New York’s commitment to safeguarding employees’ rights is evident in its progressive labor laws. In a recent move reflecting this dedication, Governor Kathy Hochul signed an addition to the New York Labor Law limiting employers’ rights to claim ownership of intellectual property created by their employees on their own time.
Effective upon Governor Hochul’s signing, Section 203-f of the New York Labor Law now renders unenforceable any employment provisions that compel employees to assign inventions or IP created without using the “employer’s equipment, supplies, facilities, or trade secret information.”
The new law, however, contains exceptions for inventions or IP that: (a) “relate… to the employer’s business, or actual or demonstrably anticipated research or development of the employer” or (b) “result from any work performed by the employee for the employer.”
This means that IP created in the employee’s own capacity and outside the context of their employment shall remain the employee’s own.
Several states have similar laws in place, including California Labor Code § 2870 and New Jersey Statutes 34:1B-265.
Section 203-f invalidates, as a matter of public policy, provisions in existing employment agreements mandating employees to assign inventions to their employer that would otherwise be excluded under this legislation.
Traditionally, many existing employment agreements would require employees to assign their inventions or other IP to employers, whether created at work or on the employee’s own time.
However, these agreements may now face unenforceability to the extent that they seek to assign rights to employers for inventions created during an employee’s personal time, unrelated to the employer’s business, research, or development efforts, and without utilizing the employer’s trade secrets or resources.
The statutory language may become a gray area. The work-from-home environment often entangles personal time and work time, so how and when an invention was created may be subject to dispute.
Consequently, employers should exercise caution to ensure that future employment agreements do not contain clauses that infringe upon employees’ rights to their independently conceived inventions.
To remain compliant with the evolving legal landscape in New York, employers must ensure that their contractual agreements respect employees’ ownership of intellectual property created during their personal time, free from undue restrictions.
If you are an employer or employee with questions about how Section 203-f impacts the employment relationship, or whether your employment contract provisions are enforceable, contact the Romano Law team.