Does an NDA automatically grant my employer ownership of my side projects?

No, an NDA typically protects confidential information, but it is often paired with an 'Invention Assignment Agreement.' If your contract is broad, your employer may claim ownership of any work created during your employment, regardless of whether it relates to their business.

What states provide the strongest protection for employee side projects?

California, Washington, Illinois, and several other states have specific labor codes (like California Labor Code Section 2870) that invalidate employment contract provisions requiring employees to assign inventions developed entirely on their own time without using employer resources.

How can I protect my side projects from employer claims?

Ensure your project is developed on personal equipment, outside of working hours, and is unrelated to your employer's actual or anticipated business. Always disclose the project to your employer if required by your contract.

A TermScore is an AI-generated risk rating from 0 to 100 that evaluates the fairness and risk level of any legal document. A score of 86-100 means the contract is highly favorable, while 0-30 indicates dangerous terms you should walk away from.

What types of documents can TermScore analyze?

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Yes. Documents are processed in memory and analysis results are stored encrypted. TermScore never shares your document data with third parties and you can delete your data at any time from your dashboard.

Are side projects created on my own time and equipment protected from employer ownership claims in an NDA?

Are side projects protected from employer ownership?

No, working on your own time and equipment does not automatically guarantee ownership of your side projects. While many states provide statutory protections, your employment contract—specifically the 'Invention Assignment' clause—often overrides these protections if the work relates to your employer’s business or uses their proprietary information.

Key takeaway: Never assume your side project is safe. If your contract contains a broad 'Work for Hire' or 'Invention Assignment' clause, your employer may have a legal claim to your intellectual property, even if you built it on your own laptop at midnight.

The Anatomy of an Invention Assignment Clause

Most NDAs are bundled with an Invention Assignment Agreement. These clauses are designed to ensure that any intellectual property (IP) you create during your tenure belongs to the company. To determine if you are at risk, you must look for three specific triggers in your contract:

Scope of Business: Does the clause claim ownership of anything related to the company's 'actual or anticipated' business?
Temporal Scope: Does it claim ownership of anything created 'during the term of employment'?
Resource Usage: Does it include language regarding the use of 'company equipment, supplies, or trade secrets'?

Action Item: Search your contract for the word 'Inventions' or 'Developments.' If the definition is broad enough to cover any project you work on, you are at high risk.

State-Specific Protections: The 2870 Standard

Several states have enacted laws that limit how aggressively employers can claim your side projects. California Labor Code Section 2870 is the gold standard. It prevents employers from requiring you to assign rights to an invention if you meet these criteria:

The invention was developed entirely on your own time.
No equipment, supplies, facilities, or trade secret information of the employer was used.
The invention does not relate to the employer’s business or actual/anticipated research.
The invention does not result from any work performed for the employer.

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

Action Item: Check if your state has an 'Invention Assignment' statute. If you live in a state without one, your contract terms are the only law that matters.

How to Mitigate Risk

If you are building a side project, you must create a 'firewall' between your employment and your personal work. Follow this process to minimize exposure:

Use Personal Hardware: Never use a company-issued laptop, phone, or cloud storage account for your project.
Strict Time Separation: Document that your work occurs outside of your contracted hours.
Avoid Overlap: Ensure your project does not compete with your employer’s current or planned product roadmap.
Disclose (If Required): Some contracts require you to disclose all inventions. Consult an attorney before disclosing, as this can sometimes trigger a claim you might have otherwise avoided.

Key takeaway: If your side project is even tangentially related to your employer's business, the risk of a legal challenge is high. Documenting your independence is your only defense.

Common Red Flags in Your Contract

When reviewing your employment agreement, look for these 'red flag' phrases that signal an overreaching employer:

'All work created during the term of employment': This is overly broad and often unenforceable in states like California, but dangerous elsewhere.
'Any idea, concept, or invention': This language is designed to capture everything, including non-technical projects.
'Related to the business of the Company': This is subjective. If you are a software engineer at a bank, a fintech app is likely 'related' to their business.

Action Item: If you find these phrases, do not sign the agreement without requesting an 'Exclusion List'—an addendum where you list your existing side projects to exempt them from the assignment clause.

Conclusion

Navigating the intersection of employment law and intellectual property is complex. You need to know exactly what you signed and how your local jurisdiction interprets those terms. TermScore can automatically analyze your employment contracts and NDAs to flag aggressive invention assignment clauses, helping you understand your risks before you start your next big project.