Taking a leave of absence and working another job is not automatically against the law, but it can get you fired, cost you your benefits, or expose you to fraud charges depending on the kind of leave you’re on, what your employer’s policies say, and why you’re out in the first place. The safe path runs through disclosure and written permission. The dangerous path is assuming nobody will notice.
Start With Your Handbook and Contract
Before you accept any outside work, pull up your employee handbook and your employment contract. Look for sections titled “Outside Employment,” “Moonlighting,” or “Conflict of Interest.” Many employers require you to disclose a secondary job and get written approval before starting one. Some prohibit outside work that competes with the company or interferes with your primary role.
Your contract may also contain a non-compete clause barring you from working for a direct competitor, including during a leave. Non-competes remain enforceable in most states, though several states have been restricting them.1Federal Trade Commission. Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule If you signed one, assume it applies while you’re on leave.
Every employment relationship also carries an implied duty of loyalty under common law. You’re expected to act in your employer’s interest and not undermine the business. Working for a competitor or diverting clients during a leave can breach that duty even if your handbook says nothing about moonlighting at all.
One rule cuts across everything else: whatever policy your employer enforces has to apply to everyone, not just people on leave. A company cannot invent a special restriction that targets employees who happen to be out on FMLA or another protected leave. An existing, uniformly applied policy is fine. A policy that singles out leave-takers is not.
FMLA Leave
Federal law does not prohibit outside employment during Family and Medical Leave Act leave. The Department of Labor has said so directly: “neither the statute nor regulations prohibit outside employment by an employee on FMLA leave except as a result of the employer’s established policies.”2U.S. Department of Labor. FMLA-106 If your employer has no moonlighting policy, you’re free to work elsewhere while on FMLA.
If your employer does have a uniformly applied outside-employment policy, that policy stays in effect during FMLA leave. An employer without such a policy cannot strip your FMLA protections just because you picked up other work, unless the leave itself was obtained fraudulently.3eCFR. 29 CFR 825.216 – Limitations on an Employee’s Right to Reinstatement
Fraud is where FMLA cases go bad. If you take leave for a back injury that prevents heavy lifting and then spend the leave lifting heavy things for another employer, your employer has strong grounds to call the leave fraudulent. An employee who fraudulently obtains FMLA leave loses all job-restoration and health-benefit protections under the law.3eCFR. 29 CFR 825.216 – Limitations on an Employee’s Right to Reinstatement The same employee taking a sedentary desk job that fits within their medical restrictions is a different situation, but expect scrutiny. An employer who doubts your medical certification can require a second opinion at company expense.4U.S. Department of Labor. Family and Medical Leave Act Advisor
Disability Leave
Disability leave is the highest-risk category for outside work. The whole basis for your benefits is that you can’t perform your job, so working elsewhere looks like evidence that you aren’t actually disabled. Insurers and government agencies treat it that way.
Private Disability Insurance
Short-term and long-term disability policies vary, but most define disability either as an inability to perform your “own occupation” or an inability to perform “any occupation.” Under an own-occupation policy, you might be able to do a completely different type of work. Under an any-occupation policy, any employment can end your benefits. Some policies allow limited rehabilitative work but reduce your benefit dollar-for-dollar based on what you earn, and many cut off benefits entirely once your earnings pass a set percentage of your pre-disability income. Read the policy before you take any job. The safest step is to contact the insurer and get written confirmation of what’s allowed.
Social Security Disability Insurance
If you receive SSDI, the Social Security Administration uses earnings thresholds to decide whether you’re still disabled. In 2026, earning more than $1,690 per month, or $2,830 if you’re blind, counts as “substantial gainful activity” and can end your benefits.5Social Security Administration. What’s New in 2026?
SSDI also includes a trial work period that lets you test your ability to work without immediately losing benefits. In 2026, any month you earn more than $1,210 counts as a trial-work month.6Social Security Administration. Trial Work Period You get nine trial-work months within a rolling 60-month window. The catch: you have to report your earnings. If you don’t, the SSA will eventually find out, and you’ll be on the hook for repaying every dollar of benefits you weren’t entitled to receive.7Social Security Administration. Preventing and Managing Overpayments
Workers’ Compensation Leave
Workers’ comp is state law, so specifics vary, but the framework is consistent. If you’re receiving wage-replacement benefits because a workplace injury keeps you from doing your job, picking up undisclosed work on the side is one of the fastest ways to lose those benefits and face fraud charges.
Most states calculate temporary disability benefits from your average weekly wage. If you can do some work within your doctor’s restrictions and earn less than your pre-injury wage, many states pay temporary partial disability benefits to cover part of the gap. The critical word is “disclosed.” You have to report any earnings to the workers’ comp insurer. Concealing outside income while collecting benefits is treated as fraud in every state, and penalties usually include full repayment, civil fines, and in serious cases, felony criminal charges.
