What is the Significance of a “Work for Hire” Clause in a Contract?

POSTED ON March 30, 2021 / IN Documentary Toolkit



This Q&A was originally published in the Winter 2021 issue of Documentary magazine, a publication of the International Documentary Association, a nonprofit media arts organization based in Los Angeles.

A “work for hire” clause in many instances gives ownership of a creator’s work to the creator’s employer as if the employer were the author from the moment of inception. This contradicts the general rule that the creator of a work owns the copyright. Knowing when you’re creating a work for hire, where your employer will own the copyright, or having one made for you, where you will own the copyright as employer, is important.

Under copyright law, works for hire come about in one of two ways: Either they’re prepared by “regular” employees within the scope of their employment or they’re created by independent contractors if a pair of conditions are met.

To determine whether or not employment is “regular,” factors like these are taken into account: Are services provided on the employer’s premises? Does the employer provide benefits and take withholding from the employee’s paycheck? Is there a salary rather than payment by project? Does the employer have the right to assign additional projects? Affirmative answers point toward regular employment. To determine whether or not employees are acting within the scope of their employment when they create something depends on factors such as how the workday is defined (are the hours fixed or fluid?) and the nature of the creation (is it in the same category as day-to-day work effort?). For example, if an employee is hired full-time to provide a documentary script and makes a scripted fictional film when not working on the documentary, that film is not a work for hire for her regular employer.

Creators whose work is ordered or commissioned by an employer but who are not regular employees are independent contractors, but not everything an independent contractor creates is a work for hire. Two conditions must be satisfied for work-for-hire status. First, the works must fit into one of nine specified categories, the most notable of which are audiovisual works and supplementary works (a broad category that includes musical arrangements); and second, both the creator and the commissioning party must sign a written agreement—generally before the work is created—characterizing the work as a work for hire. If either of these conditions is not met, then the copyright in the creator’s work belongs to the creator, at least in the first instance.

I say in the first instance because a typical work-for-hire clause in a production services agreement or other employment contract has two parts. The first part says that everything the creative professional creates within the scope of his employment is a work for hire. The second part says that to the extent the creative professional’s work is not a work for hire, then she assigns all rights to the employer. In other words, if it’s not a work for hire, the employer still owns all rights—but through a written assignment rather than from inception. (Copyrights can only be assigned in writing.) From the employer’s point of view, this belt-and-suspenders approach is critical to securing a clean chain of title ending with the employer. Without this two-pronged approach, there may be uncertainty about who owns the finished film, making it difficult to sell or license rights in it. But employers should still favor work-for-hire status over ownership-by-assignment because grants of rights under copyright in the US can be terminated, usually 35-40 years after the grant. An employer’s rights in a work for hire made for that employer, either by a “regular” employee or by an independent contractor with both conditions satisfied, can never be terminated.

Can a work that doesn’t satisfy the criteria for work-for-hire status become one by agreement of the parties, say in a contractual clause? The answer is negative: an employer cannot convert a work that doesn’t satisfy work-for-hire criteria into a work for hire simply by having the individual creator agree to it. A work either originates as a work for hire or it doesn’t, and that status is permanent.

In summary, if you are a filmmaker hiring a sound person, or a cinematographer, editor, producer, researcher or script writer, or most anyone else, and you intend that you or your company own the copyright in the finished film, then you should hire that person with a written contract that includes a work-for-hire clause accompanied by an assignment in the alternative. If you are a creative professional being hired to work on a film and you don’t want to transfer the copyright to an employer—perhaps because you intend to be a co-owner, or you wish to license an independently copyrightable contribution like a story rather than assign it—then you should avoid signing a contract with an assignment. That is, unless you are a regular employee acting within the scope of your employment, in which case your work product is automatically a work for hire without anyone signing anything.

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