I could use some advice from people who have experience in computer science. One of my children will be graduating soon and has started interviewing for jobs. The issue of “work for hire” vs work done on an employee’s own time and on their own equipment has come up.
How common is it for employers to demand the rights to anything an employee creates (24/7) while under their employ? Is it typical to see language laying claim to anything they may create after leaving the company that’s “related” to any “subject” the employer currently covers or may cover in the future? I know personally of contracts that have this language and others that specify that what the employee creates on their own time and on their own equipment belongs to them, but my sample size is very small. I just find it appalling for a prospective employer to tell an applicant that “if you make the next (insert any well known product wholly unrelated to what the employer does), I should get a piece of it.” I think the right call was to walk away, but it’s discouraging. This is something we deal with in broadcasting and some companies are reasonable and others are not. I’m just wondering if there are reasonable companies in tech.
I cannot address your specific questions about CS employment contracts, but will offer an opinion.
To the extent that the employer is trying to prevent the theft of intellectual property such a contract seems reasonable even though enforcement may be difficult.
To the extent that the employer is claiming rights to all work product of an employee on a 24/7 basis, it may or may not be reasonable depending upon the facts and circumstances of a particular matter.
With respect to post employment creations, it may depend upon a variety of factors including relevant state law and whether or not it can be shown that a theft of intellectual property has occurred and resulted in the creation of new product.
In short, until litigated or legislated, it is difficult to know whether or not these type of restrictions in an employment contract can or will be enforced.
The other thing prospective employees (generally) need to be aware of before signing the employment agreement is post-employment non-compete agreements.
It is not universal, but very common, for employers to ask employees to sign agreements like you describe. However, I do not think I have ever seen something that purports to give the employer specific rights to post-employment inventions, as opposed to standard prohibition on using confidential information of the employer after employment. That could allow the ex-employer to block development or sale of a post-employment invention that is based on know-how or processes gained during employment. But that’s not the same thing as having a claim to ownership.
It is also not common, but far from unheard-of, for employees to refuse to sign such agreements, or to demand and receive mark-ups, and get away with it.
I think an issue like this does come up sometimes. I could see the reasoning for a company wanting to keep its IP.
However, I don’t think they do (or even should) have claim you something you create after your position with them. That might become a legal issue then.
This has all been very helpful, thank you. The offer came at the end of a paid internship. We forwarded the contract to our lawyer so we’re pretty clear about what it says. Is it enforceable? We wouldn’t know for sure until DC is sued and wins or loses a lawsuit.
I think there was a lot of pressure put on DC to sign. The employer refused to discuss adding a clause to give DC the rights to works not “made for hire” and said they “didn’t understand the legal stuff,” but “everyone else signed it” so it was a take it or leave it deal. They basically told DC that if you do anything in the future that makes money they should get a cut. DC said I’ll give you an answer at the end of the week.
Every single day after that the employer tried to convince DC to sign it. One day it was because DC couldn’t be added to payroll until they did. DC has been working there for pay for months, so they’re already on the payroll, just at a reduced rate. The next day the employer said “why don’t you just sign it, even if you don’t agree to the terms, so I can pay you?” DC reminded them that they had a process in place and asked if they could use that until they made their decision on Friday. The boss said fine then late that afternoon sent a one line email moving the response date to the start of the next business day. It was all very unpleasant.
This is interesting. I’ve reviewed two different offers to our S and have not seen anything that we’ve read claiming rights to anything outside of work or non-work related. Now, if one is working at a company on “X” and you are working on a better version of “X” outside of work I can see a conflict. However, you are working on something completely different I don’t see how a claim could be enforced.
I’m not a fan of “exploding offers” and I thought that tactic was going out of style, but evidently not. Wonder why they feel adding time pressure is beneficial to the employee-company relationship long term?
Can you clarify whether he is currently working as a regular employee at a post-graduation job, or in a paid internship, and (if the latter) when the paid internship started and will end? It seems unclear from you posts above.
From what I have seen, it is more typical to include such employee agreements in the offer, rather than surprise people who have already started working there. But then it may not be surprising if some unethical employers did that to increase leverage over the employee who by then has turned down other offers and is no longer actively looking.
It’s too bad that it’s become unpleasant. Your S may now be known as being “that problem employee” (when he accepts the offer) and that could follow him around the company. FWIW one company I worked for hired someone, and was very annoyed at the pay negotiations. They hired them anyway because they needed someone with the knowledge at the time, but they got rid of them in a year when they found someone else who wasn’t “difficult” and had the knowledge.
I don’t think your DC should sign anything that they are not comfortable with. The wording as you have represented it (“anything they may create after leaving the company that’s “related” to any “subject” the employer currently covers or may cover in the future”) is overreach and not only would create problems for your DC down the line, but also is something that would at least theoretically have to be disclosed to future employers.
