When you hire someone to create a video, website, article, etc. for you, you may assume that once you pay for the work, you now own it and may do with it as you like. Well, not so fast. Your rights depend on whether you have a work for hire agreement or something else.
Also called work made for hire, this is an area of copyright law that defines not only who owns a work, but also who is deemed the “author” of the work. Contracts are a big part of determining whether something is a work for hire, but they are not the be-all, end-all. You have to know how work for hire is determined as well as the consequences of defining something as work for hire.
In brief, the rights to a work made for hire belong to the person who paid for the work, i.e., not the individual creator of the work. Works that do not fall into this category follow the default rules of copyright law, meaning any rights must be formally transferred from the creator to the person paying for the work, and that the creator will forever remain the “author.”
Let’s unpack that.
Who (and What) is the “Author”?
Specifically, a work for hire agreement designates the hiring party as the legal author. What does this mean?
Think of an author as the person who originated the work or caused it to come into being. In copyright law, that usually means the person that translated an idea into “fixed, tangible expression,” the bare minimum for copyrightability. At the beginning, the author and the owner are one and the same. As rights get transferred, ownership can change, but the author will forever remain the same.
The work-for-hire doctrine is the sole exception to the general rule that the individual(s) who convert ideas into fixed, tangible expression are the authors. Instead, if all of the relevant requirements relating to work-for-hire status are met, the hiring party will be deemed the “author.”
Note that we’re talking copyright law here. In the case of patent law, the inventor would always be attached to the patent as the “inventor” even if another party hired the inventor at the beginning and referred to the invention as a “work made for hire.” Contrast that with copyright law, where a ghostwriter, for instance, might literally write a whole book but never be recognized as the author.
Accreditation doesn’t even mean someone is the author—in legal terms. If you publish newspapers or comic books, for instance, you will probably credit the writers and artists, but your agreement with those creators can fall under work for hire, so through that agreement you become not just the owner, but also the author, of the work itself.
Rights of Authors
To be the legal author means to hold certain rights.
At the outset, the author is the default owner of exclusive rights to reproduce and distribute the work, to display or perform it, or to create derivative works. This is basically the right to sell or license the work, which is usually what we’re worried about with these laws.
Internationally, an author might hold moral rights or droit moral. For example, you may have the moral right of attribution or to object to false attribution. Moral rights include the right to object to derogatory treatment (something that may affect your reputation), the right of privacy in some films or photographs, and even the right to destroy the work.
The United States doesn’t recognize moral rights except under specific terms of the Visual Artists Rights Act of 1990 (VARA) or the Digital Millennium Copyright Act (DMCA). However, in our global media environment, most things you can copyright in the U.S. will be vulnerable to exploitation across the globe, so Americans sometimes still claim moral rights. Moreover, if the source material was created by someone outside of the U.S., the author of that source material may have moral rights that need to be considered within the U.S. as the foreign work is exploited.
In addition to potential implications from moral rights, authors in the U.S. do have the right to terminate any other rights they may have granted. Sort of. This right comes into play only during a five-year window 35–40 years after the date of the grant. That may seem odd and specific, but it was designed to give authors a “second bite at the apple” in case their original deal wasn’t great or the work does better than anticipated.
This tends to be most relevant for books or films that prove to have long popular appeal. For instance, in 2021 the original writer for Friday the 13th, Victor Miller, was able to reclaim the copyright for the screenplay he wrote in 1979.
What Counts as Work for Hire?
There are two situations when a work is considered work for hire, both of which are actually very common.
In the first, the creator is an employee and created the work as part of their role. This is usually pretty straightforward. If a publisher hires a graphic designer as part of its art department to make cover layouts for its magazine, then the covers she designs belong to the publisher (or the copyrights do, properly speaking).
The other situation concerns independent contractors, but only under specific conditions.
Take note of this: You do not necessarily own the copyright to work created by an independent contractor.
To be considered work for hire, three requirements must be met:
- It is specially commissioned or ordered, meaning it is made at the hiring party’s request for a specific purpose or project and not something the creator made previously.
- It belongs to one of nine categories of work, specifically:
- contribution to a collective work
- part of a motion picture or other audiovisual work
- supplementary work such as a preface, foreword, chart, illustration, etc.
- instructional text
- answer material for a test
3. The parties agree in a written, signed instrument (e.g., a contract) that the contribution will be treated as a work for hire.
Note that the list of categories is exclusive, and that some common types of copyrightable works do not fit in any category. The most notable is software. Software developed by a contractor cannot be deemed a work-for-hire in the U.S., regardless of what the contract might say.
Meanwhile, the third element requires that there be a written agreement and that it explicitly states that the work is a work made for hire.
Employee or Contractor?
Victor Miller’s case for the copyright to the screenplay for Friday the 13th came down to a matter of whether he was an employee or contractor. The production company argued he was an employee hired under rules established by the Writers Guild (a union), while Miller claimed he was an independent contractor.
Within the copyright realm, as is the case in employment law in many U.S. states, various factors relating to the principal-agent doctrine are used to determine whether someone is a contractor or employee.
The court sided with Miller, ruling that labor law and copyright law have separate criteria for what counts as an employee. In this case, the union agreement may have qualified him as an employee under labor law, but for purposes of copyright, he still acted as an independent contractor. That’s despite the fact that Miller had signed a document titled “Employment Agreement.”
