Writers: Are You An Employee or An Independent Contractor?

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So we've established that under general principles, the copyright for a work for hire belongs to the employer, but if the work is done by an independent contractor, even under explicit directions, the copyright belongs to the artist.

But what if you are hired for a specific project?  How does the law decide who is an employee and who is an independent contractor?

A good starting point is the 20-point test established by the IRS in 1987 for deciding who is an employee and who is an independent contractor for payroll purposes.  While this is not binding on the issue of copyright ownership, its a quick referral list that is helpful.  But in reviewing this list, you must remember that the U.S. Supreme Court, courts established that ultimate classification depends upon general principles of common law, a rather amorphous standard that defies precision.

Here's the IRS's 20-point test in what I hope is more understandable language than the regulation.

1. Instructions: A person who is required to comply with specific instructions about the time, place and manner of work is usually considered an employee.

2. Training: An employee usually receives training; an independent contractor does not usual receive training from the purchaser of the services.

3. Integration: The greater the work fits into the purchasers overall business, the greater chance that an employer-employee relationship exists. (A sales manager is an employee, the interior decorator who furnishes the office probably is not.)

4. Services Rendered Personally: If the services must be rendered personally, it is usually an employment relationship (hourly employee can't send in Uncle Bob to do his job for the day).  However, with artists this is less instructive, as a publisher who contracts with Michael Connelly to do a story does not expect it to be written by someone else).

5. Hiring, Supervising, and Paying Assistants:  If the purchaser is also paying for assistants and supervising the work, this is a strong indication of an employment relationship

6. Continuing Relationship:  A continuing relationship is generally one of employer-employee. Independent contractors generally work on an assignment by assignment basis.

7. Set Hours of Work: If the purchaser sets your hours of work, it is a strong indication you are an employee

8. Full Time Required: If you must devote full time to the business of the employer, it is highly likely you are an employee

9. Doing Work on the Employer's Premises: Use of office space, telephone, stenographic service or the use of heavy equipment usually indicates an employer-employee relationship.

10. Order or Sequence Set: If you must perform work in an order established by the purchaser, it is likely that you are an employee.

11. Oral or Written Reports: Continuous reporting indicates, but is not conclusive of an employer-employee relationship.

12. Payment by Hour, Week, or Month: Regular periodic paychecks indicate an employer-employee relationship.  Independent contractors get paid in a lump sum or in agreed installments on a per project basis.

13. Payment of Business and/or Travel Expenses: If the employer pays the person for business and/or traveling expenses, the person is ordinarily an employee. On the other hand, Phillip Marlow and Sam Spade always charged for expenses, so it's not conclusive.

14. Furnishing of Tools, Machinery and Materials: If the person paying is providing you with your tools and materials, you are probably an employee. Newspapers provide computers;  free-lance writers provide their own computers.

15. Significant Investment: If you invested significant funds of your own in your business, your are probably an independent contractor.

16. Working for More Than One Firm: If you work for a number of companies at the same time you are probably an independent contractor.

17. Realization of Profits or Losses: Can you make a profit or suffer a loss?  If so, you are likely an independent contractor.

18. Making Services Available to the General Public:  If anyone with the money can hire you to do work for them, you are probably an independent contractor.

19. Right to Hire and Fire:  If the employer has the right to hire and fire, it is likely an employer-employee relationship.

20. Right to Terminate: If the purchaser can terminate the relationship at any time without incurring a liability, it is likely an employer-employee relationship. On the other hand, if termination gives rise to potential liability for breach of contract, it is likely an independent contractor relationship

The best way to determine copyright ownership is by written contract.  That's the topic for the next post.


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