Understanding Work-for-hire, Consulting and Employment Agreements

What's the difference between a Work for Hire Agreement, a Consultant Agreement, and an Employment Agreement? If you aren't sure, don't worry. Most people don't fully understand the subtle differences between each and even more frequently, use the terms interchangeably. However, there are important legal and tax implications that make it worthwhile to fully understand these common terms.

Work-for-Hire
A Work for Hire Agreement stipulates a situation where an employer hires, commissions or pays someone else such as a Consultant, author or Independent Contractors to create a product or "work" in exchange for the compensation agreed upon. A Work for Hire Agreement is not appropriate for someone you are hiring to be a full-time, payroll employee.

Most work-for-hire agreements include at least a portion of the following:

• Statement of Work
• Deliverables
• Term
• Fee Structure
• Arbitration Clause
• Rights Ownership

Consulting Agreement
A Consultants Agreement  is a contract that stipulates a specific service or set of services to be provided by the Consultant over a specific period of time. The contract can be as vague or as specific as desired but usually includes the following:

• Scope of Work
• Rate of Compensation
• Term/Termination/Other Dates including delivery milestones
• Expense/other reimbursements
• Confidentiality
• Rights and Data
• Non-Solicitation

Employment Agreement
In its most simplistic form, an Employment Agreement is a contract between an employer or business and an employee specifying the terms and conditions of the relationship. 

Employment Agreements vary widely depending upon the position, industry and other negotiations but most include the following:

• Terms of Employment
• Compensation and Benefit Package
• Expenses
• Non-Compete Agreement
• Non-Solicitation Agreement
• Intellectual Property Rights

Laws on this topic may vary from state to state. This content is not meant to provide you with complete information and it is not intended to be legal or tax advice. It is recommended that you consult with your own attorney, accountant or other advisor regarding your specific situation.