What states offer the most protection for employee side projects?

California, Washington, Illinois, and Delaware have specific statutes that limit an employer's ability to claim ownership of inventions created on an employee's own time, provided no company equipment or trade secrets were used.

How can I tell if my side project is at risk?

Check your contract for 'Invention Assignment' or 'Proprietary Information' clauses. If the language is broad—covering anything 'related to the company's business'—your side project is likely at high risk of being claimed by your employer.

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.

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Can an employment NDA legally prevent me from working on personal side projects created during off-hours?

Q: Can an employment NDA legally prevent me from working on personal side projects?

An NDA alone typically protects confidential information, but most employment contracts include 'Invention Assignment' clauses. These can legally claim ownership of your side projects if they relate to your employer's business or use company resources, effectively preventing you from pursuing them independently.

Can an employment NDA legally prevent me from working on personal side projects?

An NDA typically protects trade secrets, but most employment contracts contain 'Invention Assignment' clauses that can legally claim ownership of your side projects. If your project relates to your employer's business or uses company resources, your employer may legally own the intellectual property, effectively barring you from developing it independently.

Key takeaway: An NDA is a confidentiality agreement, but an Invention Assignment Agreement is an ownership transfer. Always check for both in your employment contract.

Understanding the Difference: NDA vs. Invention Assignment

Employees often confuse NDAs with Invention Assignment Agreements. While an NDA restricts you from sharing company secrets, an Invention Assignment Agreement dictates who owns the work you create. If you are building a side project, the latter is the document that poses the greatest risk to your ownership.

Common Red Flags in Employment Contracts

Broad Scope: Clauses that claim ownership of any invention created during the term of employment, regardless of whether it relates to the company's business.
Resource Usage: Language stating that any project using 'company equipment, supplies, or facilities' belongs to the employer.
'Related to Business' Clauses: Broad definitions that include any project that 'could' relate to the company's current or anticipated research and development.

Action Item: Search your contract for the word 'Invention' or 'Assignment' and highlight any section that claims ownership of work created 'during the term of employment' without a carve-out for personal projects.

State-Specific Protections for Side Projects

Several states have enacted laws that override overly broad employment contracts. These statutes generally protect your right to own inventions created on your own time, provided you meet specific criteria.

State	Key Protection Statute	Primary Requirement
California	Labor Code Section 2870	No company resources used; not related to company business.
Washington	RCW 49.44.140	Developed entirely on own time; no company trade secrets used.
Illinois	Employee Patent Act	No company equipment/secrets; project does not relate to employer's business.
Delaware	19 Del. C. § 805	No company resources; not related to employer's business.

Action Item: If you live in a state with these protections, verify if your contract includes a 'Notice' clause, which is often required by law to inform you of these rights.

How to Protect Your Side Projects

If you are concerned about your current contract, follow these steps to mitigate risk:

Audit your contract: Identify if your employer claims ownership of 'all' inventions or only those 'related to the business.'
Use personal hardware: Never use a company laptop, software license, or cloud account to develop your side project.
Document your time: Maintain a log showing your project was developed outside of working hours.
Request a carve-out: If you are starting a new job, ask for an 'Excluded Inventions' addendum that explicitly lists your side projects as your sole property.

Key takeaway: If you use a company-provided laptop to write code for a side project, you have likely handed the legal ownership of that code to your employer, regardless of your employment contract's specific wording.

The Risk of 'Related Business' Clauses

The most dangerous language in an employment contract is the 'related to the company's business' clause. If you work for a software company, and you build a productivity app on the side, the company can argue that your app competes with their business or falls under their umbrella of expertise. Courts often interpret these clauses in favor of the employer if the language is ambiguous.

Action Item: If your contract contains a broad 'related to business' clause, consult with an employment attorney to draft a formal disclosure document to protect your current and future side projects.

Analyze Your Risk with TermScore

Navigating the legal jargon of employment contracts is complex, and missing a single clause can cost you the ownership of your hard work. TermScore uses advanced AI to instantly scan your employment agreements, flagging restrictive Invention Assignment clauses and highlighting potential risks to your personal projects. Upload your contract to TermScore today to gain clarity on your legal standing and protect your intellectual property before you start your next build.