Texas Independent Contractors laws & compensation compliance analysis

Texas Independent Contractors: What you need to know

Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters.
Gig economy workers. The number of gig economy workers—i.e., people hired as freelancers or for short-term contracts—has grown with the introduction of app-based tech companies, like Uber and Lyft. With the advancement of the new technology, the employment relationship between the digital platforms and their workers has become more difficult to define. Are gig economy workers “employees” or “independent contractors”?
The Texas Workforce Commission’s (TWC) rule on independent contractors lays out a nine-factor test to determine whether companies can designate their workers as “marketplace contractors” and accordingly classify them as “independent contractors.” The TWC’s rule defines “marketplace contractors” as workers who enter into agreements with marketplace platforms that provide digital networks to connect those individuals to the public. “Digital networks” encompass online-enabled applications, software websites, or systems offered by marketplace platforms for the public to use and contact marketplace contractors to perform one or more needed services. As a result, app-based tech companies will most likely fit within the definition of a marketplace platform, as they use digital networks to connect their workers to members of the public who seek the services offered by those individuals.
If marketplace contractors can meet all nine factors outlined by the TWC’s test, they will be classified as independent contractors and not employees. The nine factors are:
• All or ...

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