Image by Bettina Tizzy via Flickr
A work made for hire is an exception to the general rule that the person who actually creates a work is the legally-recognized author of that work. According to copyright law in the United States and certain other copyright jurisdictions, if a work is "made for hire", the employer—not the employee—is considered the legal author.
In other words, the faculty member isn't the legal copyright holder, the university is.
My question, does this make it impossible for faculty to participate in commons-based peer-production? If the university holds an all-rights-reserved copyright to a faculty member's creations, and that faculty member is expected to do outreach as part of the terms of their employment (true for most faculty today), then it would stand to reason that faculty would be prohibited from contributing to an entity such as Wikipedia that uses a Creative Commons license.
I sent these questions to my university's copyright librarian for clarification. I'm anxious to see the response. The very idea of expecting faculty to engage with the public, and at the same time having copyright policies that effectively prevent them from doing so seems absurd.
I'll keep you posted on what I learn.