How Can I Form An LLC Without Breaching My Employment Contract?

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I have a technology job that has an intellectual property rights clause in employee contract. I asked permission to start a side business with a verbal approval from my boss. I’m absolutely positive that it doesn’t cover me from my company being able to trying to lay claim to my work. I want to start an LLS with my partner in this venture but not sure how to do it to protect from the company being able to take it. Can we have a side contract (possibly secret) between my partner and I and then have the LLC in his name only with me as a consultant? The point is to still have ownership in some form but protect the LLC from my current employer if they ever feel like suing me.

[NOTE: Articles and answers on DearEsq., while written and published by lawyers, do not constitute legal advice, and no attorney-client relationship is formed by your reading of this information. You should always consult with an attorney for any legal situations.]

This is a very delicate situation. You will definitely want to consult with an attorney who can look at your employment contract and tell you what its scope is and how or if you can avoid breaching it intellectual property rights clause. Generally, you owe your employer certain duties, which include a duty of loyalty. This means that you can’t take business, trade secrets, other employees, etc., from your employer while you’re employed. It sounds like your intellectual property rights clause is broader than this general duty, but the principles are probably similar. If you are providing services to your new company that would be covered by the clause, you would need to have explicit permission from a person with authority in your company that those services will not breach your contract. If you provide the services without approval, you will probably be in breach of your contract, whether your participation is in secret or not. With that said, sometimes restrictive clauses in employment contracts are so broad that courts don’t recognize them as enforceable. If this is the case with your contract, you may not have as much to worry about. Again, an attorney who specializes in employment will be able to read your contract and provide you with much more specific advice.



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Author: House Attorney