What is a Work For Hire Agreement?The work for hire agreement (also called an independent contractor agreement) is designed for persons or businesses who wish to hire other persons or business entities to work on an independent contractor basis (that is, non-employee basis).
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Merely calling such a person an independent contractor, rather than an employee, does not necessarily change the nature of the relationship. In other words, the relationship contemplated must properly be an independent contractor relationship; if it is, then a work for hire agreement will define the terms of the independent contractor relationship, in a manner generally favorable to the contracting party. Otherwise, an employment agreement should be used, and W-2 payroll status and payroll taxes, unemployment compensation, workers’ compensation, and the like will apply.
The Most Common Types of Independent Contractors Are:
- Outside sales people
- Marketing firms
When to use a work for hire agreementWhile there are many factors to consider, the key factor is control: If the worker has little or no control over the how, when, and where of performing the duties required, then that worker is likely an employee.
A secretary who is told to report every morning at 8 AM, answer the phone and file in accordance with company policy, take lunch between 12 – 1 PM, and to punch out at 5 PM, is a classic example of an employee. Such an employee typically incurs no expenses, takes no risk of profit or loss, and works for only one employer. A computer consultant who is hired to perform computer network maintenance, but who can determine within reason when, how, where, and by whom (his or her employees or subcontractors may actually do the work) such maintenance is performed, and who has other clients, is a classic example of an independent contractor whose work can be governed by a work for hire agreement.
In conjunction with this explanation, the declarations in Section 11 of the work for hire agreement are a good starting point to determine whether the worker being hired is properly classified as an independent contractor: If these declarations don’t ring true or sound appropriate for your business, the worker is likely properly classified as an employee, and the work for hire Agreement should not be used.
Section 3(A) of the
Agreement provides that, to the maximum extent permissible under the U.S.
Copyright Act, all copyright rights in work performed by the independent
contractor under the Agreement shall vest in the hiring party. The Copyright
Act, however, limits what items may be treated as work made for hire to
certain narrow categories.
To the extent that the independent contractor’s work under the work for hire agreement falls outside these categories – as will often be the case, in part or in whole – and with regard to other intellectual property rights, such as trademark and patents rights, over which the work for hire provisions cannot have any effect, all such intellectual property is transferred to the hiring party under the “back-up” provisions of Section 3(B). Either or both of these subsections may be deleted if they do not apply under the circumstances.
Use Common Sense
If you have any questions regarding the foregoing, or about the appropriateness of the work for hire agreement for, or modifying it to fit, your specific needs, you are encouraged to consult with and employ a local employment law attorney.