This article has been written by Niharika Chavan, pursuing the Diploma IPR, Media and Entertainment Laws from LawSikho. This article has been edited by Priyanka Mangaraj (Associate, LawSikho) and Dipshi Swara (Senior Associate, LawSikho).
What is a gig economy?
The gig economy is where a high number of people work part-time, transitory, as remote workers, or as independent contractors. Temporary, flexible, or freelance positions are common and organisations prefer hiring independent contractors and freelancers over full-time employees. The traditional economy of full-time workers, who are generally focused on their career advancement, is undercut by the gig economy. By making labour more responsive to the requirements of the economy and the need for flexible lifestyles, the gig economy can benefit workers, firms, and consumers. The benefits of the gig economy may be lost on those who do not use technical services such as the internet.
Employers also have a larger pool of candidates to pick from because they are not limited to hiring based on proximity. Furthermore, technology has become so efficient that it allows people to work under any circumstances. Finding work online is easy with websites like upwork, freelancer, and many more. People working remotely or from home are becoming increasingly frequent in today’s digital age. Due to the surge in the ongoing pandemic, “work from home” has become the new normal.
The United States is well on its way to becoming a gig economy as about 36% of the workers in the US work as gig workers and 86% of freelancers think that the gig industry has an even brighter future ahead of it. If the gig economy keeps growing at the current rate, more than 50% of the US workforce will participate in it by the year 2027.
Engaging gig workers and it’s issues
The introduction of the gig economy has been a major advantage to both start-ups and existing businesses, such as lower costs of recruitment, conveyance, and other operating costs, remote work life, an increasing number of candidates to work from home. This revolution has aided in the development of several fantastic concepts like work-from-home or workcations work from a holiday destination that would otherwise have been impossible to realise due to a lack of know-how, resources, or time.
However, failing to ensure that the hirer retains ownership of the intellectual property (IP) generated (or contributed to) by independent contractors during their engagement is a common error when employing contractors for such side projects or new company endeavours. IP in such engagements can take various forms from computer code and software, graphic designs or artwork, product literature and other copyright-protected material, or complex designs and inventions capable of being patented.
A common misconception among small businesses is that when they hire a contractor, they are paying for the finished product (and thus the IP). Many organisations also make the mistake of assuming that a contractor relationship is similar to an employment relationship, in which it is assumed that specific IP developed during employment belongs to the employer.
Unfortunately, this is not the case, and situations frequently occur where contractors have taken the output from one engagement and used it for another—or, worse, attempted to commercialise it themselves. For example, A person who has worked and developed software that segregates numerical data, in his past work contract may use the same software in any other future work/project. Or can rather commercialise it by selling it to a third party. In this way, the contractor takes the output from one engagement and uses it for another. This can be avoided by using a legal clause in the contract.
IP in gig economy : who has the ownership
A contract that specifies IP ownership is beneficial to both contractors and freelancers, as well as the business owner. In order to secure the business owners, and exclusivity clause is added in the contract or agreement to compel the contractor to exclusively work with the owner company’s original intellectual property While, a defensive employer may want to consider incorporating a condition in their employment agreement that offers them the flexibility of working part-time.
The law is ultimately the responsibility of a business owner, whether they are an employer or a contractor. An innovation industry expert can assist gig workers or employers to comprehend it if they are having any trouble. An intellectual property lawyer is one of the many options they may connect with.
How can an employer and a gig worker secure their IP in a gig economy?
It is crucial for both, employer as well as employee in a gig economy to protect their own IP respectively due to the hardships they face in a gig economy. Following are a few ways to protect their IP in a gig economy:
The agreement is one of the most crucial tools in a gig economy. Most preferably a “written” agreement. I say “written” because, while a verbal contract can be enforceable in most cases, proving the terms of a verbal contract in the event of a disagreement is extremely difficult as there is no written proof of the terms and conditions that were agreed upon by both the parties to the contract. Hence, a written agreement always works in favour of both, the gig employer and gig worker.
