Don’t be a Hirtle: Here’s Why You Should Avoid “Works Made for Hire” Clauses in Independent Contractor Agreements

independent contractor works made for hireDon’t shoot yourself in the foot, Adam Hirtle of Colorado Springs. It’s an expression, not a thing to do with a real firearm. According to this article, Hirtle did it because he wanted to see how it felt. Presumably: Bad.

Shooting yourself in the foot is something many companies may be doing when trying to protect their intellectual property in independent contractor agreements. Generally, there are two ways to protect copyright: “works made for hire” and assignment.

Many independent contractor agreements use both. Intellectual property clauses often say that anything created by the independent contractor is a “work made for hire,” which would mean that the company — not the individual — owns the copyright. These clauses will also typically say that anything not deemed a “work made for hire” is assigned to the company. This is supposed to be a belt-and-suspenders way to ensure that the company owns the intellectual property created by the independent contractor.

Did you know that clause can turn the contractor into an employee?

Yikes! Did your company accidentally do a Hirtle?

California law says that if a contract with an individual includes a “work made for hire” clause, that individual is a statutory employee for purposes of California unemployment law, workers compensation law, and aspects of employment law. A company that fails to comply with unemployment, workers comp, and other state employment laws may be subject to penalties, litigation, and other plagues, including but not limited to blood, frogs, lice, insects, pestilence, boils, hail, locusts, darkness, and killing of the first born.

The culprits are California Labor Code section 3351.5(c), and California Unemployment Insurance Code sections 621(d) and 686. Pharaohs not included.

The easiest way to avoid this self-inflicted wound is to impose an automatic assignment (a present assignment) of the author’s copyright to the company. Note that the assignment should be automatic. It’s not enough merely to require that the author/contractor assign the work in the future.

Under copyright law, there are some long-term differences between “works made for hire” and assigned works, relating to rights in the work after a number of years, so the assignment solution is not perfect. But it’s probably better than accidentally causing your independent contractor relationship to revert to employment under California law.

Also, just because you say that something is a “work made for hire” doesn’t mean that it is. The Copyright Act defines “work made for hire” to include works created by employees and a short list of other situations, many of which will not cover whatever you’ve retained the independent contractor to do.

Here’s the definition, from 17 U.S.C. § 101:

A “work made for hire” is—

(1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

Intellectual property clauses should be carefully drafted. Using boilerplate language can cause unexpected pain. Don’t do it like Hirtle — just to see how it feels.

Check your intellectual property clauses.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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