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Texas Says Gig Workers Are Independent Contractors

Published by and on June 26, 2019

Employers in Texas have reason to cheer as the Texas Workforce Commission passes a rule stating that gig workers are independent contractors for unemployment purposes.

The issue of whether gig workers (workers who perform temporary, flexible jobs often obtained through a virtual platform) has divided courts and agencies. The Texas Workforce Commission has sought to limit this confusion by passing a rule that explicitly states that a marketplace contractor is an independent contractor for purposes of unemployment benefits, and as such, are, not eligible for unemployment. See Tex. Admin. Code § 815.134. A “marketplace contractor” is defined in the rule as any individual or entity that enters into an agreement with a marketplace platform to use the platform’s digital network to provide services to the public seeking the type of services offered by the marketplace contractor.

Any individual that meets this definition is not eligible for unemployment benefits if he or she also meets the following conditions:

  • The contractor is usually paid on a per-job/transaction basis;
  • The platform does not require the contractor to be available to work during certain hours;
  • The contractor is not prohibited from working for competitors or engaging in other businesses;
  • The marketplace platform does not control the location and time of the contractor’s work;
  • The marketplace contractor bears all or most of the expense he or she occurs in connection with performing the services and must provide the necessary equipment;
  • The platform does not require the contractor to follow specific instructions regarding how to perform the services; and
  • The contractor is not required to attend any meetings or training.

The new rule explicitly does not apply to temporary employees and temporary help firms. (Therefore, temporary workers may still be eligible for unemployment.)

Welter Insight

This new rule is a helpful tool for companies in Texas who utilize gig workers in their business model. While the rule is limited only to the context of unemployment insurance, companies may attempt to cite to the rule in support of an argument that gig workers should be treated as independent contractors for other purposes as well, such as for determining general employment status.

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