What is an Assignment of Inventions clause?

This clause dictates that any intellectual property you create during your employment, and sometimes even on your own time, belongs to your employer. If not carefully drafted, it can effectively claim ownership of your freelance projects.

Are non-compete agreements enforceable for side projects?

Enforceability varies by state. For example, California effectively bans non-competes, while other states enforce them if they are reasonable in scope, duration, and geographic reach. Recent FTC rulings are also actively challenging the legality of non-compete agreements nationwide.

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?

TermScore analyzes any legal document including freelance contracts, employment agreements, residential leases, NDAs, brand sponsorship deals, SaaS vendor agreements, and rental applications. Upload PDFs, Word documents, or images.

How much does TermScore cost?

TermScore offers a free plan with 3 scores per month. The Team plan is $15/month for 30 scores, and the Professional plan is $50/month for 500 scores with team collaboration features.

Is my document data secure?

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.

Can an employment NDA legally stop me from working on freelance projects in my spare time?

Can an employment NDA legally stop me from working on freelance projects?

An NDA alone typically protects confidential information, but it is often paired with 'non-compete' or 'assignment of inventions' clauses that can legally restrict or claim ownership of your freelance work. Whether these are enforceable depends on your jurisdiction and the specific language regarding scope, duration, and the use of employer resources.

Key takeaway: An NDA is not a standalone ban on side work, but it is rarely the only clause in your contract. You must review your agreement for 'Assignment of Inventions' and 'Non-Compete' clauses, which pose a greater threat to your freelance autonomy.

The Three Pillars of Contractual Restriction

To understand if your freelance work is at risk, you must distinguish between the three most common restrictive clauses found in employment agreements.

1. Non-Disclosure Agreements (NDAs)

An NDA prohibits you from sharing proprietary information. It does not inherently stop you from working, but it prevents you from using your employer’s trade secrets, client lists, or internal data in your freelance projects. If your freelance work relies on knowledge gained at your primary job, you are at high risk of a breach.

2. Assignment of Inventions Clauses

This is the most dangerous clause for freelancers. It states that any intellectual property (IP) created during your employment belongs to the company. In aggressive contracts, this can extend to work done on weekends, using your own equipment, if the work is 'related to the company's business.'

3. Non-Compete Agreements

These clauses prevent you from working for a competitor or starting a business that competes with your employer. While many states (like California, North Dakota, and Oklahoma) have strict bans on these, others enforce them if they are 'reasonable' in duration (typically 6–12 months) and geography.

Clause Type	Primary Risk	Enforceability
NDA	Misuse of trade secrets	High
Assignment of Inventions	Loss of IP ownership	High (if specific)
Non-Compete	Total prohibition of work	Varies by State

Action Item: Locate your employment contract and highlight every instance of the words 'Inventions,' 'Proprietary,' and 'Competitive.' These are your primary areas of concern.

Jurisdictional Differences and Legal Trends

The legality of these restrictions is highly dependent on where you live. You cannot rely on a 'one-size-fits-all' understanding of labor law.

California (Business and Professions Code 16600): Generally voids non-compete agreements. Employers cannot prevent you from engaging in a profession, trade, or business.
Federal Level (FTC): The Federal Trade Commission has moved to ban most non-compete agreements, citing that they suppress wages and stifle innovation.
State-Specific Statutes: States like Illinois and Washington have salary thresholds; if you earn below a certain amount, non-competes are often unenforceable.

Action Item: Search for your state’s specific labor laws regarding 'restrictive covenants.' If you are in a state with strong employee protections, your employer’s ability to stop your side work is significantly diminished.

How to Protect Your Freelance Projects

If you intend to pursue freelance work, you must take proactive steps to ensure you are not violating your contract.

Review the 'Scope of Business' definition: Ensure your freelance work falls entirely outside the scope of what your employer does.
Use Separate Equipment: Never use company-issued laptops, software licenses, or email addresses for your freelance projects.
Request a Written Waiver: If you are concerned about a specific project, ask your HR department or manager for a written 'No Conflict of Interest' acknowledgment.
Check for 'Moonlighting' Policies: Many employee handbooks contain specific policies on outside employment that are separate from your signed contract.

Key takeaway: Documentation is your best defense. Keeping your freelance work strictly separated from company time, assets, and intellectual property is the most effective way to mitigate legal risk.

Assessing Your Risk with TermScore

Navigating the dense legal jargon of an employment contract is difficult, and missing a single clause could jeopardize your side business. TermScore uses advanced AI to instantly scan your employment agreements, identifying restrictive 'Assignment of Inventions' or 'Non-Compete' language that could impact your freelance projects. Upload your contract to TermScore today to receive a clear, plain-English breakdown of your rights and risks.