On April 9, 2019, the Texas Workforce Commission adopted Rule 815.134, entitled “Employment Status: Employee or Independent Contractor.” The Rule addresses the factors to consider when evaluating employment status for marketplace platform contractors.

Yes, “marketplace platform contractors,” who we might just call ride share drivers, app-delivery drivers,  app interpreters and even your I-phone workout coaches.

Section 815.134 (b)(1) includes definitions for digital network (i.e., apps offered by the marketplace to the public), marketplace platform (i.e., the business entity that uses the app), and marketplace contractor (i.e., independent contractor who will perform the service by agreement with the marketplace platform).

The Rule provides that a marketplace contractor shall not be treated as employees of the marketplace platform, if the factors listed in the rule are all met by both the contract and how the parties interact. In reality, the factors are not terribly different from the right of control test, which has existed for almost one hundred years.

The Rule requires:

• substantially all the payment to the contractor be on per-job basis;
• marketplace does not unilaterally set the contractors hours;
• contractor can work for multiple marketplace platforms;
• the contractor can engage in other work;
• contractor sets own hours and location of work;
• contractor bears all or substantially all of contractor’s expenses;
• contractor provides own tools/equipment;
• marketplace platform does not control the details of work;
• marketplace platform does not require contractor to attend mandatory meetings or mandatory training.

Very millennial indeed!

Subsection (3) identifies who the Rule does not apply to.

From a legal perspective, the new rule begs the question, does the definition of employment change for digital workers versus brick-and-mortar workers? In the Texas workers’ compensation world, the Texas Labor Code defines employee to be “each person in the service of another under a contract of hire, whether express or implied, or oral or written.” Tex. Lab. Code § 401.012 (a), adds:

1. an employee employed in the usual course and scope of the employer’s business who is directed by the employer temporarily to perform services outside the usual course and scope of the employer’s business;
2. a person, other than an independent contractor or the employee of an independent contractor, who is engaged in construction, remodeling, or repair work for the employer at the premises of the employer;  and
3. a person who is a trainee under the Texans Work program established under Chapter 308.”

Section 401.012(c) set out who was not an employee:  “(c) The term “employee” does not include:

(1) a master of or a seaman on a vessel engaged in interstate or foreign commerce;  or (2) a person whose employment is not in the usual course and scope of the employer’s business.”

Perhaps the shortest route to uniform interpretation and results could be to amend section 401.012(c) to include a third category of non-employees and expressly state that marketplace contractors are not employees of marketplace platforms.

The full text of Rule 815.134 and comments can be found at https://twc.texas.gov/files/agency/fr-ch-815-marketplace-adopted-4-9-19-twc.pdf. Note, the Rule takes effect April 29, 2019.