Selling Your Practice, FMLA, and Moonlighting Two Jobs

Welcome back to another edition of HR Basecamp Roundup! This week, we tackle some interesting and common issues that come up in workplaces more often than you think. If you haven’t joined our HR Basecamp Facebook group yet, be sure to join so you can participate in these discussions in real time! 

Podcasts and Resources in this Roundup:

• Department of Labor FMLA Employer Guide

• Leave of Absence Request Form 

• When should your employees be allowed to moonlight?

1. I’m selling my practice. What do I need to do?

Question: I’m selling my practice. I want to be prepared when employees ask questions about the transition and what this will mean for their jobs, health benefits, current time off, etc. I’m not sure how to answer them. I figured this would all be up to the new owner. Any advice?

The legal side: You’re absolutely right that many decisions about what comes next, like whether employees are rehired, how benefits are handled, or whether PTO policies remain, are up to the new owner. However, your current responsibility is to close out your end-of-employment relationship properly and comply with the applicable employment laws. 

Even if staff will be rehired, you must formally separate each employee from your business. That includes:

• Providing a final paycheck by the state-mandated deadline.
• Paying out accrued but unused PTO, if required by your state law or stated in your handbook policy 
• Issuing any documentation of termination needed or separation notices, including notices related to COBRA or state continuation coverage for health insurance, if applicable.

As far as health benefits go, your current group health plan typically cannot be automatically transferred to a new owner. You should contact your plan administrator to clarify the process for ending the group plan, and include in the sale agreement how and when benefits will end, and whether the new owner plans to offer coverage.

Note that if employees aren’t rehired, they will likely qualify for unemployment benefits, which would be charged against your business’s unemployment account.

The human side: From your staff’s perspective, being told the business is being sold—and that their job may or may not continue—is unnerving. While this is mostly a business transaction and hopefully a new chapter for you, it’s a life disruption for them.  Here’s how to support them compassionately:

• If you will tell them about the change before the sale, give written notice as early as possible. A heads-up of at least 15–30 days is ideal. It helps employees plan, look for new roles, and not feel blindsided. Let them know
• Be honest, but hopeful: Let your team know:
  • That their employment with you will end as part of the sale.
  • The new owner has the option to rehire them, and you hope they will.
  • That you’ve shared their strengths with the buyer and encouraged interviews with existing team members, or if it has already been determined, that the new owner intends to keep everyone in place.
  • Explain that discussions regarding retention, benefits, pay, and the like will take place with the new owner

If possible, you should work with the new owner to have them interview staff ahead of the transition and clarify any plans to retain or “grandfather” employees, which includes honoring prior tenure, benefits eligibility, or wage rates, but only if mutually agreed upon and in the sale agreement.

You don’t need to have all the answers yet, but you do need to communicate what you know and what still needs to be determined. The more you can set expectations and show that you’re working to help your team land on their feet (whether with the new owner or elsewhere), the smoother the transition will be.

Bonus Tip: Whether your purchaser keeps the team or not, your employee handbook becomes an asset because you can transfer ownership of it, and we will customize it and train the new owner.

2. How do employees apply for FMLA?

Question: My employee asked for help applying for FMLA leave. This is the first FMLA request I’ve received so I’m unfamiliar with the process and there is so much information online. Are there specific documents I need to provide? How much time off am I required to provide? 

The legal side: First, it’s important to clarify whether the federal Family and Medical Leave Act (FMLA) actually applies to your business. FMLA only covers employers with 50 or more employees within a 75-mile radius (if you have multiple locations), and even then, the employee must have been with you for at least 12 months and worked 1,250 hours in the last year to be eligible. If all of that checks out, you’re legally required to provide up to 12 weeks of unpaid, job-protected leave for qualifying reasons like a serious health condition, childbirth, or caring for a family member.

FMLA doesn’t require you or your employee to file anything with the federal government. However, you need to give them some official documentation, including specific forms and a notice once you’ve reviewed their paperwork. The Department of Labor offers these forms and a helpful employer guide, which breaks down the process step by step. CEDR members can always contact the Solution Center for help with this process and for further guidance.

If you have fewer than 50 employees, FMLA doesn’t apply—but that doesn’t necessarily mean you’re off the hook. Many states have enacted their own family and medical leave laws, some of which apply to small employers and offer similar or even broader protections. These laws vary by state and may include things like paid leave or required communication with a state agency, which do require specific paperwork. It’s crucial to check what’s in place where your business is located. Again, CEDR members can simply call in, and we will provide you with everything you need and the support.

