Checklist: Work for hire (USA)

Introduction

This checklist will help in-house counsel and private practitioners with their understanding of work for hire. It sets out key issues and points to consider when determining whether and how to develop work-for-hire provisions in an organization’s hiring agreements.

This checklist addresses the following steps:

1. Understanding work for hire
2. Developing agreements with work-for-hire provisions

The checklist is presented as a list of requirements that employers can check off as they are addressed. At the end of the document, there are explanatory notes corresponding to each requirement in the checklist.

This checklist can be used in conjunction with How-to guide: Protecting intellectual property when drafting sales or marketing agreements.

Step 1 – Understanding work for hire

Step 2 – Developing agreements with work-for-hire provisions

Step 1 – Understanding work for hire

A ‘work-made-for hire’ (commonly referred to as a ‘work for hire’) is a legal term that refers to a creative work that was made for another person or entity that meets certain criteria. Work for hire designation has important copyright consequences. If a work is made for hire, the employer or other person the work was created for (not the creator) is considered the author of the creative work and the initial owner of the copyright in the work. 

17 US Code section 201.

1.1 Understand the purpose and benefits of a work-for-hire arrangement

A work-for-hire agreement transfers ownership from the creator of work product to the commissioning party, without the need for a separate agreement or transaction for each piece of work. Work-for-hire agreements are used in many industries, but are particularly common in the following industries:

• design (eg, graphic designs, paintings);
• writing (eg, songs, essays);
• software development; and
• photography services.

The benefits of utilizing work-for-hire contracts include:

• cost-effectiveness: the organization does not have to pay license fees and royalties to use the work;
• ownership and control: the organization has the exclusive rights to own and control how it uses the work, including reproducing, distribution, and selling; and
• predictable: the terms and conditions are specified in the contract so that the parties have a clear understanding of the arrangement.

1.2 Understand the work-for-hire doctrine

The US Copyright Act defines a ‘work-made-for-hire’ as

1. a work prepared by an employee within the scope of his or her employment; or
2. a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.’ 17 USC section 101.

In addition to the statutory definition, courts have established the ‘instance and expense’ test to determine whether a work is made for hire. This test determines the ownership rights of the work by determining who paid for it and who had control over its creation. A work that is deemed made for hire gives the hiring party the ownership rights associated with the work, including intellectual property ownership. The instance-and-expense test has two parts.

Instance refers to the extent to which the hiring party provided the reason for, participated in, or had the authority to supervise the creation of the work. Where the hiring party provides creative direction or reserves the authority to supervise the work, it is more likely to be deemed a work made for hire. In cases where the creator created the work on their own initiative, it is less likely to be deemed a work made for hire.

Expense refers to the use of the hiring party's resources to create the work. For example, when the hiring party pays the creator of the work with a lump sum, it is more likely to be deemed a work made for hire. Conversely, where the creator is compensated through royalties or a profit-sharing system, it is less likely to be deemed a work made for hire.

When the hiring party can satisfy the instance and expense test, they will be deemed the owner of the work, absent evidence of an agreement to the contrary. See, eg, Urbont v Sony Music Entm't, 831 F.3d 80, 119 USPQ 2d 1619 (2d Cir. 2016).

1.2.1 Work created by employees

The rights to a work created by an employee in the course of their employment automatically belong to the employer. 17 USC section 101. There is no need for a separate or additional agreement to transfer ownership, and employers are not obligated to pay a royalty or license fee to use the employee’s work. Employers and employees are free to make other agreements, but the default rule is that the rights belong to the employer.

Note that this default rule applies only to employees, and not independent contractors. For further information about the difference between employees and independent contractors, see Checklist: Determining the difference between an employee and an independent contractor.

1.2.2 Work created by independent contractors

The rights to works created by independent contractors will usually belong to the independent contractor unless a work-for-hire agreement is entered into. To be effective, the work for hire agreement must be in writing, signed by both parties, and meet the requirements set forth in the US Copyright Act. See Circular 30, Works Made for Hire.

