Top 6 Legal Issues for Influencer Agreements
By: Marcus Lee
In a world where content is king, the year of COVID-19, which began with massive layoffs and unemployment, spawned a new wave of influencers and brand ambassadors in a generation already filled with these intrepid entrepreneurs. But companies engaging these micro-marketers are learning that projects for influencers are hugely varied depending on the details of the project. Looking for an influencer agreement to fit your project is like typing “food” into your Yelp search. Make sure you have a well thought out agreement in place to avoid future headaches.
Here are the top six legal issues to be concerned with in an influencer agreement.
1. Scope of Work
The first priority will always be the scope of work. For the benefit of both sides, the contract should detail the work to be performed and its purpose. Is the influencer being hired for content creation? Collaboration? Brand ambassadorship? Attendance at an event and visibility? Participation in a larger advertising campaign?
Influencer agreements these days are primarily about content creation. The contract should specify what the content is – whether it’s a video, article, Tweet, blog post, live stream, photo shoot, etc. Often, it’s several of these things. The contract should also specify when these discrete projects should be completed, uploaded, and/or shared, and whether the company has any control over the final product (e.g., rights over editing, approval, unposting).
2. Copyright / Intellectual Property Rights
The contract should specify who owns what – the company owns the product or service, but who owns the content? Sometimes the influencer owns the content, and the company gets the rights to use it for a certain period of time. Sometimes the company owns the content, and the influencer gets the rights to use it as part of her or his portfolio. It will depend on the parties themselves and the nature of the project.
3. Employee or Independent Contractor
It’s been over three years since California’s Dynamex case triggered a national paradigm shift in classifying workers as employees versus independent contractors. While it seems to be common sense that influencers are independent contractors, the line is actually much closer than you would think.
Influencers can provide a wide variety of services, some of which could run afoul of classification laws resulting in Labor Code penalties in many states. While there’s no bright line test, generally the more control exerted over the influencer, the higher the risk that paying them as an independent contractor might get a company in trouble with the IRS or the courts. For example, providing equipment, renting props, and securing a location for the influencer’s video shoot, dictating what a Twitter post says verbatim, or retaining approval rights and/or editing the social media content before it goes live are all different ways that control can be exerted.
4. Access to Influencer Data
Companies that often use influencers will also want to pay attention to key performance indicators (KPIs) – e.g., conversion rates, reach and awareness, referral traffic, audience growth, engagement, etc. Companies may want to consider contractual terms that grant them access to the influencer data so that these KPIs can be reviewed. It also might be wise to include the parties’ obligations with respect to influencer marketing platforms (e.g., CreatorIQ, Mavrck, GRIN, Popular Pays, etc.)
5. FTC Guidelines
The Federal Trade Commission (FTC) has a number of rules governing advertising messages to consumers. If the influencer has a material connection with the brand, that connection needs to be disclosed. The disclosure has to be clearly posted – it cannot be hidden in the “About Us” link at the bottom of the page in size 4 font. It has to use simple and clear language. If it’s a live stream, the disclosure should be repeated periodically. If it’s a pre-recorded video, the disclosure should be both visual and audio, and not just spoken or in the description below. The FTC imposes usage-of-space and term restrictions as well. And of course, don’t make false advertising.
6. Is the Influencer Part of SAG-AFTRA?
The Screen Actors Guild–American Federation of Television and Radio Artists (SAG-AFTRA) is a U.S. labor union that represents 160,000 actors, recording artists, radio personalities, singers, and other media professionals. Some influencers are signing up for SAG-AFTRA protection. More commonly, SAG-AFTRA members are moonlighting as influencers with services for hire. If a company hires an influencer who happens to be a member of SAG-AFTRA to create video content, it may need to navigate guild rules.
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