Is my side business "competing" with my employer?

I'm about to start a full-time job at a large company. But I also like to tinker on the side. One of my current projects is kinda related to the product my employer makes but does not compete with them. Imagine working at a company that manufactures only firearms and you designed a scope or an accessory that may or may not enhance the performance of the firearm. Your employer does not make accessories and you do not make guns, but the products can be used together. Your accessory can be used with any gun.

I wonder if I might violate some kind of non-compete clause that I will sign (probably a generic template). I'm also torn if I should tell them beforehand.

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1

It appears that you know the correct answer and are hoping someone will tell you otherwise.
Pick between "moral" and "utilitarian."
Measure the risk-reward vs. the opportunity that this job offered, and the stress that you will have thinking about how to avoid full disclosure.

2

Hey Irena, before we move into dissecting your position, I'd recommend that you go thru your employment agreement in detail. Most agreements have a safety provision for such a 'risk' which most employers are likely to foresee. You may want to interpret some of the related clauses yourself or check with a lawyer. Any future steps would be vastly dependent on this.

Hope this helps.

BR, Kunal

3

The first question is what is your employment status? Are you an employee (ie no strategic responsibility), a manager or an officer?

If you are a manager and/or officer, then there is a high probability that you will be breaching the rights of your employer and I would strongly recommend that you obtain legal advice.

If you are an employee and have no access to company confidential information and/or do not have any input into the strategic direction of the company then you will most likely be okay. But once again I would suggest that you seek legal advice prior.

5

As the other's said, you want to be fully transparent with your company. I will add - they have hired you expecting loyalty, trust, and commitment to the company. That does not prevent you from earning money on the side, but unless you know they don't have any plans, for producing the type of product you have, in the future as an extension to their current product, you could violate the non-compete. As well, they could view that they are disclosing their own intellectual knowledge to you, should anything they are doing benefits your product(s). If they are not aware of that potential conflict, that could become a legal issue for you.
Discussing it with them will give you all of the answers you need, demonstrate your professionalism and commitment to them, as well, could provide an opportunity for you to be a future vendor/partner with them.

How about I bring this up by telling them about my invention from college on day 1 and see if they are interested in licensing it. If they say no, then the conversation would naturally flow to whether I can do it on the side. It might not make as bad as an impression compared to if I just directly proposed working on something on the side.

3

Carefully check your employment contract - a growing number state that you should not start or continue any other money-generating activities once you accept their employment offer. If it does, you need to ask them if you can be excluded from this clause. You should firmly resist any attempt by your new employer to prevent you earning money on the side, but you should not attempt to conceal it from them.

It's best to be upfront and truthful. If you are planning to market your product soon, you can let them know. This may mean that you may longer be able to be an employee and that could be a game changer. Some companies will ask you to sign a non-compete as well as a non-disclosure. Any non-compete you sign cannot prevent you from making a living. You are certainly not a direct competitor if you are not selling the same products and if your product cannot be used as a substitute for theirs you are also not an indirect competitor. I believe you will be okay signing but make full disclosure and find a way to document it.

I know for a fact that the employment contract does not forbid outside activities. One of the person who interviewed me actually mentioned some of his outside activities, but he did say it's "frowned upon."

That's why I don't want to bring it up. It might cause them to think less of me and affect my career path. At the same time, I don't want to do something against company policy or make it look like I have something to hide.

Can I just tell them, "hey I got this idea that I developed and patented while you school. I feel this would make a great addition to your product line," and maybe work out an license agreement for the betterment of the company. If they are not interested, then the conversation would flow naturally to whether I can do it on my own, and they wouldn't get the impression that I'm not committed to the job.

Is this viable?

4

You are not in violation of anything, however, I advise you to be forthcoming in letting them know about your product. From my experience they may want to have first rights to exclusivity (meaning you designing your product with their brand signage on them for a profit share) or worse case scenario, you will have a non-compete agreement ready to sign with them so they don't feel like your competing, but giving them completion. Makes sense? Let me know if you need a non compete agreement and I'll send one to you.

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