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Independent Contractor Agreement


One of the most commonly misunderstood and litigated employment issues is whether an individual is an employee or an independent contractor. The legal distinction is important, in that the employer-employee relationship imposes certain obligations on the employer under labor laws, employment tax laws, and pension laws. For example, generally employers are responsible for their employee’s negligent conduct, whereas one who hires an independent is not. As such, misclassification of an employee as an independent contractor can create substantial liability for the employer. It is important to underscore that merely classifying a worker as an “independent contractor”, is not enough to create an independent contractor relationship. Instead, Texas courts apply the “right to control test”, which essentially holds that an individual is an employee if the one who hired him/her has the right to control the worker’s progress, details, and the means/methods of the work. Further, the test looks at the “right to control” not whether control was actually exerted. When applying the “right to control test”, Texas courts generally hold that the individual is an employee as opposed to an independent contractor if the one who hired the worker: (1) dictates when and where to begin and stop work; (2) regulates the individual’s work hours; (3) controls the amount of time the individual spends on particular aspects of the work; and (4) furnishes tools, equipment, uniforms, business cards, and other necessities needed to perform the work. Other factors Texas courts may consider in concluding that an individual is an employee as opposed to an independent contractor include whether the one who hired the individual can: (1) require compliance with instructions; (2) provide training; (3) integrates the individual’s services into the business; (4) prevent the individual from subcontracting his/her services to another; (5) hires and/or pays for the individual’s helpers or assistants; (6) enters into a continuing relationship as opposed to a one-time service; (7) requires the individual to work full-time as opposed to allowing the individual to control his/her own schedule; (8) pays the individual weekly or monthly, as opposed for a particular service; and (9) restricts the individual’s right to work for others.

Although having a worker sign an Independent Contractor Agreement is not enough standing alone to create an independent contractor relationship, it is the first step to establishing that the individual is an independent contractor.

Lovein Ribman’s employment attorneys are well versed in all types of independent contractor agreements and routinely counsel businesses of all sizes on independent contractor agreements and the creation/modification of agreements.

If you are in the process of hiring an independent contractor or want to learn more about the independent contract relationship, please call us at (888) 368-2483 for a free no-obligation consultation.

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