Employee or Independent Contractor?

Defining the Term Employee in Workers Comp Lawsuit

From Waste360, Barry Shanoff provides an excellent analysis and discussion of a case which focused on whether the employee of a staffing agency was an “employee” of the staffing agency’s client for workers compensation purposes. Barry writes:

Robert Stevenson was hired by Taylor Smith Consulting LLC, (TSC) a temporary staffing agency. TSC assigned Stevenson to work on a short-term basis for Waste Management of Texas, Inc. (WMT). The arrangement, however, was a bit more complicated.

The assignment of Stevenson to WMT was subject to a contract between TSC and Waste Management National Services, Inc. (WMNS) known as the “Master Agreement.” (WMT and WMNS are affiliated corporations, although court records do not make clear their exact legal relationship.)  Although WMT is not a party to the Master Agreement, TSC has assigned hundreds of workers to WMT under it.

Under the WCA [Workers’ Compensation Act], an “employee” is “each person in the service of another under a contract of hire, whether express or implied, or oral or written.”  An “employer” is “a person who makes a contract of hire, employs one or more employees, and has workers’ compensation insurance coverage.” Contrary to what one might expect, applying these definitions has turned out to be quite a chore for Texas judges.

Frequent litigation over the exclusive-remedy provision yielded several decisions by the state high court addressing whether an individual was an employee for workers compensation purposes where an employment agency had provided a plaintiff worker to a client defendant.  Under those cases, a worker is deemed to be an employee rather than an independent contractor if “the employer has the right to control the progress, details, and methods of operations of the work.”

On appeal, Stevenson and WMT agreed on the “right-to-control” test, but disagreed about what “right-to-control” means and whether WMT had it.  For their part, the justices were unhesitating.  “[T]here is no doubt [WMT] controlled Stevenson’s work, both as a general matter and in the specific circumstances of his accident,” the opinion stated.  To support their conclusion, the justices relied on transcripts of deposition testimony submitted to the trial judge to support the summary judgment motions.

“Employer status does not depend on whether the employer physically controls every action of the employee,” the court wrote.  “Every employee is to some extent self-directed in the physical carrying out of his daily work. *  *  * The foregoing evidence conclusively established that [WMT] controlled the progress, details, and methods of operations of the work.  *  *  *   [WMT] set [Stevenson’s] work schedule, gave him his assignments, and supervised his work.

*  *  *  Moreover, at the time of the accident, [WMT] exercised actual control over the details of the work that gave rise to the injury.”

So far, the employer-employee issue seemed solidly resolved in favor of WMT.  But what about the Master Agreement?  Stevenson contended that WMT contracted away its exclusive-remedy protections — or at least created a fact issue as to his employment status, as the court of appeals concluded, which precludes summary judgment.  Stevenson argued that because a WMT-affiliated company agreed by contract that workers supplied by TSC would be independent contractors, WMT cannot now contend that Stevenson is a WMT employee. Indeed, the Master Agreement states, in part, as follows:

“[TSC] is solely responsible for performing all hiring, firing, discipline, training and other responsibilities necessary to discharge its legal obligations as the employer of the Personnel suppled to [WMNS]. [TSC] and [temporary labor] shall be independent contractors in respect of [WMNS] and shall not be employees of [WMNS].”

The justices credited Stevenson with an apt observation but they shrugged it off.  “There is a ‘have your cake and eat it too’ flavor to [WMT’s] position,” they said.  “It wants Stevenson to be its employee in this case, but if Stevenson had injured a third party while on the job, [WMT] would likely try to use the Master Agreement to defeat vicarious liability by arguing that Stevenson was an independent contractor. Stevenson is undoubtedly correct that [WMT] is not entitled to unilaterally switch his status between employee and independent contractor whenever one label or the other suits [WMT]. But that is not what is happening here.”

Under state law, a contract stating a person is an independent contractor is given effect unless the exercise of control was “so pronounced” and “so persistent” as to raise an inference that the parties acquiesced in the principal’s right to control the details of the work.

“The facts of [WMT’s] daily control over Stevenson’s garbage-collection work . . . satisfy the standard . . . for looking beyond contractual labels,” the opinion concluded.  “No evidence – whether in the contract or in the parties’ behavior – indicat[es] that the Master Agreement’s

independent-contractor label ever had any bearing on [WMT’s] right to control the workers on its garbage-collection routes.”

Waste Management of Texas, Inc., et al. v. Stevenson, No. 19-0282, Tex. Sup. Ct., Apr. 30, 2021.

Read the full story at Defining the Term Employee in Workers Comp Lawsuit

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