A proposed class settlement filed in Washington federal court offers employers an important reminder that handbook provisions can sometimes create as much litigation risk as pay practices.

In Gillyard v. Federal Express Corp., No. 24-01666 (W.D. Wash.), plaintiffs challenged not only alleged meal-break, rest-break, timekeeping, and wage-payment practices, but also FedEx’s alleged anti-moonlighting policy. A related suit making the same claims, Alfred and Flowers v. Federal Express Corp., No. 25-01769 (W.D. Wash.), is pending before the same court. According to recently filed settlement papers in Gillyard, plaintiffs alleged that FedEx maintained legacy handbook language providing that employees “may not work for our competitors, suppliers, or contractors, nor work for more than one FedEx company at the same time.” Plaintiffs, a subclass of approximately 23,000 groundworkers, contended that the moonlighting policy violated Washington’s restrictions on outside-employment restraints (Revised Code of Washington, or RCW, 49.62.070) and noncompetition covenants (RCW 49.62.020) applicable to lower-wage workers. The parties have proposed a settlement valued at more than $30.8 million.

For many employers, the most noteworthy aspect of the case may not be the traditional wage-and-hour allegations. Those claims are familiar territory and often receive substantial compliance attention. The moonlighting allegations, however, serve as a reminder that employee handbooks frequently contain provisions that were drafted years ago, before states enacted modern noncompete and outside-employment restrictions. According to the settlement motion, more than half of the proposed settlement fund is allocated to claims involving the challenged moonlighting policies.

Practical Considerations For Employers

Employers with operations in Washington and other states with expanding employee-mobility protections may wish to revisit policies governing secondary employment, conflicts of interest, and competitive activities. Among the questions employers should consider are:

• Does the policy broadly prohibit outside employment, or is it narrowly tailored to address legitimate business concerns?
• Has the handbook been reviewed since recent state-law changes affecting noncompete agreements or employee moonlighting rights?
• Are restrictions tied to actual conflicts of interest, misuse of confidential information, or competitive concerns, rather than blanket prohibitions?
• Are managers trained on how such policies should be applied in practice?

The settlement also underscores a broader compliance lesson: employment policies that once appeared routine can become attractive targets for class litigation when statutory frameworks evolve. Employers that periodically audit handbook provisions alongside wage-and-hour practices may be better positioned to identify potential risks before they become the subject of litigation.

As courts and legislatures continue to scrutinize restrictions on employee mobility and outside employment, employers should ensure that legacy policies remain aligned with current law and modern workforce realities.