California Employee IP Assignment (Labor Code § 2870) Carve-Out & Redline Auditor
Under California Labor Code § 2870, an employer cannot legally claim ownership of an invention you developed entirely on your own time without using the employer’s equipment, supplies, facilities, or trade secrets—UNLESS it "relates at the time of conception to the employer’s business, or actual or demonstrably anticipated research or development." Employers exploit that second half by defining the "Company’s Business" in your PIIA as broadly as "any software, AI, cloud, or consumer application," effectively seizing your weekend startup even in California!
Senior Engineer’s Weekend AI SaaS Side-Project Claimed by Employer During Series A Diligence
A staff engineer built an unrelated dev-tool on nights and weekends using his personal MacBook, then left to raise a Series A. Because his prior CIIAA swept in all inventions created "during the period of employment" and claimed it "related to Company’s anticipated R&D," the former employer blocked the VC round until paid $350,000.
RedlineCore™ enforces the statutory off-duty invention carve-out (CA Labor Code § 2870 / WA / IL / NY standards) and attaches an explicit Prior & Side-Project Invention Schedule.
Check Your Full Contract PDF for Cross-Section Overrides (Free 60s Scan)
Fixing one clause alone often fails when a buried definition, exhibit, or survival clause elsewhere in your Commercial Property & Business Loss neutralizes your protection. Drop your PDF or Word (.docx) below for an instant, 100% anonymous cross-section audit.
“California Labor Code § 2870 Protection & Prior Inventions Carve-Out: (a) Pursuant to California Labor Code § 2870, this assignment strictly excludes any invention developed entirely on Employee’s own time without using Company’s equipment, supplies, facilities, or trade secret information; (b) for purposes of § 2870(a)(1), "Company’s business or demonstrably anticipated R&D" shall be narrowly limited to Company’s specific commercial product line as of the date of conception
What to Say to the Commercial Lines Carrier / E&S Insurer
"To make sure my California Labor Code § 2870 carve-out is meaningful, I need to list my existing side project on Exhibit A and narrow the definition of the Company’s business to our actual product vertical rather than all software/AI generally."
Why they drafted it this way: Tech employers attach the statutory text of California Labor Code § 2870 at the back of the contract so you think you are protected, while quietly defining "Company’s anticipated R&D" inside Section 2 to cover the entire tech industry.
Mandatory Audit Checklist Points
- Explicitly list all pre-existing code, domain names, and side startups on Exhibit A (Prior Inventions)
- Narrow the definition of "Company’s Business / Anticipated R&D" under Cal. Labor Code § 2870(a)(1)
- Strike all post-employment non-competes and customer non-solicits (void under Cal. Bus. & Prof. Code § 16600 & SB 699 / AB 1076)
- Never use a company laptop, company GitHub, or company Slack/email for any personal side project
Paste Your California employee IP assignment Labor Code 2870 carve-out Section or Upload Your Full Commercial Property & Business Loss (.pdf / .docx)
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Frequently Asked Questions
Does California Labor Code § 2870 automatically protect my weekend startup?
Only if your weekend startup does NOT relate to your employer’s "actual or demonstrably anticipated research or development" AND you never touch your work laptop or work hours. If you work at a large tech company, their lawyers will argue everything in software is "anticipated R&D" unless you list your project on Exhibit A and narrow the scope in writing.
Are customer non-solicitation clauses enforceable in California employment agreements?
Under California Business & Professions Code § 16600 (strengthened by SB 699 and AB 1076), post-employment non-compete and non-solicitation clauses that restrain an employee from engaging in their profession are void and unlawful in California.
How do I redline California employee IP assignment Labor Code 2870 carve-out traps in my Commercial Property & Business Loss anonymously without creating an account?
Upload your Commercial Property & Business Loss PDF or Word (.docx) draft to ClaimXray.com to run the "California Employee IP Assignment (Labor Code § 2870) Carve-Out & Redline Auditor" defense cartridge 100% anonymously—with zero account registration, zero email login, and stateless in-memory processing. RedlineCore™ 4.0 flags California employee IP assignment Labor Code 2870 carve-out exposure (typically 100% loss of founder/side-project IP & startup equity ownership; documented unredlined loss: $350,000 settlement share forfeiture to former employer), checks for cross-section overrides, and exports a ready-to-send Microsoft Word (.docx) Track-Changes file.
More Commercial Property & Business Loss Redline Playbooks
View All Commercial Property & Business Loss PlaybooksNew York Employee IP Assignment (NY Labor Law § 203-f) & Non-Compete Redline Auditor
New York enacted NY Labor Law § 203-f rendering unenforceable any employment provision requiring an employee to assign inventions developed entirely on their own time without using the employer’s equipment, supplies, facilities, or trade secrets. However, like California, § 203-f contains an exception for inventions that "relate to the employer’s business, or actual or demonstrably anticipated research or development"—which NYC finance, media, and tech employers draft to swallow everything you ever create, alongside unpaid "Garden Leave" notice periods.
Texas Executive & Physician Non-Compete Redline Auditor (Tex. Bus. & Com. Code § 15.50)
Under Texas Business & Commerce Code § 15.50, a non-compete is enforceable if it is ancillary to an otherwise enforceable agreement (like providing confidential information or specialized training) and contains reasonable limits on time, geographic area, and scope of activity. Texas employers routinely draft 24-month nationwide non-competes that apply even if the company fires you without Cause after 90 days—and for physicians/healthcare practitioners, try to inflate the mandatory statutory buyout clause.
Washington State Employee Non-Compete (RCW 49.62) & IP Assignment (RCW 49.44.140) Redline
Washington State has some of the strongest statutory employee protections in the country under RCW 49.62 (recently strengthened by SB 5935) and RCW 49.44.140: (1) Non-competes are void unless total annualized compensation exceeds the inflation-adjusted statutory threshold (~$120,559+ for W-2 employees and ~$301,399+ for 1099 contractors), cannot exceed 18 months, and IF you are terminated via layoff, the non-compete is VOID unless the employer pays your full base salary during the entire restriction period! (2) Under RCW 49.44.140, employers must give written notice that side inventions created on your own time belong to you.
Illinois Freedom to Work Act (820 ILCS 90) Non-Compete & IP Assignment Redline Auditor
Under the Illinois Freedom to Work Act (820 ILCS 90/1 et seq.), an employer’s non-compete or non-solicitation covenant is illegal and void unless: (1) the employee earns above the statutory salary floor ($75,000+ for non-competes / $45,000+ for non-solicits, escalating every 5 years); (2) the employer gives 14 calendar days to review the covenant before starting; AND (3) where "at-will employment alone" is the consideration, the employee actually works for the employer for at least 2 full years after signing (or receives equivalent financial/professional consideration)! In addition, the Illinois Employee Patent Act (765 ILCS 1060/2) protects personal inventions.