How to Protect IP When Working With Contractors

Lock down your intellectual property with contractors using NDAs, work-for-hire clauses, and access controls.

  1. Require NDAs before any work discussion. Get a non-disclosure agreement signed before sharing any proprietary information, including initial project discussions. Standard NDAs should cover a 2-5 year period and define what constitutes confidential information. No exceptions — this includes preliminary conversations and proposal reviews.
  2. Build work-for-hire clauses into contracts. Include explicit work-for-hire language stating that all deliverables, code, designs, and processes created during the engagement belong to your company. Specify that contractors assign all rights, including improvements to existing IP. Rate premiums for work-for-hire typically run 10-25% above standard contractor rates.
  3. Limit access to essential information only. Grant contractors access only to the specific data, systems, or processes required for their deliverable. Use separate contractor accounts with restricted permissions. Revoke access immediately when projects end — 67% of data breaches involve former contractors or employees with lingering system access.
  4. Document IP ownership in writing. Create clear records of what IP existed before the contractor started and what they developed. Include invention assignment clauses covering any improvements or derivatives of existing IP. This documentation becomes critical if ownership disputes arise later.
  5. Use secure handoff procedures. Establish protocols for sharing and receiving work that don't expose broader IP. Use encrypted file transfers, watermarked documents, and version control systems that track changes. Require contractors to return or destroy all materials when projects conclude.
  6. Include non-compete provisions where enforceable. Add reasonable non-compete clauses preventing contractors from working with direct competitors for 6-12 months after project completion. Enforceability varies by state — 23 states restrict or ban non-competes as of 2026. Focus on non-solicitation clauses as a more enforceable alternative.