Moonlighting and Side Projects: Who Actually Owns What You Build on Your Own Time

Most developers and founders assume that anything they build on weekends, on personal hardware, and without company resources belongs to them. That assumption is often wrong. Employment agreements routinely contain invention assignment clauses broad enough to capture side projects, open source contributions, and early startup work — even when none of that touches the employer's core business.

What Your Employment Agreement Probably Says

Almost every tech employment agreement includes some version of an invention assignment clause. The clause typically requires you to assign to your employer all inventions you conceive or reduce to practice during the term of your employment. The critical word is "during" — not "at work" or "using company resources," just during the employment relationship.

Many clauses go further and add a "relates to" hook: inventions that relate to the company's current or reasonably anticipated business, or that result from work you performed for the company, are also swept in. A single "relates to" clause can cover a lot of ground if your employer is in a broad space like cloud infrastructure, machine learning, or mobile software.

The Four Triggering Tests to Watch For

When you read your agreement, look for these four assignment triggers:

• Time: invented or conceived during employment, regardless of where or when
• Resources: made using company equipment, software, networks, or facilities
• Subject matter: relates to the employer's business or reasonably anticipated business
• Derivation: results from tasks you were assigned or work you did for the company

If your side project hits any one of these, the employer may have a colorable claim. If it hits two or more, the risk is real.

What the Law Gives Back to Employees

A number of states limit how far an employer can reach into an employee's personal time. California, Delaware, Illinois, Minnesota, North Carolina, and Washington each have statutes that protect inventions developed entirely on the employee's own time, without company resources, and that do not relate to the company's business or result from company work. These protections are meaningful, but they are not automatic shields — you still have to satisfy all the conditions, and "does not relate to" is frequently the hardest one to establish when your employer is in a broad technology category.

If You Are Not in a Protective State

If you work remotely from a state without an employee invention statute, the employer's contract language controls almost entirely. Courts in those states will enforce broad assignment clauses unless the clause is otherwise unconscionable. Being in a state without statutory protection means the written agreement is the whole game.

The Prior Inventions Schedule and Why You Must Use It

Most tech employment agreements include a prior inventions schedule — a blank exhibit where you list inventions you made before your hire date that you want to exclude from the assignment. This is one of the most underused protections available to employees and contractors.

If you have an existing side project, an early-stage startup concept, or open source work you intend to continue, listing it on the prior inventions schedule at the time you sign is the clearest way to carve it out of the employer's claim. A vague description is better than nothing; a specific one is better still. If the schedule is blank when you sign, you are implicitly representing that you have nothing to exclude — and that representation can be used against you later.

If the agreement does not include a prior inventions exhibit, ask for one before you sign. Most reasonable employers will add it without objection.

After You Are Hired: Ongoing Projects

The harder problem arises when you start something new after your hire date. At that point, the prior inventions schedule cannot help you. Your options are limited:

• Get a written carve-out from your employer before you begin. Some employers will sign a side-project approval letter acknowledging that a specific project is outside the scope of the assignment clause. Get it in writing, with specifics.
• Keep meticulous separation. No company equipment, no company time, no company networks. Log your development hours independently. The documentation matters if there is ever a dispute.
• Assess the "relates to" risk honestly. If your employer sells developer tools and your side project is also a developer tool, the overlap is hard to argue around no matter how clean your separation is.

Practical Takeaways

• Read your invention assignment clause before you sign — not after you have already shipped a product
• Fill out the prior inventions schedule completely; a blank schedule works against you
• Identify the four triggering tests in your agreement and map each one to your specific project
• If your state has an employee invention statute, learn its conditions — they are real but have limits
• For post-hire projects, a written employer approval letter is the only reliable protection
• When in doubt about whether a project "relates to" your employer's business, assume it does until a qualified attorney tells you otherwise

This guide is general education, not legal advice, and does not create an attorney–client relationship. For your specific situation, talk to a registered patent attorney.