Intellectual property is something that has been created by an individual or business and should allow them the specific rights to benefit from the creation. An independent contractor usually works for a business but is not considered an employee, and wages and withholding may be handled differently. The relationship may be clearly defined by the IRS in terms of how they are to pay taxes, but there is often a substantial amount of gray area; in fact, some individuals may be surprised to find out upon being hired that they are not considered traditional employees but are labeled as contractors instead.
For the business owner, there are many benefits to hiring an independent contractor. From an economical standpoint, it is usually a win due to the lack of expenses incurred by hiring regular employees. These workers can also be brought in to work on a specific project, with the understanding that they are leaving afterward. Employers have the option to ask them to sign on for a longer period of time, or can take advantage of the original agreement without having to lay anyone off or pay unemployment. The drawbacks in hiring independent contractors are that the employer has less control. And this could get tricky if intellectual property becomes an issue.
With employees, the work created on-site for the employer belongs to the business; however, this may not be the case if an independent contractor has created an invention, a new method, improvement, or more. As a business owner, you can cover yourself by discussing how potential intellectual property is to be handled with an independent contractor up front, as well as outlining your agreement in a contract. If you do not, then the intellectual property may rightfully end up being the property of the contractor.
If you are engaged in creating software, electronics, and performing new research, ownership of intellectual property can be particularly important to consider. Seek legal advice from a skilled business attorney about the future of any intellectual property, as well as help in creating a contract that protects your business. Along with outlining ownership details about intellectual property, a good contract with an independent contractor should include project scope, duration of contract, payment details, and a dispute resolution clause.
Do you have questions about hiring an independent contractor or drawing up a business contract? Are you in the middle of a business dispute and require experienced representation? Call Shane Coons now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com. We will be glad to review your case, answer your questions, and help you move forward with success.