In reality, it probably would never actually come up, unless and until your DC creates something that starts bringing in a lot of $$ and then suddenly the old employer will pop up and want a piece of the action. And then given costs of litigation, nine times out of ten it makes more financial sense to reach a financial settlement than to fight a court battle. But I can see it also being a problem if your DC wants to register a copyright or seek a patent somewhere along the way as well.
So no – if the company wants to protect its trade secrets or have an employee enter a non-compete agreement, that’s one thing – but I think trying to lay claim to anything that person may do on their own in the future is way out of bounds. I know it may be very difficult for DC to walk away from this job offer… but I think you have to conceptualize this as something that in itself has monetary value. In this case the company may be paying their employees $X but if they are asking for a potential $XXX in return, it’s a problem.
Also, the employer’s statements that they “didn’t understand the legal stuff,” but “everyone else signed it” so it was a take it or leave it deal – is really not acceptable. Or at least it’s a very good reason to “leave it”.
That the state of California had to write a law on the subject in 1979 (see reply #1) indicates that, in the absence of that law previously, cases of that nature presumably did occur and/or show up in courts.
So it would not be surprising if that still occurs in states where there is no law prohibiting such things.
Has your attorney researched past lawsuits involving this company ?
There are several issues. The two basic issues differ in that one is concerned with the employee’s creations while working at the firm while the other focuses on post employment creations.
The first might be justified as the firm does not want to compete with its own employees. The second focus can be justified if tied into theft of the firm’s intellectual property.
A no compete would be more appropriate since the firm might have some rights to protect if they trained the employee & a properly written non-compete agreement could cover both situations while employed & post employment. Why isn’t this firm using a non-compete agreement ? Is it because the law is more well established & easier to research & apply ?
When a company tells a future employee that the owner or manager doesn’t understand all that legal stuff in the employment contract, then it is time to run away since it is unlikely that the employer will stop lying once the employee is on board. The other course of action would be to hire an employment attorney to explain the employment contract to your son. And, then once he understands, let him run away as fast as he can.
Too many problems & too many warning signs this early on in a relationship is a clear indication that future problems will follow.
P.S. Does the employment contract also require that the employee live in company housing & only shop at the company owned store even after he no longer works there ?
The while-employed restrictions may well be enforceable.
Think about an accounting firm or a law firm. Accounting firms do not want their salaried employees moonlighting as tax preparers or consultants for other firms. Law firms don’t want their associates taking on clients and cases that may well conflict with the firm’s clients and cases.
It is reasonable for one’s full-time employer to expect all work efforts in that field to benefit that full-time employer.
But post employment restrictions need limits. Limits are often expressed in terms of time and/or distance.
Employment contracts should be fully understood by all parties to the contract. In this case, you are being told that the employer doesn’t understand the legal stuff, but that your son or daughter should sign it because all of the other employees did.
P.S. Worth noting: The last line of the California law cited in post #1 in this thread places the burden of proof upon the employee. This is not good for any employee who signs such an employment contract as being offered to your son or daughter.
Thank you so much for all the replies. They’ve been very helpful.
I’m sorry my posts were confusing. This was a part-time (paid) internship arranged with the help of a college professor about a year
ago. I think DC assumed the professor knew the employer personally, but I don’t know if that’s true. Anyway, DC has been working a half dozen hours/week during school as a paid intern. Over winter break they worked as a full-time intern with the understanding that an official job offer (for a position that would be full-time after graduation in May) would be coming early in the new year.
After a lot of thought and several discussions with our attorney DC decided to reject the offer. I think it was a sound decision, but I’m disappointed for them because they were so excited. There are lots of other companies, though, and DC is eager to try again.
Post-employment non-compete agreements can have their own similar issues, in that employers may write them broadly, such that most alternative jobs and employers could be construed as “competition” (particularly for large employers doing business in many areas), so that such an agreement is basically the employee agreeing to be unemployed for some amount of time after ending employment with the employer.
In California, the typical agreements commonly include:
Invention assignment to the employer, subject to limitations of state law (see reply #1).
Non-disclosure and non-use of employer's trade secrets, etc. outside of the employer.
No moonlighting another job concurrently with full time employment with this employer.
Non-compete clauses in employee contracts is an issue for intern/co-op student jobs. For example, Amazon had students sign one that said 18 months, which if the student worked at Amazon before their senior year would impact what jobs they could take once they graduated. These agreements come under state law and so their enforceability will vary depending upon the state (and become more complicated if the agreement is signed in a different state than the person ends up working.)
In CS, contracts very often have an intellectual property clause, where anything you work on during their employment belongs to the company. So no working on the next big tech thing in your garage at night after leaving the office.
I would see lots of red flags for an employer pressuring a soon to be college grad into signing a contract. Companies who make offers to interns often put a time limit on the offer (one company I know of will pay a bonus if the student signs up early). But these time limits are frequently negotiable if the company really wants that student.
Good Luck to your child finding the right job. The CS hiring process can be trying (many rounds of interviewing and skills tests).