Regulation of employees’ off-duty activities

Employers of course have the power to restrict certain activities of their employees at the workplace. But what about restricting activities of employees after the work day has ended? An employer can surely mandate that an employee may not smoke at his or her desk. But what about prohibiting an employee from smoking anywhere? What if the employer is motivated by a desire to keep the employee healthy, or to reduce company health insurance costs?

According to California law, employers of any size cannot discriminate based on lawful off-duty conduct of employees. Employees cannot be fired, threatened with firing, or in any way disciplined against because of lawful off-duty activities (Labor Code sections 98(k) and 98.6). Common examples are employers that discriminate against employees who drink or smoke, date other employees, or “moonlight” with second jobs.

In order for an outside activity to be protected, it must be (1) lawful and (2) performed outside working hours. Many employer conflict-of-interest policies – i.e. policies that attempt to curb employee “moonlighting” – face problems with this rule. A conflict-of-interest policy is only valid if the employee’s second job would (1) actually and directly conflict with the employer’s essential business-related interests, and (2) cause a substantial disruption of business operations. Thus, it is imperative that employers have well-drafted conflict-of-interest and trade secret policies.

So under California law, even when motivated by proper reasons, employers must use extreme caution when attempting to regulate lawful, off-duty activities of their employees.