Does an employment NDA cover personal side projects created on weekends without company equipment?

Does an employment NDA cover personal side projects created on weekends without company equipment?

An employment NDA typically restricts the disclosure of confidential information, not the ownership of your personal work. However, most employment agreements include an Invention Assignment Agreement, which often claims ownership of any intellectual property you create during your employment, regardless of whether you used company equipment or worked on weekends.

The Critical Distinction: NDA vs. Invention Assignment

It is a common misconception that an NDA is the primary vehicle for company ownership of your side projects. In reality, these are two distinct legal instruments often bundled into one contract.

• NDA (Non-Disclosure Agreement): Focuses on protecting trade secrets, client lists, and proprietary data. It prevents you from sharing company secrets, but it does not inherently grant the company ownership of your independent creations.
• Invention Assignment: This is the clause that poses the real risk. It legally transfers the rights to any "inventions," "works of authorship," or "intellectual property" created by the employee to the employer.

Key takeaway: Always check your contract for an 'Invention Assignment' or 'Proprietary Rights' section. An NDA is about secrecy; an assignment clause is about ownership.

Action Item: Search your employment contract for the word "Assignment" or "Intellectual Property." If you find a broad clause, your side project may be at risk.

Factors That Determine Ownership

Courts and employers look at several factors to determine if a side project belongs to the company. Even if you work on weekends, the following criteria can trigger a claim:

The "Scope of Employment" Trap

Many contracts state that any invention "related to the company’s business" is automatically owned by the employer. If you are a software engineer for a fintech company and you build a personal budgeting app on the weekend, the company may argue that this falls within their "anticipated business," giving them a legal claim to your code.

Action Item: Document the purpose of your side project in writing. If it is entirely unrelated to your employer’s industry, you have a stronger defense against claims of scope overlap.

Jurisdictional Protections: California and Beyond

Some states provide statutory protections for employees. For example, California Labor Code Section 2870 prevents employers from claiming ownership of inventions developed entirely on your own time without using company resources, provided the invention does not relate to the employer's business or actual/anticipated research.

• California (CA): Strong protections under Section 2870.
• Washington (WA): Similar protections under RCW 49.44.140.
• Illinois (IL): Protections under the Employee Patent Act.

Action Item: Research your specific state laws. If you live in a state with strong employee IP protections, your contract's overreaching clauses may be unenforceable.

How to Protect Your Side Projects

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

1. Review the Contract: Identify the specific "Invention Assignment" language.
2. Negotiate an Exclusion: Before signing, provide a list of existing projects to be excluded from the assignment clause.
3. Maintain Strict Separation: Never use company email, Slack, or hardware for your project.
4. Avoid Overlap: Ensure your project does not compete with your employer’s current or future product roadmap.
5. Get Written Consent: If you are concerned, ask your manager or HR for a written waiver or acknowledgment that your project is outside the scope of your employment.

Key takeaway: The best defense is a clear, written record of separation. Keep your personal development environment entirely distinct from your work environment.

The Role of AI in Contract Analysis

Navigating the nuances of intellectual property law is complex, and manual review often misses the subtle "gotchas" hidden in dense legal jargon. TermScore uses advanced AI to instantly scan your employment contracts, identifying risky invention assignment clauses and flagging potential conflicts with your side projects. By providing a clear, plain-English breakdown of your obligations, TermScore empowers you to negotiate with confidence and protect your creative work.