activity is a conflict. Context matters, including the employee’s role, seniority, access to information, workplace policies, and whether the activity affects the employer’s business.
Competing With an Employer
Competition during employment can create serious risk. Even though Ontario restricts many post-employment non-compete agreements, employees may still have obligations while they are actively employed.
Concerns may arise where an employee works for a competitor, diverts opportunities, solicits clients, or uses workplace knowledge to build a separate business. Senior employees, managers, sales staff, executives, and employees with access to strategic or confidential information may face closer scrutiny.
Timing can also matter. Planning a future business is different from actively competing while still employed. Problems may arise if an employee begins soliciting customers, taking documents, or using paid work time to prepare a competing venture before their employment ends.
Confidential Information and Company Resources
Many side hustle disputes involve confidential information. Employees may have access to pricing, client lists, business strategies, financial information, supplier data, software, marketing plans, or internal processes. Using that information for outside work can create significant employment law concerns.
Company resources can also become an issue. Laptops, phones, email accounts, software, templates, databases, vehicles, and internal systems are usually provided for employment purposes. Using them for a personal business may breach workplace rules, even where the side hustle is not directly competitive.
Digital evidence can be important. Emails, downloads, login records, shared folders, messages, and calendar entries may be reviewed if a dispute arises. Employees with side businesses may need to keep outside work clearly separate from their employment duties and employer systems.
Working Time and Performance Problems
A second job can also become a workplace issue if it affects performance. Employers may be concerned if an employee misses deadlines, appears unavailable, takes outside business calls during work hours, or uses paid time to complete freelance work.
These concerns can arise even where the outside work is unrelated. For example, an employee who runs an online store during the workday may face discipline if that activity interferes with their role.
At the same time, employers may need to avoid assumptions. If an employee is meeting expectations and the outside work does not breach a contract or policy, the mere existence of a side hustle may not tell the full story.
Social Media and Personal Branding
Some side hustles are public. Employees may run podcasts, newsletters, YouTube channels, TikTok accounts, online stores, coaching businesses, or professional profiles. These activities can raise questions about reputation, confidentiality, and whether the employee appears to speak for the employer.
Problems may arise when an employee uses the employer’s name, logo, client examples, workplace stories, or internal information to promote a personal venture. Similar concerns may arise where online content affects workplace relationships or creates reputational concerns.
Personal branding is not automatically improper. In many industries, employees build professional visibility online. However, issues may arise when that visibility overlaps with the employer’s confidential information, commercial interests, or client base.
Disclosure and Workplace Policies
Some employers require employees to disclose outside employment or business activities. Others only require disclosure where there may be a conflict.
Additional topics that policies may cover can include:
- Consulting work
- Directorships
- Procurement relationships
- Use of company property
- Client contact
- Work for competitors
Clear disclosure rules can reduce uncertainty. They allow employers to assess whether a real conflict exists and give employees a record that the outside activity was identified and reviewed. A workable policy often focuses on outside activities that may interfere with work duties, compete with the employer, involve clients or suppliers, use company resources, or raise confidentiality concerns.
Can Employers Ban Side Hustles?
Some employers may prefer a blanket ban on outside employment. Whether that approach is suitable depends on the workplace, the role, and the business interests involved. Stricter limits may be more common in regulated, safety-sensitive, fiduciary, or client-facing roles.
In many workplaces, a tailored policy may be more practical. A side hustle that does not affect performance, use company resources, compete with the employer, or create a conflict may be different from outside work that directly overlaps with the employer’s business.
Even where side hustles are not banned, employees may still have duties of honesty, loyalty, confidentiality, and compliance with workplace policies.
Departing Employees and Post-Employment Issues
Side hustles can become more sensitive when an employee leaves or is terminated. A small outside business may become a full-time venture. Questions may then arise about clients, solicitation, confidential information, restrictive covenants, and what happened before the departure.
Ontario limits many employee non-compete agreements, but other obligations may still matter. Confidentiality clauses, non-solicitation clauses, intellectual property provisions, fiduciary duties, and common law duties may still be relevant depending on the role and circumstances.
Departing employees may face risk if they contact clients too soon, use confidential information, take documents, or begin competing before employment ends. Employers may face risk if they assume that every competitive activity after departure is automatically prohibited.
Side Hustle Employment Issue in Toronto? Contact Haynes Law Firm
Side hustles, second jobs, and conflict of interest concerns can create complex employment law questions for employees and employers in Toronto and across Ontario. Whether the issue involves freelance work, confidential information, workplace policies, discipline, termination clauses, restrictive covenants, or employee rights, Haynes Law Firm can help assess the situation and identify practical next steps.
Paulette Haynes provides comprehensive advice to employees and employers on side hustles, conflicts of interest, secondary employment, workplace policies, and termination. To schedule a consultation, contact the firm online or call (416) 593-2731.
