I don't think it really applies to the side-project rights case, but there's reasons to control overtime and require permission for it: Trying to ensure lower management/peer/customer pressure don't cause people to overwork themselves, if people work more on additional projects they're not asked to do they might be less effective at the main work, in some places (probably not the US) it's a legal risk. My employer in Germany has such rules, although I'm not sure how strictly they're enforced.