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Independant Contractor or Employee?

The most common cause of disputes is the casual treatment of important relationships in business.  An example is that of the status of people working together in the early stages of a business.  Recently the Ninth Circuit gave us an opinion in a case where there was a dispute over whether someone was an employee or an independent contractor.

Often people use the independent contractor relationship to avoid having to collect, pay and account for the various taxes related to employees.  However, that can turn around and bite one in several ways, in the case in question, there was a dispute over who owned the software that was developed as part of a start up business.  If the person in question was an independent contractor, then he owned the copyright to the software as its author (absent a written agreement to the contrary).  If an employee, then the company owned the software by operation of the Copyright Act as a “work for hire”.

You can read the case and learn the details of the analysis of the court on the question.  But the real solution to the problem is a clear written agreement in advance that specifies the relationship of programmer to company, and correctly specifies the ownership and authorship of the software being written.

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