Monday, February 25, 2013

Should We Use Work for Hire Agreement in California?

Dear Rich: We work in HR in Los Angeles and we're confused about whether to use work made for hire agreements with independent contractors, particularly for website programmers. We got a memo that these agreements converts a programmer into an employee. If that's the rule how does our company acquire ownership from contract programmers who are commissioned to write code for us? Yes, California Labor Code section 3351.5(c) and California Unemployment Insurance Code Sec 686 and 621(d) both state that companies who commission workers under "work made for hire" agreements are considered "employers" under California law. In other words, if the state determines your company has "employer" status, the company may be required to obtain workers compensation insurance for the  programmers, or pay payroll taxes or in some cases, provide employment benefits. The California standards differ from those typically used by the federal government to establish employer-employee status. Although there are some advantages to obtaining code under "work made for hire" rules, your company can also acquire rights by having the programmers sign assignments of copyright (scroll down to "transfers").

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