What is an Exclusivity Clause?
On social media, some remote workers brag about working two or even three full-time jobs simultaneously without letting any of their other employers know about the hustle. Such gumption is not illegal, and it is not unethical. But some employers want to prevent it to ensure their employees give them their full attention. To do so, an employer should use an “exclusivity clause” in their employment contracts.
An exclusivity clause is a provision in an employment contract that restricts an employee from working for another employer at the same time. This means that during the term of employment (and not after), the employee is required to work “exclusively” for their current employer.
An exclusivity clause is a restrictive covenant. But it is not to be confused with a non-competition clause. A non-competition clause generally prohibits an employee from working for a competitor after employment ends, whereas an exclusivity clause prevents an employee from working for any employer during employment. Non-competition clauses are widely unenforceable worldwide as unreasonable restraints on trade, whereas exclusivity clauses are generally enforceable for now.
When to Include an Exclusivity Clause in an Employment Contract
Exclusivity clauses should not be included in every employment contract. For example, preventing a part-time fast food worker from taking another job is not very sensible. In contrast, it would be a good idea to prevent managers of engineering firms, for example, from working a second job at night.
At the same time, exclusivity clauses may be unenforceable North America in the future in situations where the employee is a low-paid part-time or casual worker because the courts or the legislatures would consider it unreasonable to prevent such an employee from supplementing their income, whereas a court would probably not find it unfeasible if a senior and sophisticated full-time employee was prevented from moonlighting on the side.
Pros and Cons of Exclusivity Clauses
On the plus side, exclusivity clauses help ensure employers’ employees focus their full attention on the employer’s business 100% of the time. On the downside, some highly skilled employees who work remotely may decline a job offer with an exclusivity clause because they have their side business or other employment they want to keep.
goHeather is software that automates employment contracts. We offer employers the option to add an exclusivity clause to their custom built employment contracts.