With the help of a contractor or a service agreement, the organisation may get its house in order. If several contractors are being employed, the employer can use a template agreement, but if the engagement is one-off or sophisticated, it should be a customised arrangement. So before any of the parties disclose any of the intellectual property or confidential information with each other, they should ensure that they have entered into a written agreement.
From an IP perspective, the written agreement should clearly specify the following:
- the ownership of the intellectual property during the engagement and all rights related with it;
- restrictions (and/or prohibitions) on the reuse of intellectual property in future interactions;
- deal with any attribution rights or other moral rights like, to claim or deny authorship of a work created by a gig worker during his engagement or being credited when the author’s work is used;
- clear limitations for the use of any confidential or commercially sensitive information provided to each other during the engagement, and make sure that any such material is either returned or destroyed after the engagement ends.
Furthermore, if the employer is concerned that a contractor will re-deploy project output in a competitor’s engagement, he might consider including non-compete/restraint measures in the contract. While such requirements can be difficult to implement in the world of contractor engagements, they can serve as a significant moral or psychological deterrent to underhanded or dishonest practices.
Negotiating and signing off on contractual conditions is sometimes put on the back burner in the enthusiasm and energy of the project. It shall be looked into before even entering into a contract. Not just because your crucial negotiation position will be weakened once the engagement is confirmed, but also because, in many instances, the IP cat is already out of the bag when you are halfway through an engagement because the employer and gig worker may sometimes already have revealed confidential information while discussing even before the actual signing of the contract for engagement
The importance of a contract is that it provides enforceable provisions that specify how a dispute should be managed in the event of a disagreement.
In addition to all of the legalese, the section that outlines the exact services to be performed is an important aspect of the contract. This section is especially crucial for flat-fee contracts because if the services are stated in a broad and open-ended way, the gig worker may find himself obligated to execute a large range of tasks on an ongoing basis for only one flat price.
On the gig worker’s part, those who work as independent contractors should think about creating a template agreement that they may customise and use to a variety. If the client is a large, established business, the freelancer may not be able to use their template agreement. However, having one can be helpful in many situations; if nothing else, it demonstrates the freelancer’s sophistication and allows the freelancer to begin negotiations on their own terms.
Have freelancers sign non-disclosure agreements (NDA’s)
Non-disclosure agreements (NDA’s) are one of the best ways to prevent independent contractors from abusing their privileges. The signing up of an NDA grants more trust between the parties signing the NDA. It ensures that despite heavy negotiations, agreements, disagreements, the information needs to be protected at all times. It deters the theft, misuse, misrepresentation of intellectual property. The nondisclosure agreement enables the company to share information about the intellectual property asset in question without jeopardising the intangible asset’s confidentiality. For example, if a camera company A shares information about new patentable inventions with a client without first signing a Non-disclosure agreement, the client B is likely to obtain the information for his own use and either publish it or use it to create the same IP asset, or even pass the information to a competitor for greater financial gain. In such situations, the NDA’s prove very beneficial.
In order to protect trade secrets and proprietary information, this is a very common practice in the business world. Without a fight, the vast majority of independent contractors will sign non-disclosure agreements.
We live in a digital age where everything has been moved to the internet, especially during the pandemic. We use the internet to help us get things done, whether it’s storing data or accessing information. As we become more involved in the cyber world, we become more vulnerable to cyber threats.
In a gig economy, as a result of bringing your own device to work, companies are already exposed to an increased risk of cyber-crime. That’s especially true in the gig economy. Employees are concerned that their personal information will be made available to employers through the use of social media. For as long as computers have existed, cybercriminals, particularly hackers, have been probing software and hardware for security flaws. However, finding and exploiting security flaws used to be a time-consuming process in which hackers had to patiently explore different parts of a system or application until they found an opportunity. Hackers can now employ machine-learning AI bots to automate the process. As a result, cybercrime has increased as a result of technological advancements and the over-use of technology during the pandemic. Work-from-home workers must, however, already deal with issues arising from having work data on their personal devices.
