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

Does an employment NDA cover personal side projects?

Generally, an employment NDA or Invention Assignment Agreement does not automatically cover personal side projects created on weekends without company resources. However, if your contract contains an overly broad 'Invention Assignment' clause, your employer may legally claim ownership of your work, regardless of when or where it was developed.

Key takeaway: An NDA protects secrets, but an Invention Assignment Agreement (IAA) determines ownership. Always check if your contract includes an IAA, as this is the document that actually puts your side projects at risk.

The Difference Between NDAs and Invention Assignment Agreements

Employees often confuse NDAs with Invention Assignment Agreements (IAAs). While they are frequently bundled into a single document, they serve distinct legal purposes:

• NDAs (Non-Disclosure Agreements): These restrict you from sharing your employer’s confidential information. They do not inherently grant the employer ownership of your personal ideas.
• IAAs (Invention Assignment Agreements): These explicitly state that any intellectual property (IP) you create during your employment belongs to the company.

Action Item: Review your employment contract specifically for a section titled 'Assignment of Inventions' or 'Proprietary Rights.' If this section exists, the 'weekend project' protection is not guaranteed.

Criteria for Protecting Your Side Projects

To ensure your side project remains yours, it must typically meet the following four criteria. If you fail any of these, you are in the 'danger zone' for a legal dispute:

• No Company Resources: You did not use company laptops, software licenses, servers, or proprietary data.
• No Company Time: The work was performed entirely outside of your contracted working hours.
• No Relation to Business: The project does not relate to your employer’s current business or anticipated research and development.
• No Use of Trade Secrets: You did not incorporate any of your employer’s confidential information or trade secrets into your project.

Action Item: Keep a detailed log of your development process, including timestamps and a list of tools used, to prove you did not use company assets.

Jurisdiction-Specific Protections

Some states provide statutory "safe harbors" that prevent employers from claiming ownership of your side work. If you live in one of these states, your contract cannot legally override your rights:

• California (Labor Code § 2870): Prohibits employers from requiring you to assign inventions created on your own time without company equipment, provided they don't relate to the employer's business.
• Washington (RCW 49.44.140): Similar to California, it protects inventions developed on your own time without company resources.
• Illinois (Employee Patent Act): Provides protections for inventions developed on your own time, provided they do not relate to the employer's business.

Action Item: Search your state’s labor code for 'Invention Assignment' to see if you have statutory protection that supersedes your contract language.

How to Mitigate Risk Before Starting

If you are planning a side project, follow these steps to minimize the risk of a future legal claim:

1. Audit your contract: Identify if you signed an Invention Assignment Agreement.
2. Disclose (if necessary): If your project is in a similar industry, consider getting a written 'carve-out' or waiver from your employer.
3. Strict Separation: Use a separate computer, separate email account, and separate cloud storage for all side project files.
4. Avoid 'Company Time' Creep: Never check your side project code or emails while on the company clock.

Key takeaway: A verbal agreement with your manager is not enough. If you need a waiver, ensure it is signed by an authorized company representative and explicitly lists the project name or scope.

The Role of AI in Contract Analysis

Manually parsing dense legal jargon to find hidden IP assignment clauses is error-prone and time-consuming. TermScore uses advanced AI to instantly scan your employment contracts, flagging broad Invention Assignment clauses and identifying potential risks to your personal side projects. By providing clear, plain-English summaries of your obligations, TermScore empowers you to understand your rights before you start building your next venture.