Employee Or Independent Contractor? It Depends On Why You’re Asking

From Mondaq, Azita Iskandar provides an excellent analysis of the classification of a worker as an employee or independent contractor under a wage order and under the Copyright Act. Azita reviews the Dynamex decision and its adoption of  the ABC test for determining if a worker is an employee or independent contractor for the purpose of a wage order.

 In Dynamex, the Court said:

it is appropriate to look to a standard, commonly referred to as the “ABC” test, that is utilized in other jurisdictions in a variety of contexts to distinguish employees from independent contractors. Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Under this standard, many workers who were classified as independent contractors would need to be reclassified as employees. 

Azita also reviewed the issue of worker classification and copyright ownership. She writes: 

If the creator of a work is an independent contractor (rather than an employee), and there is no signed writing stating that the work is being specifically ordered or commissioned for use in one of the nine work made for hire categories, then the copyright ownership stays with the individual who created the work (the independent contractor). 

She reviewed the standard for determining if a workers is an employee or independent contractor for copyright purposes. She writes: 

The issue of worker classification for purposes of the Copyright Act was addressed by the U.S. Supreme Court in its 1989 decision in Community for Creative Non-Violence v. Reid.19 That case looked at whether a sculptor who had created a particular work for a hiring entity was an employee or an independent contractor for copyright purposes. The Court held that, when determining whether a work is for hire under the Copyright Act, “a court first should ascertain, using principles of general common law of agency, whether the work was prepared by an employee or an independent contractor.”20 

Azita appropriately notes that there is a different standard for determining if a worker is an employee or independent contractor for wage order purposes and copyright purposes. Shc concludes: 

Given the two different tests at issue (the ABC test under California state law and the common law agency inquiry under federal copyright law), it is possible for a California worker to be considered an employee for purposes of the California wage orders, but to be considered an independent contractor for purposes of the Copyright Act. Going back to the prior example of the newspaper hiring a writer to write journalistic pieces for the newspaper’s weekly publication, there may be circumstances where, on balance, that same writer who is an employee for California wage order purposes could be an independent contractor for purposes of the Copyright Act—because, for example, she works from home, using her own tools and equipment, setting her own work schedule (aside from a weekly publication deadline), receiving no benefits, with no tax withholdings, and she is only writing her weekly column for the duration of the holiday season. The outcome would depend on the facts and on how a court balances the various factors.

Read the full story at Employee Or Independent Contractor? It Depends On Why You’re Asking – Intellectual Property – United States

California adds a wrinkle to the classification and copyright issues. Simply adding a provision in an independent contractor agreement saying that the work product is a “work made for hire” may have unintended consequences in California. California statutes say that if there is a written agreement saying that the work product is a “work made for hire”, then the worker is an employee and the company hiring the worker is an employer. See The California “Work Made for Hire” Trap: Your Consultant May Be Your Employee.  

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