Can an employment NDA legally stop me from working on personal side projects developed on my own time?

An NDA typically protects confidential information, but it rarely prevents you from working on side projects. However, most employment contracts include an Invention Assignment Agreement. If your project relates to your employer's business, uses company resources, or was developed during work hours, your employer may legally own your work.

Understanding the Legal Distinction: NDA vs. Invention Assignment

Employees often confuse NDAs with Invention Assignment Agreements. An NDA is a restrictive covenant designed to prevent the disclosure of trade secrets. An Invention Assignment Agreement, conversely, is a transfer of ownership. It dictates that any intellectual property (IP) created during your employment belongs to the company.

The Scope of Ownership

Most standard employment contracts claim ownership of any work that:

• Relates directly to the employer's current or anticipated business.
• Results from tasks performed for the employer.
• Is developed using the employer's equipment, supplies, facilities, or trade secret information.

Key takeaway: Always check your contract for an 'Invention Assignment' or 'Proprietary Information' section. An NDA is about secrecy; an assignment clause is about ownership.

Action Item: Locate your employment agreement and search specifically for the word 'Assignment' or 'Inventions.' If you cannot find these terms, your risk is significantly lower, but not zero.

Jurisdictional Variations: The California Exception

Not all states treat invention assignment clauses the same way. California is the most employee-friendly jurisdiction in this regard.

California Labor Code Section 2870

Under California law, an employer cannot require you to assign rights to an invention developed entirely on your own time without using the employer's equipment, supplies, or trade secrets, provided the invention:

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

Action Item: If you reside in a state with specific labor protections, cite the relevant statute if you need to negotiate an IP waiver with your employer.

How to Protect Your Side Projects

To minimize the risk of your employer claiming your side project, you must maintain a strict 'firewall' between your professional and personal work.

The Four-Point Protection Strategy

• Use Personal Hardware: Never use a company-issued laptop, phone, or tablet.
• Use Personal Accounts: Do not use company email, GitHub Enterprise accounts, or cloud storage (AWS/Azure/GCP) tied to your employer.
• Strict Time Separation: Document your work hours. If you work on your project during your lunch break or on company premises, you provide the employer with a legal argument for ownership.
• No Company IP: Ensure your project does not utilize any proprietary code, algorithms, or data sets you accessed through your employer.

Key takeaway: If your side project is even tangentially related to your employer's industry, the risk of a legal dispute is high. Documenting your 'clean room' development process is essential for your defense.

Action Item: Create a 'Personal Project Log' where you record the dates, times, and hardware used for your side project to prove it was developed independently.

Negotiating a Carve-Out

If you are starting a significant project, the safest path is to request a written waiver or 'carve-out' from your employer. This is a formal document stating that the company disclaims any interest in your specific project.

What to Include in a Waiver

1. A clear description of the project (e.g., 'A mobile app for tracking personal fitness').
2. A statement that the project does not compete with the employer.
3. A confirmation that no company resources were used.
4. A signature from an authorized company representative (usually HR or Legal).

Action Item: If you are currently interviewing, ask for an IP carve-out to be included in your offer letter before you sign the employment contract.

How TermScore Can Help

Navigating complex legal language in employment contracts is difficult, but you don't have to do it alone. TermScore uses advanced AI to instantly scan your employment agreements, flagging restrictive invention assignment clauses and potential IP traps that could jeopardize your side projects. Upload your contract to TermScore today to get a clear, plain-English breakdown of your rights and risks before you commit to your next venture.