So Garcia has moved to intervene in the Fairey v AP case. Good for him and I hope he wins both ways. But this post isn’t about the Fairey part of this, it’s about the AP’s claim that Garcia was an employee. Garcia says he never signed the contract. I half-jokingly said on the BAP Facebook page that if Garcia was an employee, then were are his benes?
The benes issue is not unimportant. If the AP wins its claim that Garcia was an employee (that is, if there is no contract and they still win–which is entirely possible), then they’ll have to pay back taxes, etc. They’ll likely have to pay a lot, and not just for Garcia, but all of its “employees,” including, likely, penalties. The IRS is not to be messed with in situations like this and you know they are paying attention to this, of course.
The IRS has been cracking down on companies that are using people just like employees but calling them “Independent Contractors” so as to avoid the tax liabilities and other costs associated with employees.
This is partially why I am wondering about AP’s motivation in claiming copyright. If Garcia was an employee and they paid taxes, etc., for him at the time, then fine–he loses and learns a tough lesson. But if they have not treated him as an employee by withholding taxes and paying their share of FICA, etc., then they could seriously shoot themselves in the foot by calling him one now.
So why are they saying that he was an employee but no one seems to have produced a signed contract to that effect. Hmmm…
(NOTE: I am not a lawyer! Anything on this blog and in this post is just personal opinion)
Exactly. I thought being an “employee” was clearly defined as a taxation category. I heard Garcia on Fresh Air a few months ago and he insists he was never an employee. I don’t understand what the AP is trying to do.
Adrien
Here in Tucson, an ad agency recently decided to cut costs by making its employees into independent contractors. I’m not sure how the IRS is going to view this decision, but here’s how the local media covered the story:
http://www.azstarnet.com/sn/biz-topheadlines/284971
The story’s headline noted that most of the agency’s employees would lose their benefits.
As you probably know, “employee” means one thing to the IRS and another to the Copyright Office: the two definitions overlap but are not synonymous. A work need not be by an “employee” to be a Work for Hire, but if the creator was not an employee, the burden of proof shifts to the party claiming WFH, and the elements necessary to prove the work was made for hire, while not a legal Mt. Everest, are far from de minimis to establish. “We told him to go take a picture of the President for us” is not going to cut it.
However, what I think is really going to cost AP some toes here is that written contract, or lack thereof. No written contract, and either Garcia was an employee entitled to full benefits and requiring withholding and reporting, or he was a totally independent individual and there was no assignment. To heck with intervening in the case, Garcia should be suing AP for copyright infringement!
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Since the Copyright Act requires that all transfers other than those as a matter of law be in writing – and the only possible transfer as a matter of law is that this is a WFH which in practical terms requires Garcia to be an employee – without that contract AP is going to come out of this bloody. They might even WITH it, but without it, they’re sunk.