Sort your projects according to their level of risk
The level of risk varies depending on the project, the industry, and the type of work you want to be done. Sharing information about a food product recipe, for example, may be less risky than sharing data containing personally identifiable information. Understanding the risks ahead of time can help you take precautionary measures. Breaking down large and complex projects into smaller projects can also help you assess the risk involved at each stage and list specific security measures that may be required.
Using strong passwords is essential
A strong password is the next best precaution if someone does manage to gain access. Utilise special characters and numbers if the platform allows them. Keep in mind that you do not have to stick to the minimum password length requirement. Consider using a passphrase instead of a single word to protect your account information. In contrast to random letters and numbers, words are more difficult for hackers to crack but are still easy to remember.
Insist on VPN usage from freelancers
Working with freelancers carries some risk because you don’t know who they are or where they are logging in from. Examples include freelancers who travel frequently and use insecure networks in hotel rooms, coffee shops, and airports. Due to this, more and more companies are asking freelancers to log in using a virtual private network (VPN), which is a private network that runs over a public network. VPNs protect data and systems by encrypting and securing them. Identity and data access must be strictly enforced with the least amount of privileges.
Keep your files safe
When you share files and collaborate with freelancers online, make sure to follow these simple precautions to keep your data safe.
- Before uploading data, try to avoid sharing as much personally identifiable information as possible. Make certain that you only share information that is absolutely necessary for the freelancer to work on your project.
- Ensure that healthcare data is compliant with security and safety standards such as HIPAA.
- When sharing files, try to use password protection methods, such as Adobe’s PDF password protection.
- Give restricted access to documents by granting user-specific permissions, as Google Docs or Dropbox do.
Know your freelancer
To have a successful collaboration, you must be able to completely trust the person with whom you are collaborating. Employers can manually screen and verify the authenticity and level of expertise of freelancers using social media platforms such as LinkedIn by taking the following steps:
- If they are in an academic institution or university, go to their official page; if they are in a postdoctoral, research, or teaching position, go to their LinkedIn profile.
- Look for alternative profiles online that the social networking website may have suggested.
- On their profile, you can see a list of their publications.
- Look for previous employer ratings, comments, and recommendations from previous clients.
The gig economy employs a large number of people who work part-time or from home. Temporary, flexible, or freelance positions are common, and employers prefer to hire such gig workers these days, especially in light of the pandemic. The US is progressing towards becoming a gig economy. Employers prefer to hire gig workers for a variety of reasons, including lower recruitment costs, greater convenience, and lower operating costs. While the gig worker enjoys working in a gig economy because of the flexibility it provides, such as working from the comfort of his or her own home (work from home) or working from a vacation destination (workcations).
In a gig economy, the main issue is securing the intellectual property created by a gig worker during his engagement. The best way to resolve the issue of intellectual property rights ownership is to enter into a written agreement for engaging in a contract in the gig economy. A written agreement serves as proof of the parties’ previously agreed-upon terms and conditions.
Furthermore, the ownership of the IP shall be clearly stated as to who will own the IP in the created work or who owns the attribution or moral rights or non-disclosures or it provides provisions that specify how a dispute should be managed in case of disagreement and the remuneration that shall be paid for the services of the gig worker, etc. In a gig economy, strong passwords are essential, as is the use of a VPN. Cybercrime is on the rise, and the gig economy has become a popular target for cyber attackers.
There are many other hardships faced by the employers and workers regarding the IP while working in a gig economy and hence there are various other solutions available, which are subjective to the employers and employees in a gig economy. But one thing is for sure that the gig economy is the future of this world and hence the issues in the gig economy should be addressed as soon as possible. Solutions to the issues addressed should be convenient to help the gig economy function smoothly.
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