The work-for-hire designation is not theoretical; it has important consequences. For example, if a clothing retailer hires a photographer to shoot product images for the retailer’s website and enters into a work for hire agreement, the retailer will be the owner of the images and can use them for other purposes, such as on billboards and other promotional materials. In contrast, if there’s no valid work for hire agreement, the photographer will have ownership rights by default, and the organization will need to continuously negotiate usage rights with the photographer.

If no work for hire agreement is entered into, the contractor will generally have initial ownership of the works, but it is still possible to enter into a transfer agreement so that the commissioning organization obtains ownership of the work.

1.2.3 Work created by Artificial Intelligence

The DC Circuit Court of Appeals upheld a ruling affirming that copyright requires human authorship, rejecting the claim that an AI system can be an author. In Thaler v Perlmutter, No. 23-5233 (D.C. Cir., Mar. 18, 2025), the court supported the US Copyright Office's stance against granting copyright to a work (’A Recent Entrance to Paradise’) generated solely by Dr. Stephen Thaler's ‘Creativity Machine’ AI.

The court reasoned that the Copyright Act of 1976 implies human authorship through provisions related to property ownership, inheritance, lifespan-based copyright duration, and the need for a signature for transfers – all of which are inapplicable to machines. The court dismissed Thaler's dictionary definition argument, emphasizing statutory context. It also rejected the work-made-for-hire argument, noting it acknowledges the hired party is ’considered’ to be the author, but is not actually the author.

The court further stated that denying copyright to AI-generated works doesn't stifle creativity, as human creators using AI still have incentive. Machines don't respond to economic incentives, so the human authorship rule doesn't inherently reduce original work.

This decision aligns with the Copyright Office's 2025 report, reinforcing that while AI can assist, human creative input is necessary for copyright. While the ruling doesn't address the ability to copyright AI-assisted human creations, it underscores that content solely generated by AI likely lacks copyright protection, a key consideration for companies using AI for content creation, including code.

1.3 Identify the key terms and provisions of a work-for-hire agreement

To fulfill the instance-and-expense test, the organization commissioning the work should appear to be in control of the process to be considered work for hire. A few project specifics that should be included in the work-for-hire agreement include:

• project timeline – the agreement should be specific as to when the work product is expected to be completed for use;
• work schedule – demonstrating some type of control over the contractor;
• milestones – for example, a draft of the work product should be available on a specific date;
• payment terms – preferably a single lump sum, or a total fee that may be paid in instalments when project milestones are met; and
• rights – the contract should specify that all rights will be owned by the organization and not the creator.

1.4 Understand the effects of work-for-hire provisions on employment rights and benefits

Generally, independent contractors under a work-for-hire arrangement are entitled only to the compensation payments as provided in the contract. Conversely, employees are entitled to many other benefits, such as health insurance, life insurance and retirement benefits. Employees are also entitled to unemployment benefits and hold many other legal rights that an independent contractor does not.

For further information, see Checklist: Determining the difference between an employee and an independent contractor and IRS guidance, Worker Classification 101: employee or independent contractor.

Step 2 – Developing agreements with work-for-hire provisions

2.1 Review and understand applicable laws

The laws that may be relevant in a work-for hire situation include:

• copyright laws – these are exclusively federal laws;
• laws relating to the determination of whether a worker is a contractor or an employee (see step 1.4 above); and
• laws relating to license agreements for the use of copyrighted material.

License agreements and worker classification laws are generally governed by state law and these laws can vary by state, so it is important to know which apply to an organization’s work-for-hire agreement. For example, in California, a work for hire agreement may result in an independent contractor being classified as an employee for workers’ compensation and unemployment law purposes. See, Cal. Lab. Code section 3351.5(c); Cal. Unemp. Ins. Code sections 621(d) and 686.

2.2 Review and understand available enforcement guidance

Enforcement of a work-for-hire agreement is the obligation of the parties to that agreement; however, the US Copyright Office provides information about when a copyrightable work is made for hire. See Circular 30, Works Made for Hire.

2.3 Incorporate work-for-hire language into the agreement with the individual

Work-for-hire language is often incorporated into the main agreement that is entered into between the organization and the individual carrying out the work, and this practice is usually effective. However, best practice is to make the work-for-hire agreement separate from the overall engagement agreement. A work-for-hire agreement must be an express agreement and cannot be implied.

