What states have laws protecting employee inventions?

States including California, Washington, Illinois, and New Jersey have specific statutes (e.g., California Labor Code Section 2870) that prevent employers from claiming ownership of inventions created entirely on personal time without using company equipment or trade secrets.

How can I tell if my side project is safe?

Check your contract for 'Invention Assignment' clauses. If the language is broad—covering anything 'related to the company's business'—your project may be at risk even if built on personal time.

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Do employment NDAs automatically cover projects built on personal time without company resources?

Q: Do employment NDAs automatically cover projects built on personal time without company resources?

No. A standard Non-Disclosure Agreement (NDA) protects confidential information, not ownership of intellectual property. However, your employment contract likely contains an 'Invention Assignment' clause that may claim ownership of personal projects regardless of when or where they were created.

Do employment NDAs automatically cover projects built on personal time?

No. A standard Non-Disclosure Agreement (NDA) is designed to protect trade secrets and confidential information, not to grant the employer ownership of your personal intellectual property. However, most employment contracts include a separate 'Invention Assignment' clause that can legally claim ownership of your side projects, even if developed on your own time and equipment.

The Critical Distinction: NDA vs. Invention Assignment

Employees often conflate NDAs with Invention Assignment Agreements (IAAs). Understanding the difference is the first step in protecting your personal work.

NDA (Non-Disclosure Agreement): Restricts you from sharing the company's proprietary data. It does not inherently grant the company rights to your creative output.
IAA (Invention Assignment Agreement): Explicitly transfers ownership of any intellectual property you create during your employment to the employer.

Key takeaway: Never assume that because you used your own laptop and worked on a Sunday that your project is yours. If your contract contains a broad 'Invention Assignment' clause, the company may have a legal claim to your work.

Action Item: Locate your original employment offer letter or signed handbook. Search specifically for the terms 'Inventions,' 'Intellectual Property,' or 'Work Product.'

When Are Side Projects Protected?

In many jurisdictions, there are statutory protections for employees. These laws act as a 'floor' that employers cannot contract around. The most common criteria for a protected side project include:

Zero Company Resources: You did not use company hardware, software, servers, or proprietary data.
No Relation to Business: The project does not relate to the company’s current or demonstrably anticipated business.
No Company Time: The work was performed entirely outside of your compensated working hours.

Jurisdictional Variations

State laws vary significantly regarding how much protection they offer. For example, California Labor Code Section 2870 is highly protective of employees, rendering any contract provision that attempts to claim ownership of personal inventions (created without company resources) unenforceable. Conversely, in states without such specific protections, the language of your contract is the final word.

Jurisdiction	Protection Level	Key Statute
California	High	Labor Code § 2870
Washington	Moderate	RCW 49.44.140
Illinois	Moderate	765 ILCS 1060/2
New York	Low	Common Law/Contract

Action Item: Research your state's specific 'Invention Assignment' statutes. If you live in a state with low protection, your contract language is your only defense.

Red Flags in Your Employment Contract

When reviewing your contract, look for these specific phrases that signal potential danger for your side projects:

'Related to the Company's Business': This is dangerously broad. If your company is a tech firm, almost any software project could be argued as 'related.'
'Developed During the Term of Employment': This implies that any idea conceived while you are employed belongs to the company, regardless of when you worked on it.
'Arising Out of Your Employment': This is a catch-all phrase that can be interpreted to include skills or knowledge you gained while working for the company.

Key takeaway: If you see the phrase 'related to the company's business,' consult with an attorney before launching a side project. This is the most common clause used to initiate litigation against former employees.

Action Item: Create a 'Prior Inventions' list. Most contracts allow you to disclose existing projects in an exhibit. If you have a project you are working on, ensure it is documented as a pre-existing asset before you sign a new contract.

How to Protect Your Work

Document Everything: Keep a log of hours worked on your personal project and a list of all hardware/software used.
Use Separate Infrastructure: Never use a company-issued laptop, email address, or cloud storage account for your personal project.
Disclose Early: If you are starting a significant project, consider disclosing it to your manager or HR to get a written waiver or acknowledgement that it is outside the scope of your employment.
Review Your Contract: Use automated tools to identify the specific clauses that govern your IP rights.

Action Item: If you are currently working on a side project, audit your current contract today to see if you are in breach of any 'Invention Assignment' clauses.

Analyze Your Risk with TermScore

Navigating the legal nuances of employment contracts is complex, but you don't have to do it alone. TermScore uses advanced AI to instantly scan your employment agreements, highlighting broad invention assignment clauses and potential risks to your personal projects. By identifying these issues before they become legal disputes, TermScore gives you the clarity you need to innovate with confidence.