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Company Handbook Question California

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  • Company Handbook Question California

    We have been using a national payroll company that also assists us with HR. With the ongoing monthly charges we pay, our contract states that this company would assist us in putting together our employee handbook. We have decided to go another route with our payroll and have read over our contract with the agency we have in place now. Based on this wording, do we or the company we contract have exclusive rights to our handbook? The printed version should arrive in two weeks, I have a digital copy that was sent to us three weeks ago. This is what the contract states:

    [B]Ownership of Handbook Policies. P***C**x owns all rights, title, and interest, including all intellectual
    property rights in the Handbook Policies and Handbook Policy Updates. P***c**x will not seek to register
    copyright rights in the Additional Handbook Policies. If Client is ever held or deemed to be the owner of any
    copyright rights in the Handbook Policies and Handbook Policy Updates. Client irrevocably assigns to
    P**C**x all such rights, title, and interest. Client will execute all documents necessary to implement and
    confirm the letter and intent of this section. P**c**x grants to Client a limited, non-exclusive license to make
    a derivative work of the Handbook Policies for the Client's internal use only. In the event Client makes a
    derivative Client handbook, the copyright notice will remain in the name of P**c**x. The limited license to
    prepare a derivative work does not include the license or authority to sell or otherwise distribute the Client
    handbook or any derivative work to any third party.

  • #2
    You should consult with your own counsel but I will tell you what I see.

    The payroll company owns the copyright to the manual. This is understandable, since they probably use 99% of language over and over again for other clients. Even if they draft some specific language at your request, they own the copyright on that language as well. That means your only rights are those rights granted to you by the copyright holder.

    The language you quoted also says "P**c**x grants to Client a limited, non-exclusive license to make a derivative work of the Handbook Policies for the Client's internal use only." At least in the language you provided, there is no time limit on that grant nor is there any limitation based on your continued use of P**c**x as a payroll processor or HR service provider.

    Unless there is other language elsewhere, what the quoted language tells me is that you are free to use the employee manual internally and can continue to use it and modify it internally in the future, as long as you include the copyright notice of P**c**x. What you can't do is copy it for use by third parties or license its use by third parties.
    David K. Staub (www.illinoisbusinessattorney.com)
    Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.

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    • #3
      I am not an attorney, but have been in HR and have pulled our company from a PEO/HR service agreement. You are going to need to take the whole agreement to an attorney in your area. Because it is possible there is another section that discusses what happens to all their HR documentation (not just the handbook) when you terminate the contract/agreement and they are no longer the service provider. This could include New Hire forms, performance appraisals, etc.

      Honestly, it sounds like the payroll company owns the copyright and it does say the client is "limited" license (expect that it was limited during the time period that you were a client/subscriber). You would only own any "additional" policies that you had written that were not part of their original document. If you had specifically paid for a handbook to be written (versus it being part of a larger HR/payroll client agreement), you might have more luck with the ownership and "work for hire". But it doesn't sound like that was the agreement.

      That's one of the things you lose when you go with "HR assistance" versus developing your own employer materials either in-house or through some type of HR consulting firm (and generally payroll companies are not HR consulting firms)


      eta: read dkstaub after I posted -- you need to look elsewhere in the agreement/contract to see if there is a time limit.....It would surprise me greatly if there were not, but a payroll company doing HR might not have considered it.
      Last edited by hr for me; 08-31-2017, 01:35 PM.

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      • #4
        Thank you for your responses. I think it will be best to ask our legal counsel as we are using their HR, onboarding, evaluation forms, RTF forms, etc.

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        • #5
          I think that the key phrase is "does not include the license or authority to sell or otherwise distribute the Client
          handbook or any derivative work to any third party."

          To give an analogy, buying a Harry Potter book not give you the right to publish Harry Potter books.
          "Reality is that which, when you stop believing in it, doesn't go away".
          Philip K. **** (1928-1982)

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