Can My Employer Claim a Side Project I Built on Weekends?

What is an IP assignment clause for?

Employers need to own what employees create as part of their job. If you are paid to write software, the company reasonably expects to own the software. An IP assignment clause makes that explicit, and on its own it is entirely normal.

The problem is scope. Some clauses are limited to work created within the scope of employment. Others claim everything you create while employed, at any hour, on any subject. The broader the clause, the more likely it is to reach a side project.

States that protect personal-time inventions

Several states limit what an employer can claim. California Labor Code section 2870 is the best known, and Delaware, Illinois, Kansas, Minnesota, New Jersey, New York, North Carolina, Utah and Washington have similar laws. In general, an employer cannot require you to assign an invention you developed entirely on your own time, without using the employer’s equipment, supplies, facilities or trade secrets, unless the invention:

• relates to the employer’s business, or its actual or demonstrably anticipated research or development, or
• results from work you performed for the employer.

Which state statutes protect employee inventions?

The statutes behind this protection are California Labor Code § 2870, Delaware Code title 19, § 805, Illinois's Employee Patent Act (765 ILCS 1060/2), Minnesota Statutes § 181.78, North Carolina General Statutes § 66-57.1 and Washington RCW 49.44.140, and Kansas, New Jersey (N.J.S.A. 34:1B-265) and Utah (Utah Code 34-39-3) have similar laws. New York joined the group in September 2023 with Labor Law § 203-f, which makes an assignment clause unenforceable to the extent it reaches an invention developed entirely on your own time without the employer's equipment, supplies, facilities or trade secret information, unless it relates to the employer's business or results from your work there.

The details vary. Minnesota's statute lets the employer still claim inventions that relate directly to its business or to its actual or demonstrably anticipated research or development. Illinois puts the burden on the employee to prove an invention qualifies. Illinois and Washington, like California, require the employer to give written notice of the protection when the agreement is made. New York's law has no express private right of action and is enforced by the state Department of Labor.

Not every state leans toward employees. Nevada Revised Statutes § 600.500 makes the employer the sole owner of any patentable invention or trade secret an employee develops during the course and scope of employment that relates directly to that work, unless an express written agreement says otherwise. Utah's Employment Inventions Act also protects own-time inventions, though with its own definitions. If you work in one of these states, or in a state with no statute at all, the wording of your agreement and your prior-inventions schedule carry even more weight.

What those conditions mean in practice

“Own time” and “own equipment” are both required. Building your side project on a company laptop, on company cloud credits, or during working hours can undermine the protection even if the project has nothing to do with your job.

“Relates to the employer’s business” is the condition that surprises people most. If you work for a large technology company with broad research interests, a surprising range of software projects can arguably relate to its business. The more distant your project is from what your employer does or plans to do, the safer you are.

California also requires employers to give employees written notice of these protections when an agreement asks them to assign inventions, so the absence of that notice is itself worth noting.

What if your state has no invention protection law?

Outside these states, the answer depends mainly on the contract’s wording and general contract law. A clause limited to inventions made in the course of employment is much less likely to reach a weekend project than one that claims everything created during the term. Courts may still narrow an unreasonable clause, but you should not count on it.

How can you protect a side project from your employer?

These steps help regardless of your state:

• List existing projects and inventions in the prior-inventions schedule before you sign. Most agreements include one, and it is the simplest protection available.
• Never use company equipment, accounts, software licenses or time for the project.
• Keep the project clearly outside your employer’s business area.
• Keep records showing when and how you built it: commits, dated files, receipts.
• Ask for the clause to be limited to work created within the scope of your employment.
• If the project matters, ask your employer for a written acknowledgement that it is yours.

A worked example

Aisha is a backend engineer at a payments company in California. On weekends, using her own laptop, she builds a recipe-planning app that gains a small paying user base. Her employment agreement assigns “all inventions conceived during employment” to the company.

California Labor Code section 2870 protects Aisha’s app if it was developed entirely on her own time, without the company’s equipment, supplies, facilities or trade secrets, and does not relate to the company’s business or anticipated research, or result from her work there. A recipe app has no connection to payments. If Aisha kept the project on her own devices and accounts, her position is strong. If she had once tested it on a work laptop or used a company cloud account, the protection becomes harder to rely on.

Copyright is different from inventions

The state statutes above are framed around inventions. Creative work, such as writing, music, design and some software, is also governed by federal copyright law, under which works made by an employee within the scope of employment belong to the employer automatically. Work created outside the scope of your job generally belongs to you unless you have assigned it by contract. That makes the wording of your agreement especially important for creative side projects.

What a fair IP clause looks like

• Limited to work created within the scope of your employment, or using the employer’s resources.
• Includes a prior-inventions schedule you can complete.
• Includes the state-required notice of your personal-invention rights, where applicable.
• Does not claim work created after you leave.
• Does not require you to assign unrelated creative work.

Sample wording you can send

“I have an existing personal project, [name], which I have listed on the prior inventions schedule. Could we also confirm that the IP assignment in section X is limited to work created within the scope of my employment or using company resources?”

Common mistakes

• Leaving the prior-inventions schedule blank.
• Working on a side project on a company device.
• Using a company email address to register a domain or app store account.
• Assuming a side project is safe because it is small, then discovering the issue during an acquisition.

Open source contributions

Contributing to open source projects raises the same questions. If you contribute on your own time with your own equipment to a project unrelated to your employer’s business, the state protections above may apply. Many employers now have open source policies that approve contributions in advance, and some require approval even for personal projects. Check for such a policy, and get approval in writing for contributions that could be seen as related to your work.

Starting a business while employed

Building a business on the side raises IP questions and duty of loyalty questions at once. Even if the IP is clearly yours, you cannot use your employer’s time, resources or confidential information, solicit its customers, or compete with it while employed. If the business is related to your employer’s field, disclose it and get written approval before launching, and read the moonlighting and non-solicit clauses as well as the IP clause.

Quick checklist

• Check whether your state limits invention assignment.
• Read whether the IP clause covers work within the scope of employment or everything.
• Complete the prior-inventions schedule before signing.
• Use only your own devices, accounts and time for the project.
• Keep dated records of your development work.
• Check any open source or outside activity policy.
• Get written acknowledgement from your employer if the project matters.

Key terms explained

These are the terms you are most likely to meet in the clause itself and in any correspondence about it, explained in plain English so you can read your own contract with confidence.

• IP assignment: a clause transferring ownership of intellectual property you create to your employer.
• Invention: in these statutes, broadly a new idea, product, process or improvement, including software in many cases.
• Prior-inventions schedule: a list of inventions and projects you created before joining, excluded from the assignment.
• Scope of employment: the work you are hired and paid to do.
• Work made for hire: copyright work created by an employee within the scope of employment, owned by the employer automatically.
• Trade secret: valuable information kept confidential, such as source code or product plans.
• Duty of loyalty: an employee’s obligation not to compete with or act against the employer while employed.

Check before you launch

A side project becomes a problem when it starts to succeed: an acquisition, an investment round, or a sale all involve due diligence, and an unclear IP position can stop a deal. ClauseAudit reads your IP assignment clause, checks whether your state limits it, and flags missing prior-invention schedules and overbroad language before you rely on it.