Under Texas work injury law, employees and independent contractors have very different rights.
In this article, we're going to discuss the difference between the right to sue that an independent contractor has when they are hurt on the job and the right to sue that a bona fide employee has when they are hurt on the job.
While at first blush this may seem like a simple enough topic to cover, there are a few tricky aspects that we need to cover first so that we can lay a foundation for the discussion:
First and foremost, everything we discuss on this page is related to Texas non-subscriber work injury law, that is to say, we're talking about the rights of injured workers whose employers DO NOT participate in a Texas workers' comp plan. So, if your employer has workers' compensation coverage, none of what we discuss on this page will relate to you, and you should instead visit our workers' compensation overview page.
Second, it needs to be understood that when a worker is hurt on the job while working for a company that does not subscribe to a workers' comp plan, that can actually be good news for the injured worker. You see, workers' comp is a benefit system that pays rather insignificant compensation to injured workers. The advantage of the workers' comp system for injured workers is that the benefits they receive are mostly paid without incident. Workers' comp is a no-fault system, so they don't have to engage in a protracted court battle with their employer in order to get paid. The downside for injured workers is that even if they want to sue their employer, they can't. The law takes that right away from workers who employers opt in to the workers' comp system.
But for workers whose employers are non-subscribers, the right to sue the employer stays intact. While this certainly breeds conflict and generally makes it more difficult for the injured worker to get paid, it also affords them the opportunity to obtain far more compensation that they ever could with a workers' comp claim.
Third, even though both independent contractors and genuine employees can sue their non-subscriber employer, the way that the case works and what each type of worker has to prove are considerably different. And therein lies the rub. It's easier for a negligent company to avoid paying fair compensation to an independent contractor than it is for them to avoid paying an injured employee.
As such, many employers mis-categorize their workers as contractors, and therein lies the controversy that spawned this article.
Questions Answered on This Page:
- How is my work injury case impacted if I'm a contract worker?
- Does a work injury case change if I'm an employee versus a contract worker?
- How does my my employee status impact my Texas work injury case?
The difference between contractors and employees.
A contractor is someone who provides their services to multiple companies or individuals, owns their own equipment, pays their own taxes, provides their own training and supervision, decides when they take breaks, and can typically lose a single customer without it upending their entire business. They are, for all intents and purposes, in charge of their own business. An example would be the guy that Walmart uses to trim their hedges. He also trims hedges for other companies in the area. Another might be the handyman you hire to install a light in your house. He's not your employee; he's an independent contract.
By contrast, an employee typically works for a single company, what they do and how they do it are dictated by a supervisor or company policy, they're typically provided by their employer with tools, training, and supervision, they're told when to come to work, the employer pays part of their payroll taxes, they're typically provided with benefits, and so on.
Next, we'll cover why this matters.
It's all about the duty that companies owe to different types of workers.
When you go to the dentist, he owes you a duty to behave as a reasonably prudent dentist. That means that he has to really know what he's doing and do it right, since being held to the standard of a typical dentist is tantamount to saying that he's held to the standard of a highly educated, highly trained professional doctor. But even on the other end of the spectrum, the least educated and wealthy among us still owe at least some basic duty to their fellow man not to hurt them through carelessness. The law requires that we all take reasonable steps to avoid hurting people.
But when it comes to non-subs, the duty they owe to the people working for them is specifically related to the status of the worker as either an employee or an independent contractor. When Texas lawmakers made the workers' comp system, they also created the non-subscriber work injury laws, and in doing so, set the bar very high for non-subscribing employers to defend themselves in civil suits. The thinking was that if a company wasn't smart enough to buy into the workers' comp system which, among other benefits, provided the employer with blanket immunity from work injury lawsuits, that the employer should be held to a higher legal standard. As such, the legislature stripped away, by statute, some of the best defenses that an employer had historically been able to use to fend off a work injury case.
