From Satya Narayan at the Royse Law Firm, PC
Most consulting/ contractor agreements will include a boilerplate provision that the work product created by the consultant for the company is protected as a “work made for hire” under the United States Copyright Act 1976, as amended (the “Copyright Act”). There are benefits of including such a provision from a copyright law-perspective, including treating the company as the “author” and, therefore, under the Copyright Act, the first owner of the work made for hire for certain categories of works. It is also included to potentially obtain a longer copyright protection term for the work (“works made for hire” are entitled to U.S. copyright protection for 120 years after creation or 95 years after publication, whichever expires first; while the standard U.S. copyright term is life of the author plus 70 years).
A “work made for hire” provision, however, has serious consequences for companies with respect to consultants in California. Under California Labor Code section 3351.5(c), a person who creates a work under a contract that expressly provides that the work shall be considered a work made for hire, is an employee and similarly, under California Unemployment Insurance Code section 686 and 621(d), a party commissioning a work under a contract that expressly provides that the work shall be considered a work made for hire, is an employer. As an employer, your company will be required to maintain workers compensation and unemployment insurance for California-based consultants performing work under a contract that states that the work is a “work made for hire.”…”
Read the full story at The California “Work Made for Hire” Trap: Your Consultant May Be Your Employee