In Texas, the law applies the "right to control" test to determine a worker’s classification. Employers need to consider whether they have control over the following aspects of the worker's job:
Work methods and how the job is performed
Hours and days the worker is required to work
Work location
Quality and quantity of the worker’s output
If the employer controls these factors, the worker is typically classified as an employee. However, certain conditions can point toward independent contractor status, including:
The worker has a separate business or trade.
The worker uses their own tools and equipment.
The worker is paid by the job, not by the hour.
The worker sets their own schedule and chooses their work location.
Key Differences: Employees vs. Independent Contractors in Texas
Taxes:
· Employees must pay income taxes, FICA, and unemployment taxes.
· Independent contractors are responsible for self-employment taxes.
Benefits:
· Employees may receive benefits like health insurance, paid leave, and retirement plans.
· Independent contractors are not entitled to these benefits.
Liability:
· Employers are liable for the actions of their employees during work.
· Independent contractors generally carry their own liability.
Consequences of Worker Misclassification
Misclassifying workers as independent contractors when they should be employees can lead to:
· Fines and penalties for employers
· Back taxes owed by the employer
· Loss of benefits and protections for the worker
Key Points to Remember
· Worker classification is complex and may evolve over time.
· Misclassification can be challenged by the government or the worker.
· Proper documentation is critical to support your classification decision.
By understanding the legal classification of workers in Texas, you can avoid costly mistakes and ensure compliance with state labor laws.
Consult with an L&F Brown Employment Attorney
Should you have any questions or concerns about the Legal Issues addressed in this blog post, please reach out to Derek Saunders, Keith Strahan, or Richard Armstrong of our firm, shown here: https://lfbrown.law/our-team
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