Be careful using full-time job's time, resources

If you’re developing your startup on the side while working for someone else, you want to make sure that your employer doesn’t have a legal claim to your intellectual property.

Being a part-time entrepreneur with a full-time job “is full of legal pitfalls,” said Raleigh lawyer Jim Verdonik of Ward and Smith.

The basic rule of thumb, Verdonik said, is that you’re on solid ground developing a business on the side while working for someone else if you’re not using company assets, such as a telephone and PC; you’re not doing it on company time; and the business you’re planning isn’t directly related or “a foreseeable offshoot” of your employer’s business.

“Generally speaking, the last is the biggest problem,” Verdonik said. “That’s kind of a nebulous area.”

Verdonik counsels that, if your startup veers into that grey area, you need to disclose your plans to your boss and ask for a formal waiver declaring that your employer has signed off on the venture.

But be prepared that you may not like the answer.

“The problem is, if you go to your boss, your boss has a boss, and when you go to get your formal waiver, it’s CYA time,” Verdonik said. “No one wants to be the jerk that gave up Google.”

One mistake that entrepreneurs sometimes make, Verdonik said, is starting a business based on a suggestion that their employer declined to pursue.

“But that is not the same as a legal waiver of the employer’s rights,” he said.

Entrepreneurs may figure that their employer will never know that they developed their startup on the side. But, Verdonik said, if an entrepreneur plans to seek outside funding for their venture, savvy investors will want to know: “Did you get a sign-off from your employer?”

Garrett Klas decided not to seek a waiver from his employer when he was developing his tech startup Finridge after consulting an attorney who assured him that, in his case, a waiver wasn’t needed.

Klas also was scrupulous about making sure that his work for his employer and his Finridge efforts didn’t mix. When he was out of town meeting with a client, he didn’t do any Finridge work at all, even in the evenings, because he felt it was his job to give his client his undivided attention.

“I wanted to be as fair as possible,” Klas said. “I would want to be treated the same way if I had an employee who was thinking of moving on.”

Keith Strombotne founded his startup, Joinzoo, before the nonprofit group Kidznotes hired him as director of development and community partnerships. And Kidznotes was well aware of his entrepreneurial ambitions when it hired him.

“It isn’t like I spend time 9-to-5 on Kidznotes and nights and weekends on the software company,” Strombotne said. “I just work. Both. At once.”

That’s OK with Katie Wyatt, executive director of Kidznotes.

Wyatt, who describes Strombotne as “a great member of the team,” noted that the same people that Strombotne might seek out to invest in his startup are also potential Kidznotes donors – and vice-versa.

“Smart investors are smart investors,” Wyatt said. “They want to make good investments, whether it’s for money or for a cause.”

Staff writer David Ranii

This story was originally published January 2, 2015 at 12:03 AM with the headline "Be careful using full-time job's time, resources."