To Moonlight or Not to Moonlight: The Questions Surrounding Your Employment Agreements

This blog was originally written as a guest post for Eleven Fifty Academy.

In the age of new technology, in which companies are spawning every day and an abundance of talent can be found in-house at many companies, developers and software engineers often consider doing work on the side – whether it be at a startup or personally starting their own business.  It is critical that these developers are aware of the limitations their employment agreements might place on them and any activities they carry out outside of work.  An individual’s employment agreement can often consist of a variety of contracts and clauses that affect side work, including the following:

• Non-compete – this contract addresses the ability of an individual to work for another company. It is a common misconception that a non-compete is unenforceable. But, a well drafted non-compete that includes reasonable limitations regarding the scope of work, geographic scope, and when the agreement expires are regularly enforced.
• Non-disclosure/confidentiality – these contracts address the ability for the individual to use information (typically trade secrets) or disclose information to another individual or company.  This can prevent a past employee from using information and systems developed at his previous employer with his new employer.
• IP protection/rights – this concerns the ownership of any trademarks, copyrights, patent, or trade secrets created by individual while employed.

The enforceability of these contracts and interpretation of clauses within them can vary drastically from state to state.  Additionally, the type of employment (employee vs. independent contractor) the individual falls under can affect the enforcement of these contracts.

When assessing whether or not you are violating of one of the above agreements the first step is to give your employment agreement a thorough reading. Some critical questions to ask yourself regarding your ability to moonlight or have a side project under your employment agreement are:

• Does the scope or type of work I am conducting outside of my employment overlap with the company’s products or the type of work I am doing for the company?
• Is the work that I am doing or the technology I am developing something my company is currently interested in or may become interested in?
• Is the product I am developing something that customers of my employer want?
• Am I using any company resources developing the new product?

If you do not have your employment contracts, you can approach your manager or HR department and kindly ask to see your contract or question whether you are able to work on side projects outside of work per your contract.  One way to best approach this is by telling them you have an opportunity for some side work and you wanted to check to ensure you are compliant with your agreement.  It is highly recommended to consult an attorney regarding your employment agreement prior to signing any agreement, especially if you are thinking about doing side work or starting your own company.

For more information and in depth discussion of employment contracts, independent contractor vs. employee, and IP ownership issues, check out Gutwein Law’s legal courses covering these topics and more at the Eleven Fifty Academy on February 18-19. Early bird prices are running until January 21st.