If you’ve got a JD diploma hanging in your office, you can probably go ahead and skip to the next article. But if you aren’t a member of the state bar, you may have a few questions about the fine print you’ve read on your client contracts. For example, what the difference is between “work for hire” and being an “independent contractor.”
Here are the terms you need to know, broken down by lawyers specializing in contracts for freelancers in creative fields, so you can confidently handle your next freelance contract.
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Copyright
This is all about ownership. Whether you’re writing a nonfiction article or software code, designing an illustration or website wireframe, you automatically own the copyright to that work. You don’t have to register the work, though this can be helpful if you have to go to court to defend your copyright.
A contract for freelance creative work includes deliverables—aka what you create. And you’ll be selling licenses for others to use those deliverables. There are a slew of licenses available within your umbrella copyright ownership.
The various licenses you might see in a contract include print rights, worldwide rights, first serial rights, nonexclusive rights, foreign language rights and translation rights. A quick Google search can shed a little light on which bit of your overall copyright that license refers to.
Most companies want to buy all the rights they can for the cheapest price possible. And many freelancers instinctively want to give up as few rights as possible. As you read through a contract and consider negotiating the rights you’d be signing over, you need to understand the balance of power between you and the company you’re contracting with, says Kiffanie Stahle, a lawyer focusing on creative entrepreneurs in San Francisco and founder of The Artist’s J.D.
Some rights—like worldwide publication rights for an article posted online—are a given because the publisher’s website is globally accessible. Others might not be of any value to you, so they may be bargaining chips you’re willing to hand over.
Governing Law and Venue
This clause dictates where your contract dispute would be heard, should you and your company butt heads and be unable to work it out in a civil manner, explains lawyer Paul Menes, who specializes in entertainment and media law.
If you and the company are located in the same state, you’re golden. “If not,” Menes says, “it means that in the event of a dispute, the freelancer would likely have to travel to where the company would have home-field advantage in court or arbitration.”
Indemnity
Here’s where the blame game comes into play. Indemnity clauses dictate who is to blame if the contract’s deliverables get the company into trouble, often because of plagiarism, trademark infringement, or non-compete or non-disclosure violations. Most companies will make their freelancers 100 percent liable for any problems that arise.
Stahle says as long as you are being responsible about the work you submit, you shouldn’t worry too much about indemnity. But there are two ways to protect yourself. First, don’t “borrow” someone else’s work. “Keep your eyes on your own page and create using your own voice,” she says. Second, obtain liability insurance. “When buying coverage, it is important to double-check that your policy will cover intellectual property claims,” Stahle adds. “If it won’t, this coverage is usually available via a rider.”
Independent Contractor
This is basic and should be worry-free. Menes says this clause “usually states that not only is the freelancer responsible for his or her own taxes, but also for their own insurance, such as health, disability and workers’ compensation, as well as any ‘tools’ necessary to do their job.” This is where you might find guidelines for reimbursement of expenses, which are often negotiable.
Non-Compete
Don’t freak out when you read your first non-compete clause. While some may appear over-arching and way too broad for your comfort, they’re also common and, for large companies, typically non-negotiable. You’ll have to weigh the positives and negatives for yourself.
When you do, consider this: Are you realistically going to have another project before this non-compete expires that would jeopardize your work for this company—and would that theoretical new project be worth the damage it could cause your current working relationship?
Keep in mind, too, that “these clauses are used as a scare tactic and they don’t carry much legal weight,” Stahle says. “However, the likelihood that a court will enforce these terms varies greatly depending on where you live.” In California, non-competes are difficult to enforce and are very circumstantial.
In Florida, they’re far easier to uphold. Familiarize yourself with your state’s laws, and the states in which the companies you work with reside (remember that “Governing Law and Venue” bit above? It comes into play here).
Non-Disclosure
This one is a biggie, particularly for editors, consultants and ghostwriters, says Emmett Collazo, a copyright, patent and trademark attorney in the New York Tri-State area. This term governs what you can say about the work you did for your client.
Can you include the work in your portfolio? Can you put the company’s logo on your website? You want to nail this term down so it’s both mutually beneficial and crystal clear. And remember, the more exclusive your client wants the work to be, the more money you should be earning.
Scope
The scope or deliverables section covers the work you’ll be doing. For everyone’s benefit, this section should be as comprehensive as possible, says Menes. It should include the project’s expectations, milestones, due dates, timeline for payment, the terms of delivery and anything else you and the contracting company deem necessary.
If you have an ongoing contract with a company, the scope of individual projects might be listed on a separate rider. The initial contract will govern your relationship with your client, while the rider will govern each project you complete for them.
Warranty
Think of warranties as oaths you’re promising to uphold, such as: “I promise all my work is 100 percent original and is not plagiarized” and “My work for this company under this contract does not violate any other contracts I’ve signed previously.”
“These are common clauses in most types of contracts,” Menes explains. “Very basically, they mean that if the freelancer makes a promise in the contract and breaks it and a third party sues the company as a result, the freelancer has to cover and pay for any liability to the company, usually including legal fees.”
The best way to not violate warranties is to not make any promises you can’t keep. Understanding your contracts is an essential part of that.
Work for Hire
Most freelancers (and their lawyers) dislike work-for-hire clauses. Why? Because when you sign a contract that has one, you’re transferring 100 percent of your ownership of the deliverables over to your client.
Here’s the catch: A lot of contracts that specify “work for hire” don’t follow the U.S. Copyright Act’s definition of work for hire. So, Stahle says, “these clauses usually have a backup. The backup states that if a court determines that it isn’t a work for hire, then you will transfer your copyright to the client. Either way, the freelancer doesn’t own the copyright of the final deliverables.”
“At a minimum,” Menes adds, “freelancers should make sure they get credit for their work and the right to use it for their own promotional purposes.”
Now that you’ve got a handle on some of the legalese buried in freelance agreements, you’ll no doubt feel more confident the next time you have to sign on the dotted line. Of course, if you still have questions, don’t hesitate to get legal advice from a licensed attorney.
