In today’s “gig” economy, it isn’t unusual to have both a day job and a side hustle like driving for Uber. I’ve written previously about the potential complications involved in having a side hustle and a security clearance, but the income opportunities contemplated in that article were the garden variety. There are, of course, more unusual options available, and you can bet that some clearance holders have managed to find them.
Indeed, we’ve previously encountered clearance holders who moonlight as exotic dancers, an adult bookstore employee, and other, shall we say, non-PG-rated pursuits. Those “encounters” were strictly in the context of providing legal advice, lest there be any confusion about that. Here is a broad recap of the questions we asked and the guidance provided:
IS IT LEGAL?
This may seem like an obvious question, but laws vary significantly among jurisdictions; what is legal in one state or locality, might be illegal in another. More broadly, complying with the law doesn’t just mean criminal statutes. Many states and localities license certain adult-oriented professions or impose other regulatory requirements that may constitute civil or criminal penalties when violated. If you’re contemplating engaging in any type of adult-oriented pursuit to earn income, first consider a consultation with a local attorney versed in your state’s laws.
Additionally, keep in mind that federal law always trumps state/local laws (read: marijuana involvement), and that sometimes even federal policy can trump state/local law in the security clearance context. For example, prostitution is legal in some parts of Nevada, but federal agencies typically disregard that and instead point to U.S. Attorney General’s guidance on federal employee/contractor involvement in prostitution activity.
ARE YOU PAYING TAXES ON THE MONEY EARNED?
It may be tempting to not report earnings received as cash, but remember that the feds nailed Al Capone for tax evasion, not murder, gun running, or extortion. We’ve seen countless instances over the years where clients could have avoided serious trouble by accurately reporting their earned income and paying the applicable taxes. Saving a few bucks truly isn’t worth the headaches and potential legal exposure.
DOES IT CONFLICT WITH YOUR CLEARED JOB DUTIES?
While some conflicts are obvious – for example, simultaneously working for a federal agency and a contractor receiving contracts from that agency – not all of them are so blatant. For example, working in certain adult-oriented pursuits may increase the clearance-holder’s exposure to illegal activities like drug use and prostitution, as well as a potentially dicey crowd. When in doubt, the safest way to inoculate yourself against potentially career-ending conflict-of-interest charges is to request an ethics opinion from your employer’s designated ethics official, general counsel, or human resources department. Sharing your desired after-hours pursuits with your employer may not be the most comfortable thing to do, but it sure beats an avoidable ethics rap.
HAVE YOU PROPERLY REPORTED THE OUTSIDE ACTIVITY?
Even if you haven’t sought out an ethics opinion, you’ll ultimately need to inform the government on your SF-86 form about any outside activities undertaken for financial compensation. Some agencies may also have additional reporting requirements. Readers may recall the case of two DEA agents who were criminally prosecuted several years ago for failing to report on their SF-86’s ownership interests in a local “exotic dancing” establishment that apparently employed illegal aliens and engaged in a lot more than just dancing.
DOES YOUR OUTSIDE ACTIVITY RISK EMBARRASSING YOUR CLEARED EMPLOYER – OR YOU?
Finally, even if your outside activity is legal, properly reported, and you’re paying taxes on the income, be sure that it doesn’t create a risk of blackmail. Also, don’t rule out the possibility of your cleared employer finding a creative reason to revoke your clearance or deem you “unsuitable” for employment if your activities risk embarrassing them or otherwise bringing them disrepute. Keep in mind the importance of discretion – and your primary paycheck.
This article is intended as general information only and should not be construed as legal advice. Consult an attorney regarding your specific situation.