So last week I wrote about the pros and cons of hiring employees versus independent contractors (or freelancers). As we noted in that piece, contractors or freelancers tend to be less expensive than a typical employee. That being said, as Jaia Thomas highlights, there are 3 things you still must do to protect your business if you decide to hire freelancers.
Before we get into those 3 factors, let’s go over how we define a contractor or freelancer. Ms. Thomas uses the American Heritage Dictionary’s definition of freelancer which focuses on whether the work being done is temporary in nature. In our employee v. independent contractor blog post, we also looked at how much control you, as the employer, have over the worker. Once you and the contractor are clear on the nature of your relationship, it is time to follow Ms. Thomas’ precautions and cover yourself:
1. Get your agreement in writing:
As I noted in a recent blog post, a contract is the easiest way for you to protect yourself without going to court. A contract “lays out the actions that must be taken by each party; it uses language that minimizes misunderstanding; it is evidence of your agreement that you can use in court if there is a dispute. Also, …some agreements will not hold up in court unless you use a written contract.”
As we discussed in our Contracts Cheat Sheet, a contract does not have to be pages long. Even a one page contract will be valid so long as it includes the 5 elements required of all contracts.
2. If the work product is something that can be copyrighted, ensure that it is designated as “work made for hire”:
As Ms. Thomas discussed, the US Copyright Office generally deems the creator and author of a work the owner of said copyright. That standard rule is valid except in cases where it is “work made or hire” i.e. cases where a “project [is] prepared by a worker when the assignment is specially ordered or commissioned in certain specified circumstances.” So if you hire a freelancer or contractor to create a logo for your business (or any other type of work that may be subject to copyright) always include a clause in your contract that states that it is “work made for hire” so the copyright for such work is 100% owned by your company and the freelancer has no legal claim to the work product.
3. Do not make 100% of the payment up-front
We all want to believe that everything will work out perfectly. Unfortunately, this not always the case in the real world. So, we must always think about how we can protect ourselves if things go sour… say, for example the freelancer or contractor does not complete the work or even refuses to comply with your specifications. Ms. Thomas advises you to “bifurcate payments. Alternatively, if the entire payment must be furnished up front, be sure to have something in writing so that the company can recoup a portion if the relationship is prematurely terminated before the work is completed.”
As business owners, we almost always put pressure on ourselves to do too much. But with these tips to help you protect yourself, maybe you can now go out and hire the help you need?
