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My full-time job contract contains a clause that says my employment with the company is exclusive and I should have no other occupation or business outside of it.

I would like to know what exact kind of activities are allowed in this case.

I have a few examples which relate to my situation: 1. Can I sell my second-hand books or my own hobby-made craft and earn a little bit of cash in the process? 2. Can I make any earnings on investments, e.g. putting house/rooms on rent? 3. Can I take on a leadership role in a hobby club (e.g. a sports club, a volunteer group, etc.)? 4. Can I do any volunteering?

Some of these questions may sound obvious, especially because I know many people who volunteer or sell stuff on Amazon, who also have office jobs like me, but I want to be 100% sure.

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    It is not a prohibition on outside income it is a prohibition from moonlighting.For 3 and 4 I would make sure I got permission before I took them on, but that is generally not what your employer is trying to avoid. This question could probably be saved by changing it to ask what the basic intent of the clause is. Oct 13, 2013 at 16:40

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Your contract makes it clear: no other "occupation or business". Having a garage sale is not a business; even the IRS says so. Selling regularly on Amazon is likely to be a business; selling one used item is not.

The IRS says, at http://www.irs.gov/Charities-&-Non-Profits/Trade-or-Business--Defined

"Trade or Business" Defined

The term trade or business generally includes any activity carried on for the production of income from selling goods or performing services. It is not limited to integrated aggregates of assets, activities, and goodwill that comprise businesses for purposes of certain other provisions of the Internal Revenue Code. Activities of producing or distributing goods or performing services from which gross income is derived do not lose their identity as trades or businesses merely because they are carried on within a larger framework of other activities that may, or may not, be related to the organization's exempt purposes.

The intent of your contract is to keep your work efforts solely focused on your job, even if it's off-hours. That way, there is no question that anything you develop, during that period of employment, no matter what day or time it may have been done, belongs to the company.

You can volunteer, part-time, elsewhere, as long as you aren't given a regular job role. You can play sports and even be captain of the team, as long as you're not paid for it and you don't hold a business-related position in the organization.

It's not all that fuzzy. If you want to sell your hobbycrafts on the side, you're breaking your contract as that is a side business. It's not about how -small- the business is, it's that you've agreed that you will have only one job, one occupation, and work for only one business. Period. And even if others get away with breaking their contract, you still would be risking your job if you do the same, and violating the terms to which you agreed.

Here is an example from some slightly clearer language in a standard contract; it allows one area of exception that your contract may not spell out:

http://thompsonhall.com/sample-employment-agreement-template-for-minnesota-businesses/

The EMPLOYEE shall devote EMPLOYEE’s full business time and best efforts and abilities to the COMPANY in the performance of EMPLOYEE’s duties and responsibilities determined and assigned by the COMPANY’s _______ and shall engage in no other business, either directly or indirectly, in EMPLOYEE’s own behalf, or as an employee or independent contractor of another employer.

Notwithstanding the above, the EMPLOYEE shall be permitted, to the extent such activities do not interfere with the performance of her/his duties and responsibilities to (i) manage her/his personal, financial and legal affairs, (ii) serve on civic or charitable boards or committees, (iii) serve on boards of other companies of organization that do not compete with COMPANY or any related entity in any shape or form, and the EMPLOYEE shall be entitled to receive and retain all remuneration received by her/him from the items listed in clauses (i) through (iii) of this paragraph.

Another way to look at it is to consider whether that activity might be something you'd want treated as a business if it's profitable. You can't deduct your hobbycrafts costs if it's just a hobby, despite being required to report the income; if you want to deduct the costs from the income, then you have to define it as a business. The same applies for those selling on Amazon: to deduct the costs of doing business from the income produced, you must file the very form that acknowledges it's a business. When working for others (such as a non-profit) as a volunteer, it becomes an "occupation" if you have identified responsibilities, a consistent role, or any of many other aspects that show that you function as regular employee (even if unpaid and part-time.)

But when in doubt: Ask the other party. They might even give you permission to do something outside of the contract terms.

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  • Thanks, but I don't think I've made claims; the wording is clear. If one is unclear about what constitutes a "business or occupation", there are many sources, including the IRS. But the reality is that denying something as a "business" because it's small or just a side-line, is simple obfuscation; everyone knows it's still a business. But I'm adding some links, if that will help.
    – Debra
    Oct 13, 2013 at 17:07
  • This site has a Back it up policy Due to semi recent changes to the FAQ it is no longer there but the policy exists. But thank you for the edits. I think that the answer is now very good. Oct 13, 2013 at 17:15
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    FWIW, you can line out things in the contract that you are not comfortable with for most companies. I've done that when the contract says that even things I do on my own time/equipment belong to the company, and I've never had a company refuse. Oct 13, 2013 at 23:35
  • Amy, I think your comment is worth noting, even though it's hard to do this if you want the job so much that you're afraid of the risk. This is far preferable to breaking the contract to which you freely consented.
    – Debra
    Oct 14, 2013 at 0:30
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Ask HR. If they care about it they will let you know. If it is a borderline case they will have a form. Sometimes the key is just declaring the activity.

Sometimes the size of enterprise or frequency of the event is what makes a difference. Becoming the treasurer of the little league baseball team while you are an accountant might not be considered an issue, because the team was never going to hire a professional accountant. Running the fall yard sale for the community is a once a year event, so they know it will be limited to only part of the year.

They get concerned when the outside activities encroach into the workday or the work place. So don't use the work equipment to keep the books for the team, and don't use the copier to print flyers. Take related phone calls on your cell.

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