Hi, Scou624, and welcome to the forum.
I’m not an attorney, so take what I have to say with a grain of salt. It’s just my personal experiences.
In the United States, a non-compete contract with an employer is a state-by-state issue. Some states allow them, while others don’t. Even in those that allow them, they’re sometimes difficult to enforce in situations where the enforcement would seriously impede a former employee from earning a living.
In an after-hours moonlighting situation, again, there’s state-by-state ambiguity in whether or not an employer has any right to tell employees what they can and can’t do when they’re not at work. Even in states that allow a company to make signing a contract limiting moonlighting a condition of employment, it’s difficult to enforce since a determination of what and what isn’t allowed on a case-by-case basis would be difficult.
I don’t know of any statistics (haven’t checked), but I suspect more companies have policies regarding conflicts of interest rather than legally binding contracts that people are forced to sign in exchange for employment. A policy isn’t necessarily legally enforceable, but it gives the employer some ability to point to a policy being violated when filling out performance reviews or making work assignments. No matter the situation, it’s just not a good idea for an employee to violate company policies since an employer has the upper hand in determining just how that employee is treated.
I’ve worked for two places with conflict of interest policies. I ended up selling a side business in one of those situations when that business started looking like it could be a conflict of interest. My employer at the time, couldn’t tell me what to do, but the suggestion to sell it was unmistakable.
In general, it’s just not a good idea to have a conflict of interest with one’s employer. If you’re moonlighting for a competitor or undercutting your employer’s business in some way, your employer probably isn’t going to be too happy about it. It’s typically best not to have your employer upset with you.
I think there’s also an ethical responsibility for the employee to be somewhat loyal to an employer. It cuts both ways, though — if an employee is freelancing after hours in a way that poses no conflict of interest, I don’t think the employer has any ethical business limiting that employee’s after-work activities.