Does an employment NDA cover personal side projects created on my own time without company equipment?

Does an employment NDA cover personal side projects created on my own time without company equipment?

An NDA (Non-Disclosure Agreement) typically restricts the sharing of confidential information, not the ownership of new intellectual property. However, most employment contracts include an 'Invention Assignment' clause that may claim ownership of your side projects, even if created on your own time and without company equipment.

The Distinction Between NDAs and Invention Assignment Clauses

Employees often confuse NDAs with Invention Assignment Agreements. While they are frequently bundled into a single document, they serve distinct legal functions.

• NDAs: Prevent you from disclosing trade secrets, client lists, or proprietary data. They do not inherently grant the company ownership of your personal creative output.
• Invention Assignment Clauses: These are the 'trap' clauses. They explicitly state that any intellectual property (IP) created during your employment—or sometimes even shortly after—belongs to the employer.

Key takeaway: Never assume that 'off-the-clock' status grants you ownership. If your contract contains an overly broad assignment clause, the company may legally own your side project regardless of your personal resources used.

Action Item: Locate your employment agreement and search specifically for the section titled 'Proprietary Information and Inventions' or 'Assignment of Inventions.' Do not rely on the NDA section to determine ownership.

The 'Related to Business' Trap

Many employment contracts define 'Company Inventions' using broad language. If your side project is even tangentially related to your employer's current or anticipated business, you are at high risk of a claim.

Jurisdiction-Specific Protections

Some states provide statutory protections that override overly broad contract language. For example:

• California (Labor Code Section 2870): Prevents employers from claiming ownership of inventions developed entirely on your own time without using company equipment or trade secrets, provided the invention does not relate to the employer's business or actual/anticipated research.
• Washington (RCW 49.44.140): Provides similar protections, ensuring employees retain rights to inventions created on their own time.

Action Item: Check if your state has an 'Invention Assignment Statute.' If you live in a state without these protections, your contract language is the final word.

How to Protect Your Side Projects

If you are planning to launch a side project, follow these steps to minimize legal exposure:

1. Audit your contract: Identify if your project falls under the 'Invention Assignment' definition.
2. Document everything: Keep a log of hours worked and a list of personal hardware/software used.
3. Avoid overlap: Ensure your project does not use company trade secrets or proprietary methodologies.
4. Request a carve-out: If you are a high-level employee, negotiate a written amendment that explicitly excludes your side project from the scope of your employment agreement.

Key takeaway: If your side project has any potential to compete with your employer, you must secure a written waiver. Verbal agreements with managers are rarely enforceable in court.

Action Item: Create a 'Project Disclosure' document for your own records, detailing that the project is independent, unrelated to your work, and developed using 100% personal resources.

The Role of Contract Analysis

Understanding the nuances of your employment agreement is difficult without a legal background. TermScore can automatically analyze your contract to identify aggressive Invention Assignment clauses, broad NDA definitions, and potential conflicts of interest, giving you the clarity you need to pursue your side projects with confidence.