Not all workers are classified equally. Contract labor laws in Texas govern how employment contracts are to be written and enforced, the differences between an independent contractor vs. an employee, 1099 employee rights in Texas and employers’ rights regarding contracted labor.
Understanding Contract Labor Laws in Texas
Contract labor laws in Texas cover a variety of topics. When an employment contract is in place, all parties named in the contract must abide by its terms. This includes the contract’s stipulations regarding dispute resolution, which may require that the parties use arbitration or mediation as a means to settle any disagreements that arise.
An Independent Contractor vs. an Employee
In Texas, the way to differentiate an independent contractor vs. an employee is by determining the level of control the worker may exercise over her work, according to a simple test included in the Texas Unemployment Compensation Act. The covers a variety of factors that differentiate an independent contractor from an employee, such as:
- the ability to negotiate a job’s terms with the employer
- how much control the employer has to manage the details of the work
- whether the worker uses his own equipment to perform the work
- whether the worker works under her own name or as a representative of the employer
None of these factors can singularly define a worker as an employee or an independent contractor. Rather, they are used to holistically determine a worker’s position.
Understanding 1099 Employee Rights in Texas
The term “1099 employee” is a misnomer; 1099 workers are independent contractors. Employers use W-9 forms and 1099 forms to hire and account for independent contractors. A W-9 is used to request a worker’s taxpayer identification number (TIN), and a 1099 is used to report the wages and other types of income the contractor earns.
As far as employee rights go, independent contractors don’t have many. Federal laws that protect employee rights, like Title VII of the Civil Rights Act and the wage and hour protections offered by the Fair Labor Standards Act, apply only to W-2 employees.
1099 employee rights in Texas and throughout the United States include:
- the right to negotiate a contract
- the right to take legal action to settle a contract dispute
- the right to hire subcontractors
- the right to control how work is done
- the right to market services to other clients while under contract
- the right to perform work when and how she sees fit
- the right to her own business management, such as scheduling work hours and completing administrative tasks
When an employer classifies an employee as an independent contractor in an effort to circumvent employee protections, the worker also has a right to challenge this classification.