What Should Be Included in a Work for Hire Agreement?

Your webpage guru worked hard to produce a beautiful landing page with language to help you get customers. Now you want to copyright the content. How do you make sure your company owns that copyright? If you are hiring a creative worker (employee or independent contractor) to create something for your business, you should have a work for hire agreement in place before the work begins so you don’t have to dispute this issue in court.

What Is Work for Hire?

Work for hire is any work that is done by one person or business for another person or business. This kind of work product is called intellectual property, something of value that has no tangible form.

Who Owns the Copyright to a Work?

As soon as a work is in fixed form (like a book that has been printed or an artistic work is finished) the copyright becomes the property of the person who created it.

Work for hire is an exception to this rule. If a work is made for hire, the owner is the employer who hired the person to create the work.

For the purpose of determining who owns the copyright, the U.S. copyright defines work made for hire in two ways:

• A work prepared by an employee within the scope of their employment
• A work specially ordered or commissioned for use in a variety of circumstances

The term "employee" for copyright purpose, is an employee under what's called the law of agency, not the common law definition of an employee. If an independent contractor does the work, it should be ordered or commissioned and there should be a contract.

The ownership of a work for hire depends on the type of creative work:

For copyrights, the U.S. Copyright Office says the author is, “The employer or another person for whom the work was prepared.” They go on to state that this person or employer “owns all of the rights comprised in the copyright,” unless there is a written agreement signed by both parties.

For patents, according to the U.S. Patent and Trademark Office (USPTO), the inventor holds the ownership. But in most businesses, employees who work on patents must assign the ownership of the patent to the company that they work for.

Trademark ownership is established by use. If your company uses a trademark after it’s created, it still needs a work for hire agreement with the person who created it to establish that the employer, not the employee is the owner.

Why Do I Need a Work for Hire Agreement?

When something of value is created, things can get messy. Who owns this thing of value? Who can make money from it? A patent, for example, can make a substantial amount of money for its owner over a lifetime.

For example, let’s say you have an employee who created a user manual for a new product you launched. The default situation here is that your business owns the product and the copyright, not the employee. But what if the employee wants to take you to court, saying they should get the copyright and the income? If you have an agreement, it would be more difficult for the employee to argue that they own the copyright.

What Should Be Included in a Work for Hire Agreement?

The sections often included in a work for hire agreement are listed below. Work for hire agreements are complicated. There isn’t a specific template and every situation is different. For example, some states have specific required language for exceptions to ownership in work for hire agreements. 

Identify the two parties. Your business and the worker. Designate the status of the worker (employee or contract worker). Include addresses or other identifiers.

Include language that specifically states ownership. This is the important part. Include language that shows the understanding of the two parties that this is work for hire and that ownership of the work lies with your business, not with the worker.

Explain the payment relationship. Who is the payee (your business)? Who is receiving payment, in what form and when? This is important to establish the “for hire” concept.

Provide details on the work itself. What is the format? What are the requirements? When must it be delivered? Are there due dates along the way?

Include other requirements. If the worker is a contractor, there may be requirements for this person, like getting insurance. A confidentiality agreement may be part of this contract, restricting what the worker can discuss of the contracting company’s business.

Also, describe in detail what happens (penalties) if either party fails to fulfill its responsibilities under the contract. This section might have an agreement in which each party agrees to settle disputes by arbitration.

Do I Need an Attorney for a Work for Hire Agreement?

You would be wise to steer away from “Free” online agreement forms. Your unique legal situation may be different than the one addressed in the form, the law may have changed since the agreement was written, and, as noted above, your state may have specific language requirements.

It’s always best to have an attorney work on this agreement. Make sure the attorney you use has experience in intellectual property law. You can get the attorney to create a form for your business that you can use in a variety of situations. It’s a good idea to have a separate form for employees and contract workers.