The result of this is that, even though a non-subscriber case filed by an employee is only valid if the employee can show that the employer was negligent (i.e. careless, reckless), with so few defenses at their disposal, the reality of non-sub cases is that ANY negligence on the employer's part can become grounds to sue. In fact, employers cannot make a valid argument that the employee contributed to their own injury unless they can prove the employee was 100% at fault. Consequently, unless the employer can convince a jury that the injured worker was 100% to blame for his own injuries and the employer was 100% innocent, the company will lose, and the employee will receive compensation in an amount of the jury's choosing. In short, when we're talking about an employee who works for a non-subscriber, the employer owes them an incredibly high duty of care not to harm them, meaning employees typically have strong cases against their employers.
How it Works as a Contractor:
It works differently for contractors. Contractors are, for all intents and purposes, not employees at all, (assuming the contractor is actually legitimately classified as such.) Instead, they are essentially just a person who is interacting with the business, who, from a liability perspective, is no different than a customer. So when you think of a customer's ability to sue a company when they get hurt by an employee of the company, the rights we attribute to said customer are virtually the same as that of a contractor working for the company, and vice versa.
The key point here is that the company has many defense arguments that the law allows them to use to fend off the claims of an injured contract worker. Effectively, they owe a much lower duty of care to contractors. Whereas they'd have to try very hard not to injure employees, they don't have to try so hard not to injure contractors, since there are many instances where a contractor can get hurt and the employer can simply say, "He's at least partially responsible for his own injury." In a world where they can blame the victim, it doesn't take much imagination to see how they can easily turn a jury against an injured contractor. To the extent that a jury ultimately puts fault for their injuries on the contractor, the company's financial responsibility is reduced. And if the jury puts 51% or more fault on the contractor, then the company wins outright and doesn't have to pay a dime. Read our article on Texas' doctrine of modified comparative fault to learn more about this.
At this point, hopefully you can see why many companies want to label workers who should legally be considered employees as contractors: it helps them avoid being financially responsible if an injury happens.
How can you tell if a contractor is actually an employee?
Many years ago, long before ever coming to work in the legal field, one of our firm's employees worked in the automotive sector for a small start-up company. He's shared with us a story about one time that the company had an emergency meeting to address the rising cost of liability insurance. It turns out that this company had a few dozen employees that all needed to be covered by a liability policy that would cover them in any of the hundreds of cars that they had to move around a parking lot throughout the day. On a whim, their insurance carrier raised their rates dramatically, which proved to be a source of pain for the small business. One of the company's owners had a solution to the problem. He said, "Guys, don't worry. I've got it all figured out. We'll just fire all of our employees, and then we'll rehire them as "independent contractors." Then, we just won't carry any insurance. If they run somebody over and we get sued, we'll be able to say, 'Sorry. Such and so doesn't work for us', and the case will get dismissed."
As shocking as that may sound, many companies employ this thinking. Fortunately for injured people everywhere, Texas courts aren't so gullible. Over the years, court cases have wound their way through the Texas court system that have addressed all sides of this issue. Consequently, a 'litmus test" of sorts was created, wherein the court would hear evidence as to whether or not a contractor was actually a contractor or a "contractor."
We refer to this process as "establishing an employer-employee relationship." Remember earlier when we listed out the characteristics that make someone an employee? Those are the criteria the court uses to determine if someone who has been labelled as a contractor is in fact an employee. Simply by proving that a so-called contractor was told when to come to work, what to do, when they can leave, how long they can take for lunch, what taxes will taken out of their check, and so on, our attorneys are able to show that contractors are not contractors at all. So, the theory used by many employers that they can just misclassify employees as contractors doesn't hold water if the injured worker has the right lawyer.
Still have questions regarding your employment status?
Call our attorneys for remaining questions you may have. Every work situation is a little bit different. If you don't feel like any of the above categories fits you, call us. We'll help you find your place and let you know what legal remedies you have available. (855) 326-0000.
Other articles about non-subscriber work injuries that may be helpful: