Does signing an employment NDA prevent me from working on personal side projects?

Signing an employment NDA does not automatically prohibit side projects, but it often accompanies an 'Invention Assignment' clause that can grant your employer ownership of your work. Whether you can pursue personal projects depends on the specific language regarding 'scope of work' and 'company resources' in your contract.

Understanding the Legal Landscape

Most employment agreements are not just NDAs; they are comprehensive restrictive covenants. While an NDA prevents you from disclosing trade secrets, the real threat to your side project is the Proprietary Information and Inventions Assignment Agreement (PIIAA). This document often dictates that any intellectual property (IP) created during your employment belongs to the company.

The Three Pillars of Ownership

Employers generally claim ownership of your side projects if they meet these criteria:

• Temporal: The work was created during your term of employment.
• Substantive: The work relates to the company's actual or anticipated business, research, or development.
• Resource-based: You used company equipment, time, or proprietary information to develop the project.

Key takeaway: Never assume your side project is safe just because you worked on it at night. If it overlaps with your employer’s industry, the contract may grant them legal ownership by default.

Action Item: Locate your employment agreement and search specifically for the section titled 'Inventions,' 'Intellectual Property,' or 'Assignment of Rights.'

Jurisdiction Matters: State-Specific Protections

Your location significantly impacts the enforceability of these clauses. Some states have enacted laws that protect an employee's right to innovate outside of work hours.

Action Item: Check your state's labor code regarding 'Invention Assignment' to see if your contract's restrictive language is legally void in your jurisdiction.

How to Protect Your Side Projects

If you are planning to launch a side project, you must proactively insulate yourself from future litigation or ownership claims.

1. Review the 'Prior Inventions' Schedule: Most contracts include an exhibit where you list existing projects. Ensure your current side projects are documented here before you sign.
2. Strict Resource Separation: Never use a company laptop, Slack account, GitHub repository, or even a company-provided internet connection for your side project.
3. Written Disclosure: If your project is borderline, disclose it to your manager or HR in writing. Request a written acknowledgment that the project falls outside the scope of your employment.
4. Avoid Competitive Overlap: If your side project competes directly with your employer, no amount of 'own time' work will protect you from a breach of fiduciary duty or non-compete claim.

Key takeaway: The 'Prior Inventions' list is your strongest defense. If you didn't list it at the start of your employment, you are at a significantly higher risk of a claim.

Action Item: Create a 'clean room' environment for your project—use your own hardware, software licenses, and cloud infrastructure to ensure no company assets are involved.

Red Flags in Your Contract

When reviewing your contract, look for these specific phrases that signal high risk:

• 'Relating to the business of the Company': This is often interpreted broadly to include any industry the company might enter in the future.
• 'Developed during the term of employment': This is a blanket claim that ignores whether you worked on it on weekends or holidays.
• 'Sole and exclusive property': This language leaves no room for negotiation regarding ownership.

Action Item: If you see these phrases, consult with an attorney or use a contract analysis tool to assess the specific risk level of your agreement.

Conclusion

Your side project is a valuable asset, but it is vulnerable if your employment contract is poorly drafted or overly broad. By understanding the intersection of NDA obligations and invention assignment, you can take the necessary steps to protect your IP. TermScore can automatically analyze your employment contracts to flag restrictive invention assignment clauses and potential conflicts, giving you the clarity you need to build your projects with confidence.