Legal Question in Business Law in California

Re: Can I do both?

You should refer to your employer's handbook or manual. Typically, most employers prohibit such side businesses especially if it's a competitive business.

Re: Can I do both?

It depends.

Did you sign an employment contract with a covenant not to compete? And, do you plan to use or need to use any tools or equipment from work? And then of course, there's the question of what business it is, which has some bearing on the question, even if the answer to both of those questions is no.

Re: Can I do both?

Questions that ask whether something is "illegal" are sometimes hard to answer because the term has a different meaning to a lawyer. To us, being "illegal," such as running a red light or selling booze to minors, is different from breaching an agreement. Even though the latter is grounds for a lawsuit, there is no law saying "Thou shalt not breach a contract." Indeed, in most ordinary business situations, breaching a contract is not considered immoral or unethical. The injured party's right to seek and obtain damages is considered an adequate remedy for the grievance.

OK, enough for the theory. The practical risks here are (1) as the previous answer says, your proposed moonlighting may be a breach of an express or implied term of your current employment agreement, especially if you are salaried rather than hourly, and therefore beholden to the employer 24/7 (more or less). In that case, you could be sued for breach of your employment agreement, but if this were the only claim the employer could make against you, it is probably less likely to bother - hard to prove and damages not huge.

Also, (2) it is very illegal to misappropriate trade secrets. See the California Uniform Trade Secrets Act, Civil Code sections 3426 to 3426.11. Your current employer may have trade secrets that are momentarily entrusted to you, such as proprietary computer code, its secret hot sauce recipe, or customer lists. Caution here is advisable. The money penalties can go beyond breach of contract damages, and I suppose in theory trade-secret misappropriation could be charged as a crime, but I think that happens only rarely and only in major industrial piracy matters.

I hope this is not too discoraging. I did this myself in my younger days, and don't regret it, even though I was eventually obliged to give up my day job and become a full-time entrepreneur. Thirty years later, I can't say which path would have been more lucrative, but life was sure a heck of a lot more exciting.