In the past we’ve explored some of the problems with letting clients cross a line by treating you more like an employee than an independent contractor.
For example, if they cross that line and are held accountable they could end up paying back taxes and benefits. That can be a good reason to pursue issues when clients are really employers trying to scam the system to save a buck.
But Yolander Prinzel’s recent post about the financial differences between employees and freelancers reminded me of something else you need to watch out for — copyright.
How Copyright Comes Into Play
With the way copyright law works in the U.S., as a freelancer you automatically hold the copyright for any work you create. Transferring that copyright to a client requires fairly specific contract terms in writing.
But if you work as an employee, your employer would automatically hold the copyright on your writing unless you had another agreement in writing.
You can learn more about copyright transfers with clients and employers in the U.S. Copyright Office’s Works Made for Hire brochure.
Why This Matters
In general, it’s not a good idea for a freelancer to transfer a copyright to the client. There are exceptions though. For example, you might not care if it's something that can never be used again in any way. Or you might be hired to create a derivative work of something the client already owns the copyright to where it could make more sense to leave all rights with the client. But if you choose to do this, you can (and I'd argue you should) charge significantly more.
Why wouldn't you want to let go of your copyright on every project? You can often find ways to get more out of them. You might directly resell rights, such as selling first rights to a feature to a magazine and selling online rights to a blog later on. But owning the copyright means more than that.
It also means you’re the only one with the right to create or commission derivative works. If you work within a narrow niche, it’s highly likely you’ll write similar content over the years. You might even re-use sources. And by retaining the copyright to the original content, another client can’t come after you for producing something similar that they claim is a derivative work. That would be your right.
It could also lead directly to more freelance work if your clients later want derivative works made from content you created, and you would be the natural choice to do that for them. For example, if a feature you write goes over well and the client wants to expand it into a longer report, unless they've negotiated a license that allows it, they need your permission to create that. Ideally you would be hired to expand the content. Worst case, you charge more up front for the license that allows them to hire someone else to do so (or do it themselves). On the other side of the spectrum you might also decide to create and release a longer report based on a past article. As long as you retained the copyright, you should be able to do that.
Now let’s say a freelance client oversteps and crosses into employer territory. Normally they would be the one concerned about you reporting them and requesting that their classification as an employer be enforced. They could end up paying more because you had to give up certain freedoms and take on certain costs involved in working as a freelancer. But there’s a risk to pursuing it. If you do, and they’re classified as an employer, then they might technically own the full rights to your work.
Would it be worth it? You would have to decide what’s more important — your copyright or your professional rights and freedom as a freelancer. Fortunately this is something most of us won’t ever come across. It's simply an issue you should be aware of. You can avoid having it happen to you by not allowing clients to cross those lines in the first place. Not sure where those lines are? I explored some of them in my look at Elance’s Work View, but you can learn more by reading ”Independent Contractor (Self-Employed) or Employee?” from the IRS.
Have you ever had a client try to cross the line into employer territory? Did you do anything about it or walk away from the project? Or did you put up with it at the time? Were you aware that your professional relationship status could impact your copyright in your own work? Share your stories and experiences in the comments.