Williams HR Law LLP

SHINING A LIGHT ON MOONLIGHTING: LESSONS FOR EMPLOYERS

July 19, 2023

With an increase in the popularity of remote working schedules, employers may have concerns about employee moonlighting, which occurs when an employee keeps a full-time job while maintaining a personal business venture on the side.

In Dove v Destiny Media Technologies Inc., 2023 BCSC 1032, the British Columbia Supreme Court (the “Court”) held that an employee’s moonlighting activities justified the termination of her employment for cause.

Background

The employee was hired by the employer, a technology company, as a “List Manager” on a full-time basis in 2009. Her duties primarily involved the oversight and management of the employer’s music marketing and distribution list management platform.

During her employment, the employee began to engage in unpaid work at a café and store jointly owned by the employer’s CEO and another party, although there was some dispute over whether the employee was in fact the owner. The employee claimed that she continued with the unpaid work because she enjoyed it and had extra time available, and because the work matched skillsets she had acquired through previous employment in hospitality.

Over time, the employee began to spend more time working at the café and store, which led to the employer having concerns about unapproved absences and poor work performance. In particular, the employee missed an important deadline to deliver a business plan to the employer and often failed to respond to emails and approve time sheets for other employees reporting to her.
The employer did not provide any formal warnings about the employee’s performance, including through negative performance reviews or prior discipline, as part of a course of progressive discipline.

The employer suspended the employee and engaged an investigator to conduct an investigation into the employee’s conduct. The employee refused to participate in the investigation, despite the employer advising her that a refusal to participate would be seen as insubordination.

Following the investigation, which concluded without the employee’s participation, the employer dismissed the employee with cause. The employee filed a claim for wrongful dismissal.

The Decision

The Court made clear that an employee has an implied duty of fidelity to their employer, which includes the duty to provide full-time service to the employer unless otherwise agreed upon. Relying on this principle, the Court found that the employee’s for cause dismissal was warranted based on the following factors:

  • The employee performed significant work for the café and store, including during her regular working hours with the employer;
  • The employee was heavily involved with the business operations of the café and store; and
  • The employee’s work for the café and store negatively impacted her ability to fulfill her duties and responsibilities for the employer.

The Court also found that the investigation constituted a sufficient warning to the employee that her job was in jeopardy, as “an employer’s decision to investigate is reasonably related to the provision of a warning”. The Court noted that the investigation was conducted in good faith and would have provided the employee an opportunity to respond to the employer’s concerns, however her refusal to participate prevented this from occurring.

Takeaways for Employers

This decision affirms the employee’s duty to provide full-time service to their employer, unless otherwise agreed upon, and the consequences that may befall employees who engage in unauthorized moonlighting. Employers should ensure that this duty is reflected in its employment agreements and policies, and that such documents clearly outline expectations regarding moonlighting and any potential conflicts of interest to avoid misunderstandings and potential disputes in the future.

Additionally, this decision emphasizes the importance of conducting a thorough and impartial investigation when faced with concerns regarding employee misconduct. Employers should conduct such investigations to gather all relevant information before making any decisions regarding corrective action or discipline. As the Court made clear, investigations can serve as a warning to employees that their behaviour is under scrutiny and may lead to serious consequence. However, as a best practice, employers should endeavour to consistently and promptly address any performance issues through progressive discipline measures.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.

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