NEW CALIFORNIA LEGISLATION ADDRESSES MOONLIGHTING AND OTHER LAWFUL CONDUCT OCCURRING DURING NONWORKING HOURS AWAY FROM THE EMPLOYER’S PREMISES  

Effective January 1, 2000, California employees may file claims with the Labor Commissioner “for loss of wages as the result of demotion, suspension, or discharge from employment for lawful conduct occurring during nonworking hours away from the employer’s premises.”  Labor Code §96(k).

This legislation was proposed by the California Professional Fire Fighters Association after several of their members claimed that they had been subjected to retaliation for engaging in political activity.  The new law states in part that “The Legislature ... finds and declares that allowing any employer to deprive an employee of any constitutionally guaranteed civil liberties, regardless of the rationale offered, is not in the public interest.”

A problem with the new statute, if read literally, is that it gives absolutely no consideration for employers’ legitimate business interests.  On its face, the statute prevents employers from taking action against an employee whose lawful activity outside of work is or may be harmful to the employer’s business activity or reputation, such as a private grade school teacher who moonlights as a stripper.  The statute also fails to account for situations in which moonlighting may involve conflicts of interest, such as a sales manager moonlighting as a salesperson for the employer’s chief business competitor.  Similarly, shouldn’t a law firm be entitled to terminate a word processor who insists on continuing to work as a word processor on weekends for the law firm’s adversary in sensitive litigation involving trade secrets, in circumstances where the employee cannot be insulated from the trade secret and attorney-client privileged information?

Employers may continue to take disciplinary action under Section 96(k) when the non-work activity causes the employee’s work performance to suffer.  In that situation, the disciplinary action would be taken not because of the employee’s lawful conduct outside of work but because of its adverse impact on the employee’s job performance.  For example, if moonlighting causes the employee to be fatigued and to fail to meet reasonable work requirements, any disciplinary action would be taken not because of the moonlighting but because of its impact on the employee’s work performance.  Such action therefore would not run afoul of Labor Code §96(k).  In such circumstances employers should timely prepare adequate documentation that the disciplinary action was based on deficient work performance rather than lawful conduct occurring outside of work.

In contrast to Section 96(k) is New York Labor Law §201-d, which prohibits employment discrimination because of political, recreational or union-related activity, or legal use of “consumable products,” provided that such activity is legal and is conducted during nonworking hours off the employer’s premises.  The New York statute appropriately makes an exception for such activity which “creates a material conflict of interest related to the employer’s trade secrets, proprietary information or other proprietary or business interest.” Although Section 96(k) requires that claims be submitted to the California Labor Commissioner for resolution, the California Supreme Court held in Green v. Ralee Engineering Co. that employees may file lawsuits for wrongful termination in violation of “public policy,” founded on “an important public policy based on a statutory or constitutional provision,” or on regulations enacted under such statutory authority.  Plaintiffs’ employment attorneys can be expected to rely on Section 96(k) as the basis for asserting wrongful termination public policy claims.

California courts hopefully will construe Section 96(k) to reflect employer’s legitimate business concerns, including the exceptions in the New York statute.  Ideally the statute should be amended to incorporate those exceptions.  California employers need to exercise the utmost care in taking disciplinary action which could be construed as discrimination because of lawful conduct occurring during nonworking hours away from the employer’s premises.  Such care includes thoroughly documenting the reasons for such disciplinary action, so as to enable the employer to successfully defend a claim that the action violated Labor Code §96(k).