There’s also a practical risk worth naming. If you’re caught doing work that contradicts your medical restrictions, the insurer will argue you were never as injured as you claimed, and that can unravel your whole claim retroactively rather than just cutting off future payments.
Military Leave Under USERRA
The Uniformed Services Employment and Reemployment Rights Act protects service members from losing their civilian jobs due to military service. Under USERRA, an employee on military leave must be treated as if they’re on a furlough or leave of absence, and they’re entitled to the same rights and benefits given to employees on comparable non-military leaves.8Office of the Law Revision Counsel. 38 U.S. Code 4316
Federal regulations explicitly protect moonlighting during military service. The regulatory example is direct: if you’re sent to an out-of-state training location and spend your off-duty hours working as a security guard, you don’t lose your reemployment rights because of it.9eCFR. Subpart C – Eligibility for Reemployment You can even take a job with a different employer before applying for reemployment, provided you file your reemployment application on time.
The exception mirrors the general rule. If your civilian employer has a legitimate policy against working for a competitor, that policy still applies. Taking a job that would have gotten you disciplined even without the military leave can give your employer cause after you return.9eCFR. Subpart C – Eligibility for Reemployment If your employer varies how it handles benefits across different types of non-military leave, you’re entitled to whichever treatment is most favorable.10U.S. Department of Labor. USERRA – A Guide to the Uniformed Services Employment and Reemployment Rights Act
Personal Leave, Sabbaticals, and PTO
When your leave isn’t tied to a specific federal statute, the rules come almost entirely from your employer. A personal leave of absence, a negotiated sabbatical, or a block of paid time off all fall here. No federal law restricts what you do during these periods, so your handbook and any written leave agreement are your only real constraints.
Sabbatical agreements sometimes include their own terms about permitted activities. An academic sabbatical may require you to pursue research rather than paid consulting. A corporate sabbatical may prohibit any professional work at all. Read whatever you signed. If the agreement and handbook are both silent on outside employment, you’re generally fine, subject to the duty of loyalty above.
State Laws on Off-Duty Conduct
A handful of states have laws protecting employees from being punished for lawful activities they engage in off duty and off the employer’s premises. Colorado, California, North Dakota, and New York all have versions of these statutes, and they can reach moonlighting. The scope varies. Some states protect any lawful activity; others focus more narrowly on recreational activities or political expression.
These protections aren’t absolute. Every state with this kind of law carves out exceptions for conduct that creates a genuine conflict of interest with the employer’s business. Working for a direct competitor typically falls outside the protection even where off-duty laws are strongest. If your state has one, it’s an extra layer, but it doesn’t override the terms of your leave or the rules of a benefits program.
Handling Withholding on Two Paychecks
If you do take on a second job during your leave, the tax side needs attention. Each employer withholds independently, and neither one knows about the other’s wages. The usual result is underwithholding: each employer calculates your bracket as though its paycheck is your only income, and you owe more at filing time than either one held back.
The fix is IRS Form W-4. Step 2 of the form is designed for people who hold more than one job at a time and gives you three ways to correct the math.11Internal Revenue Service. Form W-4 Employee’s Withholding Certificate Whichever method you pick, complete Steps 3 through 4(b) only on the W-4 for the higher-paying job, and leave those sections blank on the other one. Skipping this won’t create a legal problem during the year, but it does create a bill in April.
What Happens If You Do It Without Authorization
The fallout from unauthorized outside work during a leave ranges from inconvenient to career-ending, depending on the leave type and what you did.
- Termination for cause is the most common outcome. Being fired for cause rather than laid off makes it much harder to collect unemployment. Most states disqualify workers terminated for misconduct, and violating a known company policy qualifies.
- Loss of benefits follows quickly if you were collecting disability, workers’ comp, or SSDI while working undisclosed. Expect the benefits to end and expect to repay what you received. With SSDI, the agency calculates the overpayment and pursues collection.7Social Security Administration. Preventing and Managing Overpayments
- Fraud charges are possible when you conceal income while collecting disability or workers’ comp benefits. Penalties vary by state but commonly include fines from $1,000 to six figures and potential felony exposure.
- Breach of contract claims can follow if your outside work violated a non-compete or another contractual restriction. Your employer can sue for damages, including lost revenue or the cost of replacing you.
- Loss of FMLA protection applies if your employer can show the leave was fraudulently obtained. You lose your right to job reinstatement and continued health benefits under the law.3eCFR. 29 CFR 825.216 – Limitations on an Employee’s Right to Reinstatement
The common thread is disclosure. People who get permission in writing, report their earnings to the right benefits program, and stay within their medical restrictions rarely have serious problems. People who hide a second job and hope no one notices are the ones who lose everything.