Texas Supreme Court docket Finds Injured Contract Employee Was an Employee for Staff’ Compensation Functions

The current importance of the multi-company job – where so-called “host” employers rely on outside recruitment to perform various functions – makes clear determination of legal “employer” status critical in a variety of contexts. Often times, a host employer will argue that an employee is an independent contractor and not an employee. With this approach, the recruitment agency is usually responsible for grading decisions under the Fair Labor Standards Act and for compliance with the Occupational Safety and Health Act.

In April 2021, the Texas Supreme Court significantly expanded the responsibilities of host country employers in relation to occupational accidents. In particular, in the Waste Management of Texas, Inc. v. Stevenson, the court found that an employee who was injured on the job while working for a temporary employment agency is the host country employer’s employee for compensation purposes, notwithstanding a contract between the host employer and recruiter who specifically stated that the Workers are independent contractors.

In the waste management business, plaintiff, Robert Stevenson, was hired by Taylor Smith Consulting, LLC and temporarily assigned to Waste Management of Texas, Inc. No. 19-0282, 2021 Tex. LEXIS 348, * 3 (April 30, 2021). In May 2014, Stevenson was working on a garbage disposal truck on a garbage collection route when the truck driver accidentally pulled back over Stevenson’s leg and foot. Both Waste Management and the employer at Stevenson’s temporary employment agency took out workers’ compensation insurance. Stevenson applied for benefits under the recruitment agency’s policy and filed separate lawsuits against Waste Management and the driver based on common law negligence. Waste Management won a summary judgment and successfully argued that the Texas Workers’ Compensation Act excluded Stevenson’s claims against Stevenson and the driver because it was Stevenson’s employer. Stevenson unsuccessfully argued that the employment contract, which explicitly stipulated that temporary workers like Stevenson “should be independent contractors in relation to waste management”, should apply. The Fourteenth Court of Appeals overturned and remanded her on the grounds that it was a real question of fact whether Stevenson was the Waste Management employee.

The Texas Supreme Court overturned the fourteenth appellate court ruling that by law, waste management for employee compensation purposes was Stevenson’s employer and was entitled to exclusive remedy under the Employee Compensation Act. The judgment of the Court of Justice was based on the existing Workers’ Injury Act and appears to have expanded it. In connection with employee compensation in particular, case law shows that “[t]The test of determining whether an employee is an employee and not an independent contractor is whether the employer has the right to control the progress, details, and operation of the work. “I would. at * 5 (with reference to Limestone Prods. Distrib. Inc. v. McNamara, 71 SW3d 308, 312 (Tex. 2002) (per Curiam)). In determining that Stevenson was an employee of Waste Management and that there were no factual issues on this point, the Texas Supreme Court relied on both the right to control Stevenson’s work and the existence of actual control. The agreement between waste management and the personnel company is “a factor to be taken into account”, but “not decisive”, especially since the definition of “employee” in the Employee Compensation Act provides for employees with a rental agreement. Ultimately, the Court found that the present agreement “did not raise a question of fact sufficient to avoid a summary judgment given the conclusive nature of the conflicting facts”.

The Stevenson case underscores the need for employers to be both contractual and practical in their dealings with agency workers. Host country employers should recognize the possibility of being treated as the employer of a worker, especially if they have the right to control that worker’s work. In the case of employee compensation, this can be a good result. This may not be the case in other contexts.