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I started a new job yesterday and was given a document titled '[Company] Non-disclosure Agreement'. Hidden in that document is a clause stating that everything I do, on or off company time, is owned by the company. This is unacceptable, as I wish to retain ownership of my personal projects (none of which are directly related to the company's line of work).

My current plan is to not sign the document and hope HR forgets about it. If they bring it up, I'll explain my objection to that clause and offer a couple solutions:

  1. Remove the clause entirely; or
  2. Modify it so that that it only covers activities related to the company's business.

Is this a decent plan? What do I do if they don't allow any changes to the agreement?

Another option would be to sign the document, continue working on my projects in private, and then magically have a very productive month right after I leave the company. I think this is what most people do with these sort of agreements, but it makes me uneasy.

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    You didn't say where you're located. I would modify it, cross the "off company time", add a few dozen projects I already started (including half baked ideas and already completed projects), sign it, copy it, & ask them to sign it with a post it note "sign here" and a cover letter on top describing your change. Go in expecting that they're going to sign it like it's no big deal. And don't tell them you that you're going to modify the clause before you actually modify it yourself. Do they have an employee manual as well that you're agreeing to abide to? If so, ask them for a copy of it as well. – Stephan Branczyk May 17 '16 at 22:31
  • @StephanBranczyk: Thanks, that sounds like a better idea. I'm located in Michigan, United States. – Snowball May 17 '16 at 22:37
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    This is why you should always demand to see ALL employee agreements and policies before accepting any offer. – Wesley Long May 17 '16 at 23:39
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    Hmm, everything you do is owned by the company? What about kids you may have while you are employed by the company? :) – Masked Man May 18 '16 at 5:54
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    I asked, in writing, for written confirmation that the company wished to assume legal responsibility for any malicious software I wrote in my own time. The clause disappeared. – The Geoff May 30 '16 at 13:44
19

In my experience as an owner of a company that does the majority of our work as a contracted team, I can tell you that this is very common. They handed you a boilerplate agreement and chances are a good percentage of people just sign it and hand it back, which is a bonus for them. That said, they are absolutely aware that the passage exists and that some more studious candidates will see it and question it.

So the question is (and correct me if i'm wrong), how do you address this problematic passage inside of a contract that you were ready to sign?

What I have done in every similar situation is to simply rewrite the areas of the contract in a way that I am comfortable with. Typically contracts are sent to me in a PDF or Word doc format that allows me to actually edit the original document with edits and re-save it. If that is not possible because it is a hard copy or a locked document, then you should write up a contract addendum.

What is a contract addendum?

A contract addendum is simply a document that outlines the disputes you have with the contract as it currently stands and your desired outcome. The document itself could be signed as a contract addendum on top of the original contract or it could be used to rewrite the original contract.

How to format a contract addendum

When writing up your document try to match the style (margins, fonts, etc) of the original document.

Title the document using the name of the original contract or a descriptor of the original document like this:

"Addendum to January 1, 1970 Employment Contract with [Your Name Here] and [Company Name Here] "

Lead into the document explaining that this is an addendum to the original document and changes outlined in this document will be effective as soon as the contract or addendum is signed and agreed upon. A sample lead-in would read something like this:

Outlined below is a list of minor changes I would like to propose to the original Employment Contract. If these changes suit the company's needs this document and accompanying Employment Contract will be effective immediately upon signature of both parties

Outline your changes clearly and concisely. Start the section by typing up the original paragraph that you intend to change and mark it as such. If the contract has item numbers, numbered lists, or headlined sections, make sure to reference those when reporting changes.

Make sure your changes are visually recognizable from the original content. Make use of bold, italics, and strikethroughs when rewriting and editing an existing section and provide a key. This section could look something like this:

Original Item:

ii) Ownership of works: This is a work for hire agreement whereby all intellectual property created by the employee while under contract with [ company ] will remain owned by and whole by [company ]. By signing this document you agree that all work and work products created by you (the employee) while under contract will exist under the ownership of [ the company ].

  • Additions are bolded, edits are in italics and deletions are strikethrough

Addendum to item ii:

ii) Ownership of works: This is not a work for hire agreement and all copyright ownership of intellectual property will be maintained by the employee. By signing this document you agree that all work and work products created by you (the employee) while working under [the company's] time will will exist under the ownership of [ the company ]. be granted an irrevoccable, exclusive license of use to [the company] in perpetuity.

From there make sure to include a place to sign and date the document and be certain to include the pages of the original document with your new document.

Addressing the issue

The final step is to address the actual issue of presenting this to them. My recommendation is that you simple have a casual meeting where you bring up the contract and tell them that you are excited to get started but had a couple do small changes. This can even more easily be done over email in one fell swoop. Simply inform the correct person that you have the contract and have signed it but have some changes that you need to be made in order to move forward.

