Texas Independent Contractor Laws
Independent contractors perform services in exchange for compensation and are generally free from the employer’s control and oversight. Whether a person is designated as an employee or an independent contractor has important implications, as under both state and federal law, independent contractors are afforded different rights than employees. If you have questions about your status as either an employee or an independent contractor, please contact an experienced employment law attorney who can evaluate your case.
Classifying an Independent Contractor
Whether a person is considered an employee or an independent contractor depends on his or her specific circumstances, so courts are directed to take a series of important factors into consideration, including:
- Whether the individual works under his or her own name or otherwise exercises economic independence;
- Whether the worker uses his or her own equipment and materials, indicating that both parties share a risk of loss;
- Whether the individual’s connection to the employer is limited to the terms of the service agreement;
- Who controls a worker’s manner and means of performing job duties;
- The skill necessary to successfully complete the job;
- Whether the individual exercises independent business judgment or is supervised;
- Whether the worker is economically dependent on the business of an employer;
- Whether the individual can be fired at will or for cause;
- Whether the person is paid by time or upon completion of a task;
- Whether the performance of the service is integral to the employer’s business, which includes situations where the work is a part of the production process or involves a service that the employer is in the business of providing;
- Whether the worker exhibits managerial skills and whether or not those skills affect profit and loss;
- Whether the parties are under the impression that they have an employer-employee relationship;
- Whether the individual is involved in a distinct occupation; and
- The length of time required to complete the agreed-upon services and the permanency of the worker’s relationship with the employer.
The most commonly used method of determining whether a party is an employee or an independent contractor is by applying the “right to control” test, which involves assessing the aforementioned factors in relation to the amount of control that the employing party can exercise. Analysis of this factor requires inquiries into who sets the pay amounts and work hours and whether the worker is free to work for others or to hire additional help.
If the employing party has a lot of control over the minute details of a job, he or she is most likely the person’s employer. This goes hand in hand with the ability to negotiate the terms of work. Independent contractors have the ability to consider and negotiate the terms of an agreement, while employees must either accept an employer’s decision or quit.
Workers who use their own materials and tools, control meaningful aspects of the working relationship, complete tasks relatively quickly, are highly skilled, and control how they perform their job can usually be classified as independent contractors.
On the other hand, those who are paid by the hour, complete work that is integral to an employer’s company, and can be discharged at will are much more likely to be employees. Unfortunately, it is not always easy to tell whether a party falls under the category of an independent contractor or an employee, as a result of which, many workers are misclassified.
Satisfying only a few of these factors is usually not enough to convince a court that a person is an independent contractor. For example, merely working offsite or having flexible hours does not qualify as proof that a person is an independent contractor. In fact, even signing an agreement which specifically states that a person is an independent contractor is not conclusive evidence of the type of employment relationship between two people.
Similarly, having an employee identification number (EIN) or other documentation indicating that a person is performing a service as a limited liability company or another type of business does not automatically make someone an independent contractor under the Fair Labor Standards Act.
Many employers are honest when it comes to classifying workers as employees or independent contractors and ensure that workers are paid a fair wage, including overtime. Unfortunately, some employers attempt to avoid paying health insurance or overtime by misclassifying employees as independent contractors.
This can have serious consequences for those who are under the impression that they are eligible for all of the rights and benefits that go along with being an employee, which includes:
- Workers’ compensation insurance, which covers injuries sustained in workplace accidents;
- The right to be paid the minimum wage and overtime for hours worked in excess of eight hours per day or 40 hours per week;
- Guaranteed family and medical leave;
- A safe workplace that is free of dangerous hazards and gives employee’s access to safety equipment;
- Unemployment benefits for those who are terminated for reasons unrelated to performance;
- Health care coverage for workers and their dependents; and
- Automatic deductions for Social Security benefits and Medicare.
Misclassification also allows employers to avoid paying payroll taxes, while freeing them from liability if a worker is injured while acting within the scope of his or her employment.
Call Today to Discuss Your Case with a Dedicated Employment Law Attorney
Employment law covers a wide range of legal issues, one of which is employee rights. These rights, which include the right to a fair wage, overtime pay, and safe working conditions are only available to those who legally qualify as employees. For this reason, many employers are eager to find ways to classify a worker as an independent contractor, as this protects them from liability for workplace accidents and eliminates the need to provide health insurance.
Unfortunately, this can have devastating consequences for a worker who believed that he or she qualified as an employee. If you believe that you are being misclassified as an independent contractor, please contact the experienced employment law attorneys at Lindquist Wood Edwards LLP by calling (214) 760-6893 to learn more about your rights.