Can your employer claim your side project? What US and EU law actually says, the 2025 case-law shift, and the 5 rules that keep your 5 AM work truly yours.
In most jurisdictions, your employer owns what you create as part of your job duties, using company resources, during company time. What you create on your own time, with your own resources, unrelated to your employer's business, is generally yours. The problems start in the grey area between those two poles — and in the specific language of your contract.
One disclosure before anything else: I'm not a lawyer. This article is based on research, not legal advice. Employment law varies by country, by state, and by the specific language of your contract. With that said, here's what the law actually says — not what the rumors say, not what your nervous colleague told you over lunch in the corporate cafeteria.
Three months into building my first product, I was reviewing my employment contract at 11 PM — the same contract I'd skimmed years ago when the salary was exciting and the golden handcuffs hadn't locked yet. Buried on page 14, a clause: "All intellectual property created by the employee during the term of employment shall be the exclusive property of the Company."
My stomach dropped. Did my employer own everything I'd been building at 5 AM? Every line of code? Every idea I'd finally pulled out of my notebook and turned into something real? I spent the next week researching employment law across Europe and the US. What I found surprised me — and if you're a corporate professional with a side project dream, it might surprise you too.
The fear that keeps builders paralyzed
This is the number one question I get from corporate professionals who want to build on the side: "Can my employer take what I build?" And the fear is rational. You've spent 10, 15, 20 years in a company. You've seen the legal department in action. Stories circulate about employers claiming side projects, about lawsuits, about founders losing everything over a clause they didn't read.
So you don't build. You wait. You add another idea to the notebook and tell yourself you'll start "when you quit." And then you never quit, because you never built anything to quit for. This fear kills more businesses than competition ever will — and among six-figure corporate professionals, the people with the most to lose and the most domain expertise to build with, it's an epidemic.
What US law says: California sets the standard
California Labor Code Section 2870 is the gold standard for employee protection. Any contract clause requiring you to assign inventions does not apply to inventions you develop entirely on your own time, without using your employer's equipment, supplies, facilities, or trade secrets, that don't relate to your employer's business or anticipated R&D. And any contract provision that tries to override this? Void. Unenforceable. Against public policy. Similar protections exist in Delaware, Illinois, Minnesota, Washington, and several other states — the trend is moving in the employee's favor.
But there's an important exception: if your side project relates to your employer's business, even if built on your own time with your own resources, your employer may have a claim. A marketing director at a fintech company building a competing fintech product on weekends? That's a problem. The same director building a fitness app? Totally fine. The good news for most corporate professionals: your expertise probably spans multiple industries, and the problems you see most clearly are often in completely different domains from your employer's.
What EU law says: country by country, but generally employee-friendly
The EU doesn't have a single harmonized law on this. But the general principle across most European countries is surprisingly favorable to employees:
| Jurisdiction | The rule for personal-time side projects |
|---|---|
| California (US) | Labor Code §2870: own-time inventions without employer resources, unrelated to their business, can't be claimed — override clauses are void |
| Delaware, Illinois, Minnesota, Washington (US) | Similar statutory protections for employee inventions |
| Portugal | No contract provision on inventive activity → rights belong to the employee; "ordinary scope of activity" exception must be exercised within 3 months, with additional compensation owed |
| Germany | Post-employment non-compete clauses are invalid without corresponding compensation |
| France, Italy | Similar compensation requirements for non-compete enforcement |
In Portugal (where I'm based), if your employment contract has no specific provisions on inventive activity, the industrial property rights belong to the employee. Full stop. The exception: if the invention falls within your company's "ordinary scope of activity," they can claim it — but they must exercise that option within 3 months of being notified, and they owe you additional compensation. For copyright and software, economic rights are presumed to belong to the author unless your contract says otherwise. The key word is "presumed" — your contract can override it, but if it doesn't address it, you win.
The pattern across Europe: employers have rights to work done in the scope of your duties, but personal projects built on personal time are generally protected — especially when your contract is silent on the matter.
The 2025 case-law shift
Here's something most people don't know: recent court decisions are shifting further in the employee's favor. Two 2025 US cases — Rasmussen Instruments v. DePuy Synthes and CAUSAM Enterprises v. ITC — established that broad assignment clauses aren't automatically determinative. Courts are now looking at the real-world timing of when an invention was conceived and developed, not just what the contract says.
Translation: if you can prove you built something on your own time, with detailed records, that evidence now carries more weight than it used to — even against aggressive contract language.
The 5 rules I follow
- Read your contract. Actually read it. Every clause about IP, inventions, non-compete, moonlighting, and outside activities. If you don't understand them, pay a lawyer for one hour. It's the best €200 you'll ever spend — you spend more than that on a single business dinner.
- Use your own everything. Your laptop, your internet, your cloud accounts, your tools. Nothing from your employer — not their email, not their Slack, not their code libraries, not even ideas discussed in their meetings. Complete separation.
- Build outside your employer's domain. If you work in healthcare tech, don't build a healthcare product. This is the single most important protection you have — and as a corporate professional with broad business experience, you probably see broken processes in a dozen industries. Pick one your employer has nothing to do with.
- Keep detailed records. Timestamps on your commits, personal email correspondence, receipts for tools you purchased yourself. A paper trail that proves when, where, and how you built every piece.
- Consider disclosure. In some cases, telling your employer — or getting a written acknowledgment — that you're working on an unrelated side project can actually protect you. Not every employer will be hostile.
The real risk isn't your employer
To repeat: I'm not a lawyer. If you have a broad IP assignment clause, an aggressive non-compete, or you're building something even remotely related to your employer's domain — talk to a lawyer before you invest months of 5 AM mornings into something you might not own.
But take this away: the law is more favorable to side-project builders than most people think. The fear that stops corporate professionals from building is often based on myths, not statutes — on water cooler warnings, not case law. You've already spent years making your employer rich with your ideas and your problem-solving. The law, in most places, protects your right to also build something for yourself. The real risk isn't that your employer will steal your side project. The real risk is that you spend another decade letting fear keep your best ideas locked in a notebook.
Frequently asked questions
Does my employer automatically own what I build in my free time?
Generally no. The baseline across most jurisdictions: what you create on your own time, with your own resources, unrelated to your employer's business, is yours. But contract language and jurisdiction matter — read your contract, and get an hour of legal advice if anything is unclear.
What if my side project is related to my employer's business?
That's the danger zone. Even if built on your own time with your own resources, your employer may have a claim when the project relates to their business or anticipated R&D. The safest protection is to build in a completely unrelated domain.
Should I tell my employer about my side project?
In some cases, disclosure — or a written acknowledgment that your project is unrelated to their business — can actually protect you. Many employers will sign a simple acknowledgment, especially when there's clearly no overlap. If your contract has aggressive clauses, ask a lawyer first.
Is this legal advice?
No. This is research, not legal advice. Employment law varies by country, by state, and by the exact wording of your contract. One hour with an employment lawyer costs around €200 and settles your specific situation for good.