What makes an IP assignment clause unenforceable?

In states like California, Illinois, and Washington, statutes prohibit employers from claiming ownership of inventions developed entirely on your own time, without using company equipment or trade secrets, and that do not relate to the employer's current or anticipated business.

How can I protect my side projects?

Use personal hardware, avoid company networks, document your development process, and ensure your project is outside the scope of your employer's business. Always have your contract reviewed by a professional or an AI tool like TermScore.

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.

Does an employment NDA allow my company to own my personal side projects built on weekends?

Q: Does an employment NDA allow my company to own my personal side projects built on weekends?

Not necessarily. While many employment contracts include broad 'Invention Assignment' clauses, their enforceability depends on state law, the use of company resources, and whether the project relates to the employer's business. You must review your specific contract for carve-outs.

An employment NDA or Invention Assignment Agreement does not automatically grant your employer ownership of your side projects. Ownership depends on the specific language of your contract, the resources used, and state-specific labor laws that protect employee inventions developed outside of work hours.

Understanding Invention Assignment Clauses

Most employment contracts contain an Invention Assignment Agreement (IAA). While often bundled with NDAs, these are distinct legal instruments. An NDA protects confidential information, whereas an IAA dictates who owns the intellectual property (IP) you create. Employers use these to ensure that any work related to their business belongs to them, not the individual employee.

The Scope of "Company Business"

The most dangerous language in an IAA is the definition of "Company Business." If your contract defines this broadly—such as "any work related to the company's current or anticipated research or development"—it may capture projects that are only tangentially related to your job. If you are a software engineer at a fintech company, a side project involving a new payment gateway is almost certainly owned by your employer under these terms.

Key takeaway: Review your contract for the definition of 'Inventions.' If it includes 'any work performed during the term of employment,' you are at high risk of losing ownership of your side projects.

Action Item: Search your contract for the phrase 'Invention Assignment' and identify the specific scope of work covered. If it is not limited to your direct job duties, you need to negotiate a carve-out.

State-Level Protections for Employees

Several U.S. states have enacted statutes that limit the reach of employer IP claims. These laws generally invalidate contract clauses that attempt to claim ownership of inventions created on your own time.

State	Key Protection Criteria
California	Labor Code 2870: Protects inventions made on own time, no company resources, not related to employer business.
Illinois	Employee Patent Act: Prevents employers from requiring assignment of inventions developed on own time without company equipment.
Washington	RCW 49.44.140: Similar to CA; protects inventions that do not relate to the employer's business or R&D.

The Three-Pronged Test

To qualify for protection under these state laws, your project must typically pass a three-pronged test:

Time: The work was developed entirely on your own time (evenings, weekends, or PTO).
Resources: You did not use any company equipment, supplies, facilities, or trade secret information.
Relevance: The invention does not relate directly to the employer’s business or actual/anticipated research and development.

Action Item: Check if your state has an 'Employee Invention' statute. If you live in a state without these protections, your contract language is the final authority.

Red Flags in Your Employment Contract

When reviewing your agreement, look for these specific red flags that signal an overreaching employer:

"Work Made for Hire" language: This is a copyright term that essentially gives the employer authorship of your work.
Broad definitions of 'Inventions': Clauses that include 'all ideas, concepts, or designs' regardless of whether they are related to the company.
Lack of 'Carve-outs': The absence of a schedule or appendix where you can list pre-existing intellectual property you own.
Requirement to disclose all projects: Some contracts require you to disclose every project you work on, giving the employer a chance to claim it before you even launch.

Key takeaway: If your contract requires you to disclose all 'inventions' created during your employment, you are effectively giving the company a right of first refusal on your side projects.

Action Item: Create a 'Schedule A' or 'Prior Inventions' list. If your contract allows it, document your side projects and attach them to the agreement as 'Excluded Property' to create a clear paper trail.

Best Practices for Protecting Your IP

To minimize risk, you must maintain a strict separation between your professional life and your personal projects.

Hardware Separation: Never use a company-issued laptop, phone, or tablet for your side project.
Network Isolation: Do not use company VPNs, servers, or cloud accounts (like company-managed AWS or GitHub Enterprise) to host your code.
Documentation: Keep a time-stamped log of when you work on your project to prove it was done outside of business hours.
Communication: Never discuss your side project with colleagues or managers, and never use company email to send or receive project-related files.

Action Item: Audit your current development environment today. If you have any personal code on a company-managed device, migrate it to a personal, encrypted drive immediately.

Conclusion

Your side projects are your personal assets, but they are vulnerable if your employment contract is drafted too broadly. By understanding the intersection of your contract language and state law, you can take proactive steps to secure your work. TermScore can automatically analyze your employment agreement to flag aggressive IP assignment clauses and identify whether your contract includes the necessary carve-outs to protect your side projects, giving you the clarity you need to build with confidence.