2.4 Define the parties and purpose of the agreement

The parties to the agreement should be the organization and the individual being engaged to work. The organization may have related businesses or may be part of a group, so careful consideration should be given to the correct entity to be a party to the agreement.

The purpose of the agreement in a work-for-hire arrangement is to produce the expected work product. The nature of the expected work product should be made clear.

2.5 Draft and review specific terms

Some specific terms that should be included in work-for-hire agreements include:

• description of work – sufficient detail should be provided to prevent disputes as to whether the any work produced was part of the agreement so that the organization retains the rights to it;
• current and future works – in a work-for-hire agreement, the agreement should specify whether the contract includes all current and future works;
• rates/fees – in work-for-hire arrangements, the compensation should be either a single lump sum, or a single sum payable in instalments as certain project milestones are met; and
• credit – the contract should specify that all rights will be owned by the organization and not the creator. Note that the organization will be regarded as the ‘author’ of the work for copyright purposes.

2.6 Draft and review general terms

General terms that need to be given consideration in drafting a work-for-hire agreement include:

• intellectual property ownership rights – when engaging someone on a work-for-hire basis it should be specified that all the intellectual property will be owned by the organization and not the creator;
• approval – the organization commissioning the work for hire should retain the rights to accept the work only upon approval of the finished work;
• waivers and warranties – a provision where either party in a contract agrees to voluntarily forfeit a claim without the other party being liable. For example, the artist may warranty that they are not developing any similar works for another party. The artist would also waive any potential future claims to the work, including derivative projects and altered versions of the project;
• pay or play – work for hire is an agreement to pay the artist at least a part of the agreed-upon fee even if the business subsequently determines that the artist's services won't be required, or if the finished work is not accepted. For example, if the contract was for a song to be used in connection with a film, the film producer may determine that the song is not consistent with the tone of the film and, therefore, decide not to utilize it;
• choice of venue – this determines where the case will be heard in the event of a dispute; and
• choice of law – this determines the law that would be applied by the court in the event of a dispute.

2.7 Assess the applicability of provisions on a case-by-case basis

When drafting work-for-hire agreements, each of the provisions described above should be considered on a case-by-case basis. Work-for-hire agreements should be negotiated with each creator individually, so not every contract will have identical provisions.

2.8 Register the work

Registering the copyright in a work protects the work from infringement. Registration of a copyright is a requirement before a suit for infringement may be brought and the obligation to register falls on the organization. Registration is a simple process and is almost always done online through the US Copyright Office.

Additional resources

17 USC, sections 101–1511 (the Copyright Act)
Copyright.gov – Works Made for Hire
Congressional Research Service – Copyright Law: An Introduction and Issues for Congress

Related Lexology Pro content

How-to guides:

Overview of US employment law
How to draft an employment contract
How to draft the key provisions of an employee handbook
How to use arbitration agreements in employment
How to prepare for an Occupational Safety and Health Administration (OSHA) inspection
How to develop a whistleblower policy and reporting program
How to comply with the unemployment insurance program
Overview of workplace harassment
How to understand and comply with wage and hour laws
How to protect trade secrets in the employment relationship
Protecting intellectual property when drafting sales or marketing agreements
How to draft enforceable restrictive covenants for employees

Checklists:

Dealing with workplace injuries
Terminating the employment of an at-will employee
Determining the difference between an employee and an independent contractor
Developing an Equal Employment Opportunity Commission (EEOC) compliant policy
Determining whether employees are exempt from wage and hour laws
Determining Family and Medical Leave Act eligibility
Employer compliance with the Patient Protection and Affordable Care Act  
Compliance with child or spousal support orders
Drafting a non-compete agreement

Reliance on information posted:

While we use reasonable endeavours to provide up to date and relevant materials, the materials posted on our site are not intended to amount to advice on which reliance should be placed. They may not reflect recent changes in the law and are not intended to constitute a definitive or complete statement of the law. You may use them to stay up to date with legal developments but you should not use them for transactions or legal advice and you should carry out your own research. We therefore disclaim all liability and responsibility arising from any reliance placed on such materials by any visitor to our site, or by anyone who may be informed of any of its contents.