Once the court determined Miller was an independent contractor, they still had to consider whether he and the producers had a work-for-hire agreement under the three conditions above. While a screenplay can qualify, the deciding factor is that Miller did not agree, in writing, that he was producing a work for hire. Thus, as an independent contractor, he retained author’s rights and thus the ability to terminate the rights he had granted to the producers when that 35–40-year window opened up.
This is Why Your Freelancer Contracts Matter
The most common reason any of this will matter to you is if you hire freelancers. Freelancers are often going to be considered contractors. Therefore, you’ll need to have written agreements with them if you want to own what they create—and you can’t sell what you don’t own!
This is the most common kind of contract we write, and we think it’s a high priority for all creative businesses. In practice, most freelancers will basically assume you hold the copyright to the work they make for you, but that’s not necessarily true under the law. At minimum, you need to have a clause specifically transferring copyright to you. It won’t be a “work-for-hire,” however, unless the agreement includes those magic words.
Early-stage companies like to use contractors to avoid having to pay payroll taxes or offer benefits. But in matters of copyright, they suddenly start thinking about having an employee. Now, a freelancer can be considered an employee under certain conditions, but those aren’t always easy to establish. It’s better to prepare a thorough and specific contract. Your own clients will expect you to have secured all of the rights you’ll be transferring downstream.
Who Counts as an Employee: The Case of California
As with the work for hire designation, the legal definition of an employee can trump any attempt at definitions in a contract. While the federal government has its own criteria for defining the term, state laws may impact whether someone is deemed an employee or not. State court decisions governing the principal-agency relationship are often used as the basis for determining whether an employment relationship existed, which impacts the work-for-hire analysis. Meanwhile, some states have statutes that directly relate to the employer vs. contractor determination, and the implications of work-for-hire provisions in contracts on that determination.
California, for instance, recently enacted a law that basically assumes most contractors will be employees unless the employer can demonstrate the relationship meets the “ABC test.” Since it’s passing, the state has been busy amending the law and carving out exceptions, but this law is already on top of other California laws that dictate that a contract imposing a work-for-hire provision onto an individual creates an employment relationship. (If you want to take a deep dive into this, see Cal. Lab. Code § 3351.5(c), Cal. Unemp. Ins. Code §§ 686, 621(d)).
If the party being hired is another company rather than an individual, this can support the existence of a contractor relationship.
Hiring parties may find it more attractive to hire creatives working through loan out companies, e.g., an LLC or corporation, which would potentially allow the hiring party to avoid the problems arising from including a work-for-hire provision in a contract with a California-based creative. (If you’re a freelancer, check out our article “To Form or Not To Form an LLC.”)
The distinction of someone as an employee rather than a contractor, while being potentially helpful from the standpoint of securing intellectual property rights, can create a bunch of additional headaches. At a minimum, it’ll increase the costs of hiring the worker, as various taxes would need to be paid based on the worker’s classification as an employee. Thus, alternatively, the hiring parties may want to consider whether the “work-for-hire” aspect is truly worth it. If the rights exclusive to authors aren’t something that will make any significant impact on the hiring party’s business model, then maybe it would be worth sacrificing the work-for-hire language to help avoid classifying the worker as an employee.
Late or Retroactive Agreements
While the parties need to have agreed at the outset that a work would be made for hire, more often than you might think parties put the written paperwork together after a work has been completed. Some jurisdictions will recognize these retroactive agreements if they’re just memorializing a prior agreement-in-principle, but it varies. For example, in the Seventh Circuit, which covers Illinois, Indiana, and Wisconsin, a work-for-hire agreement cannot be entered into retroactively, even if there was a verbal agreement at the time the work was commissioned and paid for.
That means you can’t count on being able to consider something work for hire after-the-fact. Instead, you will want to have specific language about the transfer of copyright written into the contract, regardless of whether the work is referred to as having been made for hire.
Transferring Copyright in a Contract
Our guess is that the majority of freelance contracts out there do not adequately define whether a work falls under work for hire and therefore do not properly transfer rights. Most of the time, this isn’t a big deal; contractors don’t generally complain once they’ve been paid as agreed.
But there’s no reason not to cover your bases on this one (see the Friday the 13th case above). As a best practice, we suggest any contract attempting to claim that a work qualifies as a work made for hire should also include supplementary language after the work-for-hire clause that basically transfers the rights to the hiring party if for some reason a court does not agree it’s a work-for-hire arrangement. This language should explain that, if for any reason the work is not treated as work for hire, then the transfer will be treated as an assignment of copyright.
Note that this language would not establish the hiring party as the author. It won’t grant any moral rights and it won’t prevent the termination issues from the Friday the 13th case from coming up, but this is still preferable to not having copyright at all. 35-40 years of ownership is better than none.
You need to negotiate with contractors for the rights you want to have. Outside of a straightforward employment arrangement, it’s rarely as simple as, “You make this, I’ll pay you, and then it’s mine.” From the point of view of the hiring party, in fact, it’s buyer beware.
Know your rights, respect creators’ rights, and get everything in writing. For more help navigating the vagaries of copyright law and making solid contracts, contact us.