As added knowledge, even if no specific leave law applies, the Americans with Disabilities Act (ADA) might still come into play. If the employee’s leave is related to a medical issue that qualifies as a disability, you may be required to provide reasonable accommodation, which could include unpaid time off.

The human side: When facing a leave request, especially for the first time, it can feel overwhelming. But the best place to start is with a Leave of Absence Request form. This helps you gather the details you need: what kind of leave the employee is asking for, why, and how long they expect to be gone. Once you have that information, you’ll be better equipped to determine which laws apply and what kind of leave you can or are required to offer.

If it turns out that no legal requirements apply, your internal leave policy becomes your guide. Your professionally prepared employee handbook should outline how to handle personal or medical leaves when they’re not covered by law. This is where you have discretion—you can choose whether to grant the leave, how much time to give, and whether the time off will be paid or unpaid. That said, even if you’re not legally required to offer time off, denying a request related to a medical issue needs to get run by an HR team so they can review your polices, what you have done in the past, and the specifics of the request and why you want to deny

If you don’t have a well-written leave policy, the danger is that you do not apply benefits consistently and it becomes a lot harder to set guidelines and limits to an employee’s leave because you have no “rules” to reference. It also makes it harder to stay consistent with how you manage leaves for different employees over the years, which is extremely important. 

3. Is it okay for my employee to moonlight at another office?

Question: I just found out that one of my employees is working one day a week at a different dental office. I don’t love this, but the office is far enough away that I wouldn’t consider them a “direct” competitor. Should I be concerned about letting them work at both places? Can I make them sign a contract that says they won’t solicit my employees for the new office? 

The legal side: From a legal standpoint, moonlighting is allowed unless you’ve already outlined specific restrictions in an enforceable contract. In most cases, unless your employee has signed a non-compete agreement, you can’t prohibit them from working a second job, even at another dental office.

What about a non-solicitation agreement? While this type of clause can keep the employee from recruiting others to join them, it falls into the same gray zone as non-competes—they’re more enforceable in some states than others. They are subject to specific rules. If your business is in a state with strict limitations on employment restrictions (like California), it might not be legally enforceable. You’ll want to check your state’s laws—or better, speak to an HR expert or consult an employment attorney—before drafting one.

Also keep in mind that these types of restrictive agreements are typically only enforceable, if at all, with high-level employees like providers or managers. If the moonlighting employee is a dental assistant or billing specialist, for example, it’s much less likely that these agreements are even an option for you. 

Keep reading! We have a better solution.

Just because you can’t ban side gigs outright doesn’t mean you have to be hands-off. What you should do is address how outside employment might affect performance at your business.

The most effective approach is to have a moonlighting policy in your employee handbook. This doesn’t stop someone from working elsewhere. Still, it shows that their job with you takes priority; they must maintain performance, punctuality, and reliability, and the second job must not create a conflict of interest or cause distractions during business hours. The most essential component is that they must notify you before they take the job. This implies that with or without notice, you reserve the right to continue working with them based on your parameters.  Direct competitor, or they’ve found a job where they will be working 8 hours overnight and then coming into your practice? You can choose not to be a part of that and separate.

If the second job ever interferes with their availability, quality of work, or confidentiality obligations, you’ll be on much firmer ground to intervene if you’ve established clear expectations in writing.

The human side: Typically, but not always, when someone seeks a second job, it means they need more money to make ends meet or are trying to save up for something like a down payment on a house or a new car. We found that valuable employees often look to cure a temporary issue with extra work. If that’s the case, instead of them taking a second job, you may consider temporarily offering them more hours or working on one of those special projects you’ve been putting off, which could help you get ahead.  You might even allow them to work overtime for a short time so that both of you benefit from their temporary efforts. We highly advise creating a written understanding about the arrangement if you do this. (NOT A CONTRACT). Just send an email or upload your summary to your backstageHR system and have them acknowledge it. 

It sounds like the other office isn’t a direct competitor in your current situation, and you haven’t noticed performance issues. In that case, making this a formal problem may not be worth it. Many employees take second jobs to meet financial needs, and putting up a wall here could drive them away.

Extra Credit Reading: When should your employees be allowed to moonlight?