Why Your Company Owns Your Outside Work


This topic comes up every few months. Someone makes something "on their own time". The company they work for finds out and claims ownership. Everyone screams "It's so unfair!"

No, it's not. Here's why.

First let's be clear. We're talking about outside projects related to your company's business. So for example if you work at a video game company and make a video game outside company hours. Video games are related to the company's business. If you're working at a video game company and at home you arrange flowers and sell them, that's not related to your company's business.

So, we're talking about the first case. Something clearly related to your company's business.

Let's play a thought game. Let's imagine everything you did outside "work time" belonged to you. You're in a meeting at 11am where your team explains they need a solution for a certain problem. At 12pm you go to lunch. Around 12:30 you think of the solution. At 1pm you get back to work. Do you charge the company for the solution? You thought of it outside of work so by our make believe rules it belongs to you. Maybe you should patent it before you tell them you thought if it. There's no way business could work if you could do that. They're paying you a salary in exchange for your support/ideas/work for the company 24/7. It doesn't matter when the solutions come to you. If it wasn't that way you'd have an incentive to always claim you thought of the solutions "outside company hours" and therefore extort them for more money.

This feature is called your "Duty of Loyalty". It basically means in exchange for being an employee you have a requirement to do what's best for the company within reason. For example not to compete with the company, not to steal from them, not to withhold info related to your job from them, etc...

I hope you can see how it has to be this way. It has to be that the company owns your stuff related to their business outside of work because anything else would be untenable. They're not being jerks. They're just making sure that for paying you $XXXXX or $XXXXXX a year your required to not be a dick to them.

So, now that we've established it couldn't work any other way, the only other issue is "what's related". Honestly that's for a court to decide. There's clearly a spectrum. Work for an FPS company and try to make an FPS on the side. Pretty clearly a conflict of interest. Work for a game company and try to make a game in a different genre on the side? That's pretty far on the related side of the spectrum. I'm guessing most people would side with the company. Make a game website? It probably depends on the contents since your company probably also runs one or more game websites. Is it as related as a game? Probably not, but it's far more related than say running a forum about dentistry. Your company makes mobile games and you make a mobile app? It's certainly more related than you doing woodworking. Your company makes 3D games and you make a 3D VR system that most likely their games will all be supporting soon? Sounds pretty close to related to me.

Ultimately you have 2 choices. Make a wild guess and risk losing it all when some court decides .. or .. ask for permission and a contract where the company signs a document that says they're claiming no ownership in your side project. Some good companies routinely give such permission. Google is one for example. Better to be safe than sorry.

Arguably the problem is one of mis−understanding. Most people think of jobs has 9−5 or 8 hours day. You're paid for 8 hours and anything outside of that is yours. But that's not actually the relationship you have with your employer. You have what's called a "Duty of Loyalty"

But even if your employer does not have a specific moonlighting policy, there is a legal concept which applies to all employees called the “duty of loyalty.” Because legally employees are “agents” of their employer, they are required to act in the best interests of the employer during their employment. The higher the level of the employee, the greater this duty of loyalty is.

And let's be clear, in most places the company doesn't have to put anything in your employment contract. If you're a full time employee the default is they own your outside work, if and ONLY IF it's related to their business.

Why risk it? Ask for permission. If they say no that's one reason not to continue working at that company. At least you'll be safe.

Some links:

Under the Labor Code, employers cannot regulate employees' lawful off-work activities. Therefore, unless "moonlighting" creates an actual conflict of interest, the employee is free to work other jobs simultaneously.


...an employee cannot be required to assign any of his or her rights in an invention he or she develops “entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information” unless:
  • when the invention was conceived or “reduced to practice” (actually created or a patent application filed) it related to the employer’s business or actual or “demonstrably anticipated” research or development, ...



Of course I AM NOT A LAWYER. Don't rely on this for your legal advice.

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