Does an employment NDA prevent me from working on personal side projects during my own time?

An employment NDA typically restricts the disclosure of confidential information, not the act of creating new work. However, most employment contracts include an Invention Assignment Agreement (often part of a PIIA) that claims ownership of anything you create, even on your own time. You must distinguish between confidentiality obligations and ownership claims to determine if your side project is at risk.

Understanding the Legal Distinction: NDA vs. Invention Assignment

Employees often conflate NDAs with Invention Assignment Agreements. While they are frequently bundled in the same onboarding document, they serve different legal functions:

• NDA (Non-Disclosure Agreement): Prohibits you from sharing trade secrets, client lists, or proprietary data. It does not inherently claim ownership of your personal creative output.
• Invention Assignment Agreement: A contractual provision that assigns all right, title, and interest in any "inventions" or "works" created during your employment to your employer.

Key takeaway: An NDA prevents you from talking about your work; an Invention Assignment Agreement prevents you from owning what you build. Always check for the latter.

Action Item: Search your employment contract for the word "Inventions" or "Intellectual Property." If you find a section titled "Assignment of Inventions," your side project may be legally owned by your employer by default.

The "Scope of Employment" Trap

Many contracts define "Inventions" broadly to include anything related to the company's "actual or anticipated business." If you are a software engineer at a fintech company, a side project involving a budgeting app is likely covered by your contract, even if you built it on a weekend using your own laptop.

Criteria for Employer Ownership

Employers generally claim ownership if your project meets any of these criteria:

• Company Resources: You used company-issued hardware, software licenses, or proprietary data.
• Business Relevance: The project relates to the company's current or "demonstrably anticipated" research and development.
• Time and Effort: The work was performed during "working hours," though this is often a weak defense if the contract is broadly written.

Action Item: Maintain a strict "air-gap" between your employer and your side project. Never use company hardware, email, or cloud storage for personal development.

Jurisdiction-Specific Protections

Some states provide statutory protections that override overly broad contract language. For example, California Labor Code Section 2870 prevents employers from claiming ownership of inventions developed entirely on your own time without using company equipment or trade secrets, provided the invention does not relate to the employer's business.

Key Jurisdictional Differences

• California/Washington/Illinois: Strong statutory protections for employee inventions developed on personal time.
• New York/Texas: Generally rely on the "four corners" of the contract; if you signed it, the court is likely to enforce it.

Action Item: Research your state's specific labor codes regarding "Invention Assignment." If you live in a state with strong protections, you have more leverage to push back on restrictive clauses.

How to Protect Your Side Projects

If you are currently employed and want to build, follow this systematic approach to mitigate risk:

1. Review the "Prior Inventions" List: Most contracts include an exhibit where you list inventions created before your employment. Ensure any existing side projects are documented here.
2. Request a Carve-Out: If you are starting a new project, disclose it to your manager or HR in writing and request a formal acknowledgment that the project is outside the scope of your employment.
3. Use Personal Infrastructure: Use your own hardware, own your own domain names, and use personal GitHub accounts.
4. Avoid Conflicts of Interest: Do not build products that compete directly with your employer.

Key takeaway: Transparency is your best defense. Disclosing a project early is significantly easier than defending a lawsuit after you have achieved commercial success.

Action Item: Create a "Disclosure Log" where you document the dates and nature of your side project work. This provides a paper trail proving the work was done on your own time.

Analyzing Your Contract with AI

Navigating the dense legal jargon of employment agreements is difficult for non-lawyers. TermScore uses advanced AI to instantly scan your employment contracts, identifying hidden "Invention Assignment" clauses and restrictive covenants that could jeopardize your side projects. By highlighting these specific risks, TermScore empowers you to negotiate better terms or understand your legal boundaries before you start building.