\u201c\u2018Employer\u2019 also means any person contracting for the creation of a specially ordered or commissioned work of authorship when the parties expressly agree in written instrument signed by them that the work shall be considered a work made for hire, as defined in Section 101 of Title 17 of the U.S. Code, and the ordering or commissioning party obtains ownership of all of the rights comprised in the copyright in the work. The ordering or commissioning party shall be the employer of the author of the work for the purposes of this part.\u201d Cal. Unemp. Ins. Code Section 686.<\/p>\n

\u201c\u2018Employee\u2019 means all of the following:\u2026 (d) Any individual who is an employee pursuant to Section 601.5 or 686.\u201d Cal. Unemp. Ins. Code Section 621(d). <\/p>\n

\u201c\u2018Employee\u2019 includes:\u2026 (c) any person while engaged by contract for the creation of a specially ordered or commissioned work of authorship in which the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire, as defined in Section 101 of Title 17 of the U.S. Code, and the ordering or commissioning party obtains ownership of all the rights comprised in the copyright in the work.\u201d Cal. Lab. Code Section 3351.5(c).<\/p>\n<\/blockquote>\n

What it means <\/h2>\n

What this means for producers and businesses in the Entertainment Industry is that if a writer, director, performer, or anyone else working on your project is otherwise an independent contractor, and if the contract with that person provides that any “results and proceeds” are considered “works made for hire” (thereby vesting ownership of copyrights in the producer or company) each of those “contractors” would be deemed a statutory employee, and the Producer would be required to satisfy Unemployment Insurance, Disability and Worker Compensation requirements. Failure to comply with state law in this regard could subject the company to substantial penalties<\/p>\n

So, just get an assignment of copyright instead, right? Not so fast.<\/h2>\n

Some commentators have advocating just eliminating the “work made for hire” language from contracts where maintaining the Independent Contractor relationship is important. Many of those taking this view have suggested that the solution to the copyright ownership problem is to have the contractor execute a simple copyright assignment. And that's a workable solution… for some businesses, but not for entertainment companies.<\/p>\n

You see, another wrinkle in copyright law is the termination of transfers provision that gives authors who've assigned their copyrights another bite at the apple. For a 5-year long window between the 35th and 40th year after the assignment, the author can terminate the assignment, thereby opening up the opportunity to negotiate a more favorable deal, or to “pull” the rights altogether. For many businesses, 35 years may exceed the useful life of their copyrights, so this doesn't matter. But the entertainment industry relies heavily on exploiting its “back catalog” as a way to generate revenue. Imagine the turmoil if films and TV shows made 35 years ago suddenly became unavailable for TV, Cable, Netflix, to distribute, or if record labels could no longer exploit albums released in 1988, for fear that they'd be sued by the songwriters and recording artists.<\/p>\n

What's the solution?<\/h2>\n

Well, as I pointed out earlier, there hasn't been much notice taken of this issue just yet. When it becomes a problem, I have no doubt that California's law will be challenged on grounds that it is preempted<\/em> by the U.S. Copyright Act. (Under the Supremacy Clause of the U.S. Constitution, Federal Statutes that occupy a field of law preempt contradictory state statutes). Unfortunately, until the Courts have ruled on the issue, there can be no certainty for producers.<\/p>\n

Get thee to Washington (and Sacramento)<\/h3>\n

The Entertainment industries are certainly no stranger to lobbying, and efforts to change the law at the California Legislative level are certainly in order. Also appropriate is an effort to get clarification from Congress that it intends to occupy the field, thereby solidifying the preemption arguments. It should also be noted that the concept of “statutory employee” is addressed in both Federal and State tax codes. So, care should be taken to anticipate unintended consequences for both employers and contractors.<\/p>\n

Get some advice in the interim<\/h3>\n

Meanwhile, including “work made for hire” language in contracts shouldn't be a foregone conclusion. The wise producer will seek advice from an experienced entertainment lawyer. Due consideration must be given to all of the factors, risks and benefits before a final decision is made to hire someone as an independent contractor.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

  Recently, employment practices in the entertainment industry have been under closer scrutiny, as several major studies have been targeted in class-action lawsuits by interns who believe they should've been paid minimum wage, received overtime, benefits, etc., as employees. Using interns as unpaid labor is a long-established practice around Hollywood, so these recent lawsuits have […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\n