What states have laws protecting employee side projects?

States like California (Labor Code 2870), Washington (RCW 49.44.140), and Illinois (Employee Patent Act) provide statutory protections for inventions developed on an employee's own time without company resources.

How can I ensure my side project is protected?

Maintain strict separation of resources, document your development process, review your employment contract for 'Invention Assignment' clauses, and seek a written waiver or clarification from your employer if the project scope is ambiguous.

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Do employment NDAs automatically cover personal side projects created without company resources?

Do employment NDAs automatically cover personal side projects?

No. Employment NDAs and IP assignment agreements do not automatically cover personal side projects created entirely on your own time, using your own equipment, and unrelated to your employer's business. However, broad 'Invention Assignment' clauses can create legal ambiguity that requires careful contract review.

Key takeaway: Never assume your side project is safe. If your contract contains an 'Invention Assignment' clause, the burden of proof often shifts to you to demonstrate the project is unrelated to your employer's business.

Understanding the Scope of Invention Assignment Clauses

Most employment agreements contain an 'Invention Assignment' clause, which is distinct from an NDA. While an NDA protects trade secrets, an Invention Assignment clause dictates who owns the intellectual property (IP) you create. Employers often draft these clauses to be intentionally broad to capture any work that could potentially compete with their business.

The Three-Prong Test for IP Ownership

In many jurisdictions, for an invention to remain yours, it must meet three specific criteria:

No Company Resources: You did not use any company equipment, supplies, facilities, or trade secret information.
Outside Scope of Employment: The project does not relate directly to the employer's business or actual/demonstrably anticipated research or development.
No Work During Hours: The project was developed entirely on your own time, outside of your contracted working hours.

Action Item: Audit your current employment contract specifically for the phrase 'Invention Assignment' or 'Work Made for Hire.' If you find these, document every hour spent on your side project to prove it occurred outside of company time.

Jurisdictional Protections: The California Model

Some states have codified protections for employees. California Labor Code Section 2870 is the gold standard, rendering any provision in an employment agreement that requires an employee to assign rights to an invention developed entirely on their own time—without using company resources—unenforceable.

Jurisdiction	Primary Protection Mechanism
California	Labor Code 2870 (Statutory protection)
Washington	RCW 49.44.140 (Statutory protection)
Illinois	Employee Patent Act (Statutory protection)
General Common Law	Depends on 'Scope of Employment' tests

Action Item: Check if your state has a specific 'Employee Invention Act.' If you live in a state without these protections, your contract's language is the final authority, making it even more critical to negotiate specific exclusions.

Red Flags in Your Employment Contract

When reviewing your contract, look for these specific red flags that could jeopardize your side project:

'Any and All' Language: Clauses that claim ownership over 'any and all inventions conceived during the term of employment.'
Broad Definitions of 'Business': Definitions that include 'any business the company may enter into in the future.'
Lack of Exclusions: The absence of an 'Excluded Inventions' schedule where you can list pre-existing projects.

Key takeaway: If your contract lacks an 'Excluded Inventions' section, you should proactively request an addendum listing your side projects to create a clear paper trail of ownership.

How to Protect Your Side Project

Strict Resource Separation: Never use a company laptop, email address, or software license for your side project.
Document Everything: Keep a log of development hours and expenses. If you use your own hardware, keep receipts.
Review Your Contract: Use AI-powered tools to scan for broad IP assignment language that might conflict with your personal work.
Seek Written Clarification: If the project is significant, ask your employer for a written acknowledgment that the project falls outside your scope of employment.

Action Item: Create a 'Project Disclosure' document that outlines your side project and explicitly states it does not utilize company resources. Keep this in your personal files as a defensive record.

Leveraging Technology for Contract Clarity

Navigating the nuances of IP assignment and NDA clauses is complex, and missing a single line of text can cost you ownership of your hard work. TermScore uses advanced AI to instantly analyze your employment contracts, identifying aggressive 'Invention Assignment' clauses and potential conflicts with your side projects. By providing a clear, plain-English breakdown of your obligations, TermScore ensures you understand exactly what you are signing before you commit to a new role or launch your next venture.