Does an employment NDA prevent me from working on personal side projects during my off-hours?

Does an employment NDA prevent me from working on personal side projects?

An employment NDA primarily restricts the disclosure of confidential information, but it rarely functions in isolation. Most employment contracts include 'Invention Assignment' clauses that grant your employer ownership of any work created during your tenure. If your project relates to your employer's business, they may legally claim it.

Understanding the Difference: NDA vs. Invention Assignment

It is a common misconception that an NDA is the only document governing your side projects. In reality, your employment agreement is a bundle of restrictive covenants. You must distinguish between these three distinct legal concepts:

• Non-Disclosure Agreement (NDA): Prohibits you from sharing trade secrets or proprietary data. It does not inherently stop you from building your own product, provided you do not use company data.
• Invention Assignment Agreement (IAA): This is the clause that actually threatens your side projects. It typically states that any 'work product' or 'intellectual property' created during your employment belongs to the company.
• Non-Compete Clause: Restricts your ability to work for a competitor or start a business that directly competes with your employer.

Key takeaway: Do not focus solely on the NDA. Search your contract for terms like 'Inventions,' 'Work Product,' 'Proprietary Rights,' or 'Assignment of Rights.' These are the clauses that actually strip you of ownership over your side projects.

Action Item: Perform a Ctrl+F search in your employment contract for the word 'Invention.' If it appears, read the entire section to see if it applies to work created 'on your own time' or 'without company resources.'

The 'Scope of Business' Trap

Many employees assume that if they work on a project at night, it is safe. However, most contracts define the scope of assigned inventions broadly. If your side project is even tangentially related to your employer's current or anticipated business, the company may claim ownership.

Action Item: Map out your side project's features. If any feature overlaps with your employer's product roadmap, you are at high risk of an ownership dispute.

Jurisdictional Protections: California and Beyond

Your location significantly impacts the enforceability of these clauses. For example, California Labor Code Section 2870 provides a statutory shield for employees.

• California (Section 2870): Employers cannot claim ownership of inventions developed entirely on your own time without using the employer’s equipment, supplies, facilities, or trade secret information, unless the invention relates to the employer’s business or actual/anticipated research.
• Other States: Many states (like Washington, Illinois, and Delaware) have similar statutes, but the language varies. Some states are much more employer-friendly, allowing contracts to override these protections.

Action Item: Research your state's specific 'Employee Invention' statutes. Do not assume your contract's language is legally enforceable if it contradicts state law.

How to Safely Pursue Side Projects

If you intend to build a side project while employed, follow this protocol to minimize legal exposure:

1. Review the 'Prior Inventions' Schedule: Most contracts have an exhibit where you list inventions created before your start date. If you have a project in progress, disclose it there.
2. Strict Resource Separation: Never use a company laptop, company-paid software licenses (like GitHub Copilot or Adobe Creative Cloud), or company Slack/email for your project.
3. Get Written Consent: If you are unsure, request a formal waiver from your employer’s legal or HR department.
4. Avoid Competition: Ensure your project does not target the same customer base as your employer.

Key takeaway: The safest path is to obtain a written 'IP Waiver' from your employer. This document explicitly states that the company has no claim to your specific project, providing you with a legal firewall.

Action Item: Before starting your next project, document your 'clean room' environment—list the personal hardware and software you are using to prove no company assets were involved.

Automate Your Contract Review

Navigating the dense legalese of employment contracts is difficult, and missing a single clause can cost you the rights to your own intellectual property. TermScore uses advanced AI to instantly scan your employment agreements, highlighting restrictive Invention Assignment clauses, non-compete traps, and IP ownership risks. Upload your contract to TermScore today to get a clear, plain-English breakdown of your rights before you start your next big idea.