Texas Independent Contractor Agreement
Texas does not use the ABC test. The Texas Workforce Commission asks whether the worker is free from direction or control under the contract and in fact, and Texas courts ask who has the right to control the details of the work. A signed agreement helps only when the working relationship matches it.
What Texas law does to this document
The Workforce Commission's direction-or-control test
For unemployment tax, service performed for pay is employment unless the business shows that the worker's performance has been and will continue to be free from control or direction, both under the contract and in fact. The Commission applies a twenty-factor guide adopted by rule as Form C-8. The Commission's guidance says control need not actually be exercised, and that the right to control may be enough to show employment. A separate rule covers marketplace contractors who take work through a digital platform.
Tex. Lab. Code § 201.041; 40 Tex. Admin. Code §§ 815.134, 821.5The courts' right-to-control test
In Texas courts, a worker is an employee if the hiring party has the right to control the progress, details and methods of the work, not merely the end result. The Texas Supreme Court measures that right through five factors. They include who furnishes the tools and materials, how long the engagement lasts, and whether pay is by the job or by time.
Limestone Prods. Distrib., Inc. v. McNamara, 71 S.W.3d 308 (Tex. 2002)Wage claims follow the facts, not the label
The Texas Payday Law excludes independent contractors from its definition of employee. It also defines employment to include any service for wages unless the individual is free from control or direction both under the contract of service and in fact. A worker who was treated as a contractor but controlled like an employee can file a wage claim with the Commission within 180 days after the wages were due.
Tex. Lab. Code §§ 61.001(3), 61.001(5), 61.051(c)Workers' compensation and construction work
Workers' compensation coverage is generally elective for private employers in Texas. The Workers' Compensation Act has its own definition of independent contractor, which looks at freedom to decide how the work is done and who supplies the tools. On residential and small commercial construction projects, a hiring contractor and a subcontractor can sign a joint agreement and file it with the Division of Workers' Compensation. Once filed, the subcontractor is an independent contractor as a matter of law for that purpose, and the agreement applies to their later hiring agreements until the first anniversary of filing.
Tex. Lab. Code §§ 406.002, 406.121(2), 406.142, 406.145Penalty for misclassification on government contracts
A person who contracts with a governmental entity to provide a service must properly classify each individual retained for that contract as an employee or independent contractor. The same duty applies to subcontractors. A failure costs $200 for each misclassified individual, payable to the Workforce Commission.
Tex. Lab. Code § 214.008Non-solicitation clauses must meet the non-compete statute
A clause barring the contractor from soliciting the client's employees is a restraint on trade under Texas law. It must be part of an otherwise enforceable agreement and reasonable in time, geographic area and scope of activity. When the main purpose of the agreement is personal services, the party enforcing the clause carries the burden of proving those requirements are met.
Tex. Bus. & Com. Code §§ 15.50(a), 15.51(b); Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011)Where people go wrong in Texas
- Relying on the contract's independent contractor label, or on its clause waiving unemployment insurance and workers' compensation, while directing the worker's hours, methods and tools in practice: if the worker is in fact an employee, an agreement to waive unemployment benefits is not valid and a waiver of workers' compensation is void (Tex. Lab. Code §§ 207.071(a), 406.035).
- Assuming a Form 1099 settles the question, when the Workforce Commission looks at the right to control and not the tax form used.
- Treating the generator's agreement as the joint agreement under Tex. Lab. Code § 406.145 on residential and small commercial construction work: the draft does not include it, and the hiring contractor and subcontractor have to sign the form the Division of Workers' Compensation prescribes and file it with the Division.
How the generator works
A work-for-hire consulting agreement that assigns IP, sets payment and SOW terms, and is drafted to support genuine contractor classification under the ABC test. Answer a short interview and the draft assembles as you go, with Texas already set as the governing state. Download it as PDF or Word. No fee. No account.