Can an employment NDA legally prohibit me from coding personal projects on weekends?

Can an employment NDA legally prohibit me from coding personal projects on weekends?

An NDA alone typically protects confidential information, but most employment contracts include an 'Invention Assignment' clause. If your contract claims ownership of all work created during your employment, your personal projects may legally belong to your employer, regardless of when you code them.

Understanding the Difference: NDAs vs. Invention Assignment Agreements

It is a common misconception that an NDA is the primary tool companies use to claim ownership of your side projects. In reality, an NDA is designed to prevent the disclosure of trade secrets. The actual threat to your personal code is the Proprietary Information and Inventions Agreement (PIIA), often bundled with your employment contract.

The Invention Assignment Clause

This clause dictates that any intellectual property (IP) you create, conceive, or reduce to practice during your employment belongs to the company. These clauses are often drafted with extreme breadth, covering:

• Work created on company time.
• Work created using company equipment (laptops, servers, software licenses).
• Work that relates to the employer's actual or anticipated business.
• Work that results from any work performed for the employer.

Key takeaway: Always distinguish between an NDA (which restricts what you say) and an Invention Assignment (which restricts what you own). You can violate an assignment clause without ever disclosing a single trade secret.

Action Item: Review your employment contract for a section titled 'Inventions,' 'Intellectual Property,' or 'Assignment of Developments.' If it lacks a 'carve-out' for personal projects, you are at risk.

Jurisdictional Protections: The California Exception

Not all states view broad invention assignment clauses as enforceable. California, for instance, has strong statutory protections for employees.

California Labor Code Section 2870

Under California law, an employer cannot require you to assign rights to an invention if you developed it entirely on your own time without using the employer’s equipment, supplies, facilities, or trade secret information, provided the invention:

1. Does not relate to the employer’s business.
2. Does not relate to the employer’s actual or anticipated research or development.
3. Does not result from any work performed by the employee for the employer.

Action Item: Check if your state has a 'Labor Code 2870' equivalent. If you live in a state with limited protections, your contract's specific language is the only law that matters.

Red Flags in Your Employment Contract

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

• 'Any and all' language: Clauses that claim ownership of 'any and all ideas or inventions conceived during the term of employment' without exceptions.
• Broad definitions of 'Business': If your employer defines their business as 'any technology-related field,' they may claim ownership of any software you write.
• Lack of 'Prior Inventions' disclosure: If the contract does not provide a space to list projects you already own, you may inadvertently assign your past work to your new employer.

How to Protect Your Side Projects

If you are concerned about your side projects, take these steps immediately to insulate your work from employer claims:

1. Use Personal Hardware: Never use a company-issued laptop, cloud account, or software license for personal coding.
2. Document Everything: Keep a timestamped log of when you work on your project to prove it occurred outside of company hours.
3. Maintain Separation: Ensure your project is distinct from your employer’s core business. If you work for a fintech company, building a personal finance app is high-risk.
4. Request a Carve-Out: Before signing, ask HR or legal to add an 'IP Carve-Out' that explicitly excludes your specific side project from the assignment clause.

Key takeaway: The best defense is a clear, written agreement. If you have a side project, disclose it in writing before you start your job and get a signed acknowledgment that it is excluded from your employment obligations.

Automated Contract Analysis with TermScore

Navigating the nuances of invention assignment clauses can be daunting, but you don't have to do it alone. TermScore uses advanced AI to scan your employment agreements, identifying overreaching IP clauses and potential risks to your personal projects in seconds. Ensure your creative freedom is protected by letting TermScore analyze your contract today.