It occurred to me that many people who may read this blog aren't interested in starting their own business. Most fresh developers are more interested in getting involved with an independent studio, or just getting a steady paycheck.
So here we're going to discuss employment. Most entertainment industries have unions. Sports, film, television, and even to some extent the music industry have unions and guilds that represent the interests of talent and professionals within those industries. Those unions will typically enter into collective bargaining agreements with trade and/or industry associations (such as the RIAA) to draft standards that are thereafter embedded into every employment contract where union labor is used.
The games industry has no such union or guild. As a result, what goes into an employment contract is dictated entirely by the employer and the prospective employee. It is therefore very important that you actually get an employment contract laying out the terms of your employment in writing. As an employee getting his or her first gaming gig you should be aware of what an employer is required to do on your behalf. You also want to make sure that your quality of life doesn't go down the tubes because your agreed-upon compensation didn't take into account things like overtime, health insurance, and revenue sharing in the event of a major success.
Do not fall under the delusion that working for a game developer means that you should be working 60 hour shifts plus weekends. The terms of your employment are determined mostly by you, and you should never sacrifice your health and mental well-being for what is ultimately just a job.
What Your Employer Should Provide
Form E-4: If you are located in the US, your employer is required to withhold a percentage of your income for tax purposes. This is called the payroll tax, and if you're working as an independent contractor, you should be aware that you're responsible for both the amount normally withheld by the employer and the taxes you yourself pay (essentially double what you pay as an employee). This goes for both state and federal taxes.
- Employee Manual/Handbook: Under Federal and most State law, employers should provide you with a handbook or other documentation that sets forth the business's policies, practices, and procedures. It should also set forth employee rights and it may also include dispute procedures. While some of this will also be covered in your employment contract, the bulk of the important information concerning your rights will likely be provided to you in the form of additional documentation. This includes workers' compensation information, workplace health & safety, employee health insurance policies, sexual harassment and other discrimination policies, retirement benefits, family leave policies, and employee stock options if available.
- The Employment Contract
What Your Employment Contract Will Include
Recitals/Introduction: this sets out the name of the company and the employee (you), the place of business, etc. It sounds silly, but make sure you're actually being employed by who you think you're being employed by—in the games industry there are a number of parents and subsidiaries, so it's always best to know who will actually be responsible for signing your paycheck.
- Duties: This usually explains why you are being hired and the tasks that you will be required to perform. It may also include the title of your position. This section may also include a minimum number of hours you are required to work.
- Term: The length of your employment. Some states place limitations on the length of an employment contract (California being one), so most employment contracts will have provisions for renewal.
- Nondisclosure: NDA's may be a separate document or an embedded provision—a NDA sets out specifically what must remain confidential, although many contracts keep the definition of "confidential information" and "trade secrets" fairly broad. This is a bit dangerous for the employer because unless employees are aware of what must remain confidential, it may difficult to raise the argument that a specific piece of information should have remained confidential pursuant to the agreement.
- Work-for-Hire: While employee product created in connection with the employment is automatically a work-for-hire under Copyright law, some employers may seek to broaden the scope by including language that encompasses any work product created during the term of your employment. In this manner an employer may seek to claim ownership over any invention you created independently. It is therefore very important that you read this provision carefully if it's in your contract and address any issues you have before signing your contract. This is especially true if you're an independent contractor.
- Compensation: This should set out your salary, or it should make reference to a schedule that sets forth your salary. Be aware of who is responsible for paying what and what deductions will be made from your salary for tax and employee benefits purposes.
- Contingent Compensation: in some instances, particularly if you're working for an indie and you're getting paid peanuts on the condition that you'll get a bigger piece of the pie later, you may have a contingent compensation clause. This will set out the royalty you are entitled to once your company starts earning profit from the product.
- Credits: If this isn't in your contract, it should be. You are entitled to credit for your contribution to a project. This should set forth how your credit will be displayed and where.
- Covenants: Many agreements include covenants not to compete. While most jurisdictions legally (judicially) limit the scope of these clauses by time and geography, the covenant still may be burdensome. A covenant not to compete will usually state that, upon termination of your relationship with your employer, you are not allowed to seek employment from a "competitor" for a specific period of time (anywhere from six months to a year, usually). This obviously creates a problem if you're only taking an entry level position and plan on moving to another potentially competing firm. A reasonable employer probably won't enforce this unless you had access to highly confidential information, and there's evidence that you disclosed trade secrets to a competitor. Then again, it's a dangerous business to expect employers to be reasonable.
- Stock Option/Revenue Sharing/Pension Plan: Larger firms may offer you an opt-in to the company's stock option/revenue sharing/benefit/401(k) plan. Make sure you understand the terms of those benefit plans and what you're entitled to, as well as when you will be entitled to opt-in and subsequently collect from those benefits. It is also important to note how much of your salary will be paid directly into that plan when negotiating your salary.
- Termination: Employment is typically at-will. This means that both parties can terminate the employment at any point in time on the condition that the terminating party provides notice to the other party (usually 30 days). The Agreement may also include automatic termination in the event that you materially breach the Agreement or breach one of the major bylaws and/or company policies and practices.
- Disability: If this isn't in your agreement, it should be. If you are unable to perform your duties under the contract as a result of a serious mental or physical disability, you want to make sure that your inability to perform does not constitute a material (actionable/sueable) breach of the contract and that the disability creates a no-fault termination. Yes, there are some companies out there who really can be horrific enough to sue a paraplegic because he can no longer do his job. This is also a good time to contemplate disability benefits.
- Dispute Resolution (arbitration): Most employment contracts include dispute resolution, mediation and/or arbitration provisions as a preliminary measure to a lawsuit. This is to the benefit of both parties because it's less expensive than going to trial. It is also less formal. You will also want to pay attention to who is responsible for attorneys' fees—depending on the language of the provision, it may be better for each party to bear the cost of their own attorneys' fees.
Before accepting employment, get an idea of what it's like to work there—talk to current employees, talk to your interviewer, and try to get a tour of the workspace so you can get an idea of whether this is where you want to be. It is well documented that quality of life for game developers can at times be extremely poor. Crunch time, poor planning, and seemingly impossible-to-meet milestones can all lead to a work experience that has a detrimental effect on your personal life and psychological well being. Because there is no organization acting on your behalf to prevent these quality of life issues from arising, it is important that you take the steps to ensure that the profession you've chosen and company you work for is a good fit for your lifestyle.