What states have laws protecting employee side projects?

States like California (Labor Code 2870), Washington (RCW 49.44.140), Illinois (Employee Patent Act), and others have statutes that invalidate contract provisions claiming ownership of inventions developed entirely on personal time without company equipment or trade secrets.

How can I protect my side projects from my employer?

Ensure you develop projects entirely on personal hardware, outside of work hours, and ensure they do not relate to the employer's current or demonstrably anticipated business, or result from work performed for the employer.

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Does an employment NDA allow an employer to claim ownership of side projects built entirely on personal time without company resources?

Q: Does an employment NDA allow an employer to claim ownership of side projects built on personal time?

Not necessarily. While many employment agreements include broad 'Invention Assignment' clauses, their enforceability regarding personal projects depends on state law, the specific language of the contract, and whether company resources were used.

Does an employment NDA allow an employer to claim ownership of side projects built entirely on personal time?

No, an NDA alone does not grant ownership; however, most employment contracts include a separate 'Invention Assignment' clause. If your contract is overly broad, it may attempt to claim your personal work. Whether this is enforceable depends heavily on state-specific labor laws and your specific usage of company resources.

Understanding Invention Assignment vs. NDAs

Employees often confuse NDAs with Invention Assignment Agreements. An NDA is designed to protect trade secrets, while an Invention Assignment clause dictates who owns the intellectual property (IP) created during your employment. If your contract contains a 'Work Made for Hire' provision, the employer may claim ownership of anything you create that falls within the scope of your employment.

The Three-Prong Test for Ownership

In many jurisdictions, for an employer to legally claim your side project, they must prove the work meets specific criteria. If you can prove your project fails any of these, you likely retain ownership:

Resource Usage: Did you use company equipment, supplies, facilities, or trade secret information?
Scope of Employment: Does the project relate directly to the employer’s business or their demonstrably anticipated research and development?
Work Performance: Did the project result from any work performed for the employer?

Key takeaway: If you use a company-issued laptop, even for a personal project, you have likely breached the 'Resource Usage' prong, giving the employer a strong legal claim to your IP.

Action Item: Audit your current contract for the phrase 'all inventions created during the term of employment.' If this exists without carve-outs, you are at high risk.

Jurisdiction Matters: State-Specific Protections

Several states have enacted legislation to protect employees from overreaching IP clauses. These laws generally override contract language that attempts to claim ownership of personal inventions.

State	Statute	Key Protection
California	Labor Code 2870	Invalidates clauses claiming inventions made on own time without company resources.
Washington	RCW 49.44.140	Protects inventions not related to employer's business or anticipated R&D.
Illinois	765 ILCS 1060/2	Prevents employers from requiring assignment of inventions developed on personal time.
New Jersey	N.J.S.A. 34:1B-265	Limits assignment of inventions to those related to employer's business.

Action Item: Check if your state has an 'Employee Invention Act.' If you live in a state without these protections, your contract language is the only law that matters.

Red Flags in Your Employment Agreement

When reviewing your contract, look for these specific red flags that signal an attempt to claim your personal time:

'Any and All' Language: Clauses that claim 'any and all ideas, concepts, or inventions' without limiting the scope to the employer's business.
'During the Term' Clauses: Language that claims ownership of anything created while you are employed, regardless of when or where it was built.
Broad Definition of 'Business': Definitions that include 'any business the company may enter in the future,' which effectively claims everything you could possibly build.

Action Item: If you find these clauses, request an 'IP Exclusion Addendum' that explicitly lists your current side projects as excluded from the assignment agreement.

Best Practices to Maintain Ownership

To ensure your side projects remain yours, follow these strict operational guidelines:

Hardware Separation: Never use company-issued laptops, tablets, or cloud storage accounts for personal projects.
Time Tracking: Maintain a log showing your project development occurred outside of your contracted work hours.
Network Isolation: Do not use company VPNs or internal servers to host or develop your personal code.
IP Disclosure: If your project is significant, disclose it to your employer in writing as a 'pre-existing invention' to create a paper trail of ownership.

Key takeaway: Documentation is your best defense. Keep a dated repository of your work that proves it was developed independently of your employer's systems.

Action Item: Create a 'Personal IP Folder' containing your development logs and proof of personal hardware ownership to present in the event of a dispute.

How TermScore Can Help

Navigating complex legal language in employment contracts is difficult, but TermScore simplifies the process by automatically scanning your agreements for overreaching IP assignment clauses and restrictive covenants. By identifying these risks early, you can negotiate better terms or ensure your personal projects remain protected from the start.