Does an employment NDA cover side projects created on personal equipment?

An NDA typically protects confidential information, not ownership of new inventions. However, your employment contract likely contains an 'Invention Assignment' clause that may claim ownership of side projects regardless of equipment used, especially if they relate to the employer's business.

What is the difference between an NDA and an Invention Assignment Agreement?

An NDA restricts the disclosure of trade secrets and proprietary data. An Invention Assignment Agreement (often part of an PIIA) legally transfers ownership of intellectual property created during employment to the employer.

How can I protect my side projects from my employer?

Ensure your projects are developed entirely on personal time, using personal equipment, and do not relate to your employer's current or anticipated business. Review your PIIA for 'carve-out' provisions.

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Does an employment NDA cover side projects created entirely on personal equipment?

An employment NDA (Non-Disclosure Agreement) generally does not claim ownership of your side projects. However, most employment contracts include a separate Proprietary Information and Inventions Assignment (PIIA) agreement. This clause often grants your employer ownership of any work created during your employment, even if developed on personal equipment, provided it relates to the company's business or uses their confidential information.

The Critical Distinction: NDA vs. PIIA

Employees often confuse NDAs with Invention Assignment agreements. Understanding the difference is the first step in protecting your intellectual property.

NDA (Non-Disclosure Agreement): Focuses on secrecy. It prevents you from sharing the company's trade secrets, client lists, or internal data. It does not inherently grant the company ownership of your personal creative output.
PIIA (Proprietary Information and Inventions Assignment): Focuses on ownership. This is the document that legally transfers the rights to your inventions, code, or creative works to your employer.

Key takeaway: Never assume that because you used your own laptop, your employer has no claim. If your side project falls within the scope of your employer’s business, the PIIA may override your personal ownership rights.

Action Item: Locate your original offer letter and any signed PIIA documents. Look specifically for the section titled "Inventions" or "Intellectual Property Assignment."

When Employers Can Legally Claim Your Side Projects

Even if you use your own equipment, your employer may have a legal claim to your side project if it meets specific criteria defined in your contract or state law. Courts typically look at the following factors:

Relation to Business: Does the project relate directly to the employer’s current business or anticipated research and development?
Use of Resources: Did you use any company data, proprietary tools, or trade secrets to build the project?
Time of Creation: Was the work performed during your contracted working hours?

Factor	Risk Level	Why it matters
Directly related to employer business	High	Courts often favor the employer here.
Used company proprietary data	Extreme	This triggers both PIIA and NDA violations.
Developed entirely on weekends	Low	Helps prove no company time was used.
Used company-licensed software	Medium	Can be argued as using company resources.

Action Item: Conduct a "Conflict Audit." If your side project competes with your employer, you are at high risk regardless of the equipment used.

Jurisdiction-Specific Protections

Some states have enacted laws that limit the reach of invention assignment agreements. For example, California Labor Code Section 2870 provides a statutory "safe harbor" for employees.

California Labor Code 2870 Requirements

To be protected under California law, your invention must meet all of the following:

Developed entirely on your own time.
No use of the employer's equipment, supplies, facilities, or trade secret information.
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.

Action Item: Check if your state has an "Invention Assignment Statute." If you are in a state like California, Washington, or Illinois, your rights may be stronger than the contract language suggests.

How to Protect Your Side Projects

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

Review your PIIA: Check for a "carve-out" list where you can pre-disclose existing projects.
Maintain strict separation: Never use company email, Slack, or cloud storage for your side project.
Document your process: Keep a log of hours worked on your project to prove it was done outside of company time.
Negotiate upfront: If you have a significant project, ask for an IP exclusion agreement before starting.

Key takeaway: If you are unsure about your contract's language, do not rely on verbal assurances from your manager. Written agreements in your contract are what hold up in court.

Action Item: Create a "clean room" environment for your side project. Use a separate computer, separate internet connection, and separate cloud storage account to ensure no company data is ever commingled with your personal work.

Using TermScore for Contract Analysis

Navigating the nuances of PIIA and NDA clauses can be daunting, but you don't have to do it alone. TermScore uses advanced AI to instantly scan your employment agreements, highlighting risky invention assignment language and identifying potential conflicts with your side projects. Upload your contract to TermScore today to get a clear, plain-English breakdown of your ownership rights and potential liabilities.