Can an employer legally claim ownership of my side projects?

In many jurisdictions, employers cannot claim ownership of side projects created entirely on your own time, using your own equipment, and unrelated to the employer's business. However, overly broad IP assignment clauses in NDAs can create legal ambiguity that employers may exploit.

What states have laws protecting employee side projects?

States like California, Washington, Illinois, and Delaware have specific statutes (e.g., California Labor Code Section 2870) that limit an employer's ability to claim ownership of inventions developed on an employee's own time without company resources.

How can I protect my side projects from my employer?

Ensure you work on projects outside of business hours, use personal hardware and software, avoid using company proprietary data, and negotiate an 'IP carve-out' in your employment agreement.

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.

What types of documents can TermScore analyze?

TermScore analyzes any legal document including freelance contracts, employment agreements, residential leases, NDAs, brand sponsorship deals, SaaS vendor agreements, and rental applications. Upload PDFs, Word documents, or images.

How much does TermScore cost?

TermScore offers a free plan with 3 scores per month. The Team plan is $15/month for 30 scores, and the Professional plan is $50/month for 500 scores with team collaboration features.

Is my document data secure?

Yes. Documents are processed in memory and analysis results are stored encrypted. TermScore never shares your document data with third parties and you can delete your data at any time from your dashboard.

Is it legal for an employment NDA to claim ownership of my personal side projects built outside of work?

Can an employment NDA legally claim your side projects?

Generally, no. In many jurisdictions, an employer cannot claim ownership of inventions or projects created entirely on your own time, using your own equipment, and that do not relate to your employer’s business. However, broad 'Invention Assignment' clauses can create significant legal risk if not properly scoped.

Key takeaway: An NDA is often a trap for the unwary. If your contract lacks a specific 'carve-out' for personal projects, you may be inadvertently signing away your intellectual property rights to your employer.

The Legal Framework: Invention Assignment Clauses

Most employment contracts include an 'Invention Assignment' clause. This clause dictates that any intellectual property (IP) you create during your employment belongs to the company. The legality of these clauses depends on whether they are 'reasonable' and whether they comply with state-specific labor codes.

The Three-Prong Test for Ownership

To determine if a project is truly yours, courts typically look at whether the work meets these three criteria:

Time: The work was performed entirely outside of your contracted working hours.
Resources: You used zero company resources, including laptops, software licenses, servers, or proprietary data.
Relevance: The project does not relate to the employer’s current business, anticipated research, or development.

Action Item: Audit your current contract for the phrase 'all work created during the term of employment.' If this phrase exists without qualifiers, your side projects are at risk.

Jurisdictional Protections: Know Your State Laws

Some states provide robust statutory protections for employees. If you live in one of these states, your employer’s NDA cannot override your right to own your personal work, provided you meet the statutory requirements.

State	Relevant Statute	Key Protection
California	Labor Code § 2870	Protects inventions made on own time without company resources.
Washington	RCW 49.44.140	Invalidates agreements requiring assignment of non-work-related inventions.
Illinois	765 ILCS 1060/2	Protects inventions developed entirely on employee's own time.
Delaware	19 Del. C. § 805	Prevents employers from requiring assignment of non-related inventions.

Action Item: Check if your state has an 'Invention Assignment' statute. If you are in a state without these protections, you are entirely dependent on the specific language of your contract.

Red Flags in Your Employment Agreement

When reviewing your NDA or employment contract, look for these common red flags that signal an overreaching employer:

'Any and all' language: Clauses that claim ownership of 'any and all ideas, concepts, or inventions' regardless of when or how they were created.
Broad definitions of 'Business': Definitions that include 'any field in which the Company may engage in the future,' effectively claiming everything you do.
Lack of Exclusions: The absence of a schedule or appendix where you can list pre-existing intellectual property.

Action Item: If you find these red flags, do not sign the agreement until you have negotiated an 'IP Carve-out' that explicitly lists your current side projects as excluded from the assignment.

How to Protect Your IP Before You Start

If you are currently building a side project, follow these steps to ensure you maintain ownership:

Document Everything: Keep a log of hours worked and a list of hardware/software used for your project.
Strict Separation: Never use your work email, work laptop, or company-provided cloud storage for your side project.
Disclose Early: If your project is in a similar industry, disclose it to your employer in writing and get a written waiver.
Use Personal Accounts: Use personal GitHub, AWS, or cloud accounts that are not linked to your corporate identity.

Key takeaway: Documentation is your best defense. If a dispute arises, you must be able to prove that your project was developed independently of your employment duties.

Final Thoughts on Contract Security

Navigating the intersection of employment law and intellectual property is complex, and the stakes—your ownership of your own creations—are high. TermScore can automatically analyze your employment contracts to identify overreaching IP assignment clauses and highlight potential risks to your side projects, giving you the clarity you need to negotiate with confidence.