A misconception regularly made by companies and business owners is that anything that has been created by an independent contractor or a freelancer for their specific business is a “Work for hire.” However, as a creative, you should realize the law is not so clear-cut.
So what constitutes as work for hire under the copyright law?
The works that are created by independent contractors like freelance artists or consultants, the “Work for hire” doctrine will only apply to certain specific types of work under the federal law. However, these kinds of works that are created by freelancers or consultants do not necessarily include a logo or software. Therefore, to an independent contractor, “work for hire” is defined in the copyright act as;
“Work that is specially ordered or commissioned for use as a contribution to collective work, as part of a motion picture or other audiovisual work, as a translation, as supplementary work, as a compilation, as instructional text, as a test, as answer material for a test, or as an atlas.”
These are the only types of work that are created by an independent contractor that can constitute “work for hire.” Therefore merely calling something a “work for hire” does not make it so. Nonetheless, to constitute something as a “work for hire” the parties have to draft a written agreement to this effect that will be signed by both parties.
What do independent contractors need to know before they sign any agreement?
Many employers are usually out to save money on taxes to the effect of escaping liability under the employment laws. Therefore they get their employees to sign an independent contractor agreement, however, most people labeled as freelancers are in factemployees. The following are a few thing that every independent contractor needs to know before they sign an Independent Contractor Agreement.
In case you are creating art in the form of written work, computer programs or any other type of creative work, then it may be advantageous if you work as an independent contractor. You will be able to own the copyrights to all the work that you created as a freelancer or a consultant.
However, you will need to very careful when signing the agreement. In case, the contract you are signing says that the work that you are creating belongs to the company, then you are probably giving up one of the advantages of being a contractor.
In case you are contracted by a business or a company, and they control what you do and how you do it, then you are their employee. The employer is responsible for controlling the time, place and the manner of the work. If your employer tracks your hours, what time you report to the office, supervises your work, then you are probably an employee. An independent employee does his or her work where, when and how they choose.
As an independent contractor, you will be liable for paying both halves of your social security and Medicare taxes. An employee splits half with the employer. Therefore, you should realize that this is a big chunk of pay that you give, therefore, ensure that you are a contractor before you get to sign.
Equipment and Supplies
Do they tell you what equipment you should use while working on their projects? Do they provide you with a desk or a chair, computers and tools? If your answer is yes, then it’s a good indication that you are an employee. In most cases, independent contractors use their own tools and equipment.
In case, the business or company subjects you to evaluations, for the details and the methods of your work, then you may be an employee. Training that is offered to independent employees needs to be minimal.
Employers are required to reimburse any expenses, contractors, on the other hand, are expected to buy their own equipment. Employees are usually paid by the hour, day or week. Independent contractors are paid by the job.
There isn’t any general way to determine if you are an employee. The courts and the IRS will weigh all the factors and then look at the total outcome of your employment. However, in case you think that you are misclassified, you have options. You can always talk to your employer or fill out the IRS misclassified form and see what happens.
Lastly, whether or not you are an employee, it affects your potential rights under the discrimination, wage, hour, overtime, copyright, and other employment laws. It also affects your finances in the form of taxes, social security, and benefits. Contact a qualified and experienced lawyer to advise you through the Independent Contractor Agreement to make sure that you are covered as stated by law.
Mollaei Law is a law firm specializing in business law serving businesses and entrepreneurs. We provide legal expertise in all stages of business development by drafting and reviewing contracts and agreements, assisting transactions and negotiating, forming LLC's and Corporations, registering trademarks and copyrights, business planning, and answering any legal questions you may have about your business.
Sam Mollaei, Esq., business lawyer, can be reached by email email@example.com or via phone (818) 925-0002.