Was his work performance suffering as a result? If not, what is the actual issue here?
His output was horrendous. I would have fired him anyway based just on that, but discovering he had multiple jobs expedited the firing (and clearly explained why his output was so poor).
It's impossible to trust someone with AWS production keys and access to customer data when they lie to you about something as simple as who they work for. People secretly working multiple jobs are looking for an easy way to make a lot of money. If it's within their ability to secretly work 2 jobs, is it also in their ability to download proprietary company info and sell it to a competitor?
Most employment agreements pay for 40 hours per week.
What employees do with the rest of their time is none of the employer's business.
They could be spending all that time driving an Uber, developing an open-source project, do contract/consultant work for a friend's startup, or just play video games.
As long as the work is getting done, the employer has no recourse unless it gets outright stipulated in the actual contract.
Your conflating of "working two software engineering jobs" and "stealing company data and selling it" doesn't make logical sense.
Working multiple jobs is not an easy way to make a lot of money. It takes time and effort.
Measuring employee productivity over "hours in chair" is the way to go.
The bottom line is working for two companies full time concurrently is abnormal and it’s not a stretch to imagine you’re not getting 100% of your employee while they juggle two jobs.
I’d also fire the report if I discovered them working two jobs.
Whether that's developing open-source projects, running a YouTube channel or working 40 hours a week for another team.
If they are competing with the company or not getting a reasonable amount of work consistently done, then that would be an issue.