Texas Independent Contractor Laws

At the time of hire, many people do not pay attention to whether they were called an employee or an independent contractor.

In fact, if they did pay attention they may have thought those terms were interchangeable and had little real distinction.

To the contrary, the distinction is real and it is important. There are significant implications for businesses and workers in how the worker is classified.

In this guide, we will discuss Texas independent contractor law, why the worker distinction matters, how to tell the difference, and what to do if you have been wrongly classified.

Why Does It Matter: Employee vs. Independent Contractor?

At its essence, the distinction between an employee and an independent contractor matters because federal and state labor laws apply almost exclusively to employees.

Therefore, being classified as an independent contractor relieves the employer of a significant amount of obligations and potential liability. On the flip side, employee classification entitles you to several legally conferred benefits and rights such as:

  • A minimum wage;
  • Overtime pay;
  • Wages paid at least twice a month (with some exceptions);
  • Workers’ compensation insurance (note: under certain circumstances, Texas allows employers to opt-out of workers’ comp.);
  • Unemployment insurance; and
  • A safe workplace.

None of these benefits are available to independent contractors. Therefore, as you can see, there is a great incentive for businesses to classify workers as independent contractors rather than employees.

What Is the Difference: Employee vs. Independent Contractor?

Texas independent contractor law is clear when it states that the distinction between an employee and an independent contractor is much more than what the parties call themselves. Indeed, even having an “independent contractor agreement” does not, in and of itself, designate you as an independent contractor.

The Texas Workforce Commission and the United States Department of Labor identify factors to consider in determining a worker’s status, including:

  • Who controls a worker’s manner of performing job duties (note: this is the “direction or control” test discussed below);
  • Whether the worker has economic independence in their work;
  • Whether the worker uses their own equipment;
  • What skills are necessary to complete the job;
  • Whether the worker exercises independent business judgment;
  • Whether someone supervises the worker;
  • Whether the worker’s connection to the employer is limited to the terms of an agreement;
  • Whether the employer pays the worker by the hour or by the task;
  • Whether the employer can fire the worker at will;
  • Whether the worker is economically independent from the business;
  • Whether the worker’s performance is integral to the business’s operations;
  • Whether the worker provides managerial skills or affects profitability and growth;
  • The implied understanding of the parties (i.e., is this an employer/employee relationship);
  • Whether the worker is involved in their own separate occupation; and
  • Whether the worker’s relationship with the business is permanent.

Considering these factors as a whole is critical. Simply checking off that most of these factors apply to your situation does not mean you are or are not an employee. However, the most important of the above considerations to determine a worker’s status is the “direction or control” analysis. 

Direction or Control Test

If the business exercises sufficient “direction or control” over the worker’s job and duties, then the worker is probably an employee. Again, the considerations are extremely nuanced, and the distinctions are important. For instance, a job title or a fixed work schedule does not determine status one way or another.

Admittedly, the above legal test and Texas contractor law does not give a black-and-white answer, and is frustratingly dependent on the facts of the working relationship. Nevertheless, to initially help determine your worker status, consider the following.

You could be an independent contractor if:

  • You control your work in a meaningful way;
  • You supply our own equipment;
  • Your tasks are short and self-contained projects; and
  • Your skills are not managerial in nature.

  You could be an employee if you are:

  • Paid by the hour;
  • Essential to the company’s operations;
  • Subject to termination at will; and
  • Closely supervised about the details of your work.

We urge you to use the above lists as a starting point to your introduction to independent contractor law and not as a final determination.

Contact The Hunnicutt Law Group Today

The Hunnicutt Law Group has experienced employment lawyers highly familiar with the nuances of Texas independent contractor laws. Therefore, we can help determine your worker status under Texas law and get you what you deserve as an employee.

If you think you have been wrongly classified, contact us today to see how we can help get you the rights and benefits you deserve.

Author Photo

J. Stephen Hunnicutt

Our founding attorney, Stephen Hunnicutt, set the precedent for a commitment to excellence and a focus on the client. With 25 years of experience, he has handled countless cases involving business litigation and commercial litigation. Over the years, Mr. Hunnicutt has worked as in-house counsel for a Fortune 500 energy company, a large firm, a small firm, and finally, in his own practice.

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