You have an idea for a company, and you are ready to be an entrepreneur. But you need to pay your bills while you get your company off the ground. So you may wonder if you can begin working on your startup while still working at the job you have. The short answer is, “It depends.” But let's talk about a few things it depends on….
WHAT'S THE OVERLAP BETWEEN THE COMPANIES?
What's the overlap between your current company, present job, and the services or product your startup will provide? Be very detailed in this analysis. The more similarities there are, the more likely it is that you may want to leave your job before starting the company. On the other hand, if there's nothing in common between the two, you're probably on safer ground to work both simultaneously.
WHO OWNS YOUR INTELLECTUAL PROPERTY?
Many companies require employees to sign over the rights to any relevant intellectual property that the employees develop as long as they work for the company. Some of these contracts can include any work you might do, even on your own time. If you have a contract that hints at the company's intention to declare your new idea as their property, you're probably going to want to leave before you do any work on your new startup.
REVIEW THE CONTRACTS
The next step is to review your employment contract, employee handbook, and other contracts, looking for:
- Terms of employment: E.g., are you an “at-will” employee?
- Non-compete clauses/agreements: Are you limited in your ability to work for competitors, solicit clients, or recruit coworkers?
- Non-disclosure agreements: Are you limited in your ability to discuss, reveal, etc., your current work?
How will these provisions impact your ability to work on your startup? Non-compete clauses are usually unenforceable in California, but that limitation pertains to future employment. Employers can stop you from competing with them, recruiting staff or customers, as long as you work for them.
As we said initially, there's no automatic answer to whether you can start that startup while keeping your day job. And getting it wrong may not just mean you lose your job. You could even lose your startup, too.
That's why, if you are concerned about how your job may impact your startup (or vice versa), don't guess. Instead, consult with an attorney who specializes in working with startups. Call Amin Law, P.C. at 415-851-4300 or contact us online for a free consultation.