Handing them paperwork that is enforceable, clear, and professional will give them a very quick and easy path to completing the process, and that is what the majority of clients and employers want once they get to the stage where you are basically hired and this is an informality.

Including your signature on your addendum (and not on the original contract) shows them that you are serious about your changes but also serious about signing the contract and doing business. From there they will be the only ones holding up the work. As a result you will look like you have it all together, are a professional, and value yourself and your work.

** As far as what the actual addendum should say in your case; I can't really guide you on. I would need to see the original contract and get a better feel for what position you have in the company. The content I had written above is simply sample content and not be taken as guidance for how you should alter the actual contract.

7

My current plan is to not sign the document and hope HR forgets about it. If they bring it up, I'll explain my objection to that clause and offer a couple solutions:

Remove the clause entirely; or Modify it so that that it only covers activities related to the company's business.

Is this a decent plan?

It's reasonable not to sign anything that you find objectionable. It's also reasonable to request that the document be modified such that it is no longer objectionable.

You may want legal assistance here if you don't have sufficient expertise in cleaning up such a document. And you may want legal assistance anyway, to make sure your interpretation of the document is correct before you decide what to do about it.

What do I do if they don't allow any changes to the agreement?

You can refuse to sign it as is and let them make the next move. Or, you could quit.

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    "It's also reasonable to request that the document be modified such that it is no longer objectionable." Yes, it is, but it's also usually better to make the change first rather than to ask for permission beforehand. If you ask for permission beforehand, they can intentionally misunderstand your intent and make you feel like you're the one being nit-picky. On the other hand, if you modify the clause specifically like I mentioned in my other comment, then they're the ones who seem unreasonable for holding up the process and not wanting to accept your changes and counter-sign it. – Stephan Branczyk May 17 '16 at 22:44
  • I've never had that problem. Usually, they just forward my modifications to their legal department for review, and that's it. – Stephan Branczyk May 17 '16 at 22:57
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    @StephanBranczyk - I've had that problem. I was doing about 10 hours per month of contracting for a company, and they tried to put that into the contract. I told them no. They said it wasn't negotiable. I said I'd sign it for an additional $100K per year. They backed off. I worked for them for about 4 months before that "attitude" became apparent in everything else. Long story short: Don't work for companies that try this garbage, because they'll try this garbage everywhere else, too. – Wesley Long May 17 '16 at 23:40
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    @JoeStrazzere I disagree that you are best asking them to have their attorneys rewrite the contract to suit your needs. They would rather not have to pay their attorneys to write YOUR contract needs. – LindsayMac May 18 '16 at 0:34
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    Not signing is a bad choice. By accepting your paycheck you could be implicitly be acception this clause. You need to hold off starting at this job until this issue is resolved to your satisfaction. – Bill Leeper May 18 '16 at 20:30
-4

If it ever went to court, that clause in the NDA would probably be thrown out if challenged, due to a concept called procedural unconscionability. A few elements:

  1. It was thrown at you AFTER you started work, and after your other employment prospects were told you'd taken a job
  2. You risk losing your employment if you don't sign it
  3. You are an individual party, being challenged by a business (I presume) with lots more money than you.
  4. It severely impedes your ability to have any financial livelihood or ownership outside work.

I am not an attorney.

http://definitions.uslegal.com/p/procedural-unconscionability/

  • I don't know how #3 has any validity in such a case IMHO. – LindsayMac May 18 '16 at 1:51
  • It's because the employer has a grossly unfair advantage. Years ago, Darryl Strawberry (pro baseball) had a marital prenup thrown out during his divorce for similar reasons -- he basically forced his bride-to-be to sign the prenup (drafted by his attorney) right before their wedding, and she had no time or resources for an attorney to review it, AND she barely spoke English! got it? – Xavier J May 18 '16 at 2:48
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    @codenoire OP is probably not a pro baseball player. And this situation is very different from what you just described. Anyway, this answer doesn't really answer the question of what to do now about the contract. – Brandin May 18 '16 at 6:34
  • @Brandin The pro ball thing, in particular, is irrelevant. I was using Darryl Strawberry vs his ex as an example of grossly unfair advantage. He was (at least then!) very wealthy, and she had little leverage in the agreement that he pressed upon her. Courts are mindful of that particular aspect, where one party has pressed (through their undue influence) another to sign documents -- like this NDA example. – Xavier J May 18 '16 at 13:10
  • @codenoire your example has basically useless - the scenario is so entirely different that you've proven no basis for your claim given in list item 3. Courts are not mindful of the size of the business v individual when assuming fault. – LindsayMac May 18 '16 at 18:21

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