Does an employment NDA cover personal side projects created during off-hours without company assets?

Does an employment NDA cover personal side projects created during off-hours without company assets?

An employment NDA or Invention Assignment Agreement does not automatically cover personal side projects created without company assets, provided the work is truly independent. However, broad 'Invention Assignment' clauses often claim ownership of any work related to the company’s business, creating significant legal risk regardless of when the work was performed.

The Critical Distinction: NDA vs. Invention Assignment

Employees often confuse Non-Disclosure Agreements (NDAs) with Invention Assignment Agreements. While an NDA restricts the sharing of confidential information, an Invention Assignment Agreement dictates who owns the intellectual property (IP) you create. If your contract contains an 'Assignment of Inventions' clause, the company may claim ownership of your side project if it falls within the scope of their business interests.

Common Red Flags in Employment Contracts

• Broad Definitions: Clauses that claim ownership of any work 'related to the company’s business' or 'anticipated research.'
• Temporal Scope: Language that claims ownership of inventions created 'during the term of employment' without specifying that it must be related to company work.
• Equipment Clauses: Provisions that claim ownership if *any* company resource—even a laptop or email account—was used at any point.

Key takeaway: Never assume your side project is safe. If your contract uses the phrase 'all work product created during the term of employment,' you are at high risk of the company claiming ownership.

Jurisdictional Protections: The California Model

Several U.S. states have enacted statutes to protect employees from overreaching IP assignment clauses. California Labor Code Section 2870 is the gold standard. It renders any provision in an employment agreement unenforceable if it requires an employee to assign rights to an invention developed entirely on their own time without using the employer’s equipment, supplies, facilities, or trade secret information.

Action Item: Check if your state has a specific 'Employee Invention Act.' If you live in a state without these protections, your contract language is the only law that matters.

How to Protect Your Side Project

If you are building a project on the side, you must take proactive steps to insulate yourself from potential litigation or ownership claims.

1. Audit Your Contract: Review your employment agreement for 'Invention Assignment' or 'Work for Hire' clauses.
2. Zero-Asset Policy: Never use company hardware, software licenses, Slack channels, or even company-provided Wi-Fi for your side project.
3. Document Everything: Maintain a timestamped log of your development process to prove the work was done outside of business hours.
4. The 'Carve-Out' Request: If your project is related to your employer's industry, request a written 'carve-out' or waiver from your HR or legal department before you begin.

Key takeaway: If you use a company-issued laptop for even one line of code, you have potentially handed over the ownership of your entire project to your employer.

Assessing Risk: When to Consult Counsel

You should consult an attorney if your side project generates revenue, involves technology similar to your employer's core product, or if you are a senior executive or lead engineer. In these roles, the 'fiduciary duty' you owe the company is higher, and courts are more likely to side with the employer in IP disputes.

Action Item: If you are unsure about the scope of your assignment clause, do not launch your project publicly until you have had the contract reviewed by a professional.

TermScore allows you to upload your employment contract to automatically identify restrictive IP assignment clauses and potential conflicts of interest. By highlighting high-risk language in seconds, TermScore provides the clarity you need to protect your personal work while remaining compliant with your employment obligations.