Archive for the ‘Independent Contractors’ Category

Thank you for visiting the Law for Creatives blog! We have relocated to a new site and all new posts can be found there, as well as contract templates and other resources for creative professionals. Head on over to the new Law for Creatives!

I’m guessing many of you would answer this question with a resounding “yes”, but there is a good chance that you’re mistaken. Here, “works” refers to intellectual property, including works of authorship or creation that may be protected by copyright, trade secret or patent law. This is particularly important for photographers or videographers who use second shooters at weddings and events, as well as blogs or magazines that use freelance writers and editors to generate content, or graphic design firms and stationery companies with multiple designers working for the company.

The determination of ownership of intellectual property starts with an analysis of what kind of worker you’ve hired, be it a true employee vs. an independent contractor vs. an unpaid intern. If you’re unclear on the differences, check out this post on independent contractors and this post on interns. For the purposes of this analysis, if you have a paid intern, they could be either a true employee or an independent contractor depending on how you classify them for tax purposes. I know most small businesses seek to classify workers as independent contractors (or unpaid interns), and while my previous posts explain how difficult it is to meet the legal requirements, I certainly understand the draws of each. While hiring a true employee entails a larger commitment, extra administrative work and a greater financial investment, it also confers certain rights on you with respect to controlling how, when and where the work is done by the employee, as well as with respect to the ownership of the fruits of that employee’s labor. If you ask your employee to write a blog post for you, or shoot photographs or video footage for you, or design a logo for your company, you may own those works as “works for hire” created by the employee for your benefit and ownership if the works were part of the scope of the normal employment of the employee. If the works were outside of the scope of the normal employment of the employee, you would need a written agreement specifying that ownership of all intellectual property created by the employee during the course of employment is transferred to you as the employer.

If you have determined that your workers meet the stringent requirements of the independent contractor or unpaid intern relationship (or you’ve decided to just risk it and hope that your state and/or the IRS don’t bust you), chances are that you do not own any works created by your independent contractors or unpaid interns absent a specific written agreement. There is a common misconception that you automatically own the works when you pay an independent contractor for the work, or that you can enter into a contract with your independent contractors or interns stating that anything they create while working for you is owned by you. To the contrary, very specific contract language is needed to establish your ownership. In some states, you can use “work for hire” language in an independent contractor agreement, but this may potentially put your classification of the worker at risk since the concept of “works for hire” grew out of the traditional employer-employee relationship. This is especially true in California, where the law specifically prohibits using “work for hire” language in an independent contractor agreement, stating that a “work for hire” only arises out of a true employer-employee relationship. In California, this improper use of the “work for hire” language can actually cause that worker’s classification to be converted to a true employee, subjecting you to back pay, overtime, mandatory workers’ compensation insurance and penalties for misclassification of the worker. In California it is imperative that you have a written contract with your independent contractors and unpaid interns which states that the workers explicitly agree to transfer their intellectual property ownership rights to you. Since all contracts need consideration in order to be valid (i.e. an exchange of money or other promises; check out this post on contract basics for more info), this agreement to transfer ownership must either be contained in an independent contractor agreement that explains the services to be provided by the independent contractor, and the fees to be paid for those services and the transfer of intellectual property ownership, or if the transfer is contained in a separate contract signed after the initial independent contractor agreement, it must be supported by new, additional consideration (generally money). Since your written agreement with the unpaid intern would be supported by somewhat flimsy consideration (probably a promise to provide them with valuable education and experience in lieu of money), it is a very good idea to have the unpaid intern sign a separate transfer of ownership agreement for any intellectual property that they create while working for you, which is then supported by separate monetary consideration.

While your state may not explicitly prohibit the use of “work for hire” language for independent contractors and unpaid interns, federal copyright law uses the traditional employer-employee relationship in connection with the work for hire doctrine, and to be safe it is advisable for all businesses to use a specific transfer agreement for intellectual property ownership to ensure that ownership of those works vests in the company rather than the worker.