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Is your Independent Contractor Really an Employee?

| Mar 18, 2013 | Firm News

Last month, the Dallas Court of Appeals renewed the general rule of how to determine whether or not your independent contractor is really an employee. The general rule is a test of “control.” Poynor v. BMW of N. Am., LLC, No. 05-10-00724-CV, 2013 Tex. App. LEXIS 1743 (Tex. App.-Dallas Feb. 21, 2013).

In Poyner, a customer visited Classic BMW to purchase a car. The sales representative, an employee of Classic BMW, took the customer on a test drive. During that test drive, the sales representative “drove recklessly and lost control of the vehicle, crashing into a traffic sign, guardrail, retaining wall, and pillar.” Id. at *2. The crash injured the customer and the customer sued the sales representative, Classic BMW, and BMW North America (“BMW NA”).

Classic BMW was an independently owned dealership. BMW NA was the sole exclusive authorized distributor of BMW vehicles in North America. There was a written independent contractor agreement between Classic BMW and BMW NA that stated that Classic BMW was an independent contractor of BMW NA.

The allegations against BMW NA were that BMW North America ‘controlled’ the sales representative’s actions and that it was liable because it negligently trained and negligently hired the sales representative. The trial court awarded judgment to BMW NA and the customer appealed.

The Poyner court affirmed that the test for determining whether an independent contractor is actually an employee is one of “control.” The Poyner court defined an independent contractor as “one who, in pursuit of an independent business, undertakes specific work for another using his or her own means and methods without submitting to the control of the other person as to the details of the work.” Id. at *3.

The right to control is ordinarily a question of fact. Id. There are several factors to determine the extent of the right of control:

· The independent nature of the person’s business;

· The person’s obligation to furnish necessary tools, supplies, and materials to perform the job;

· The right to control progress of the work, except as to final results;

· The time for which the person is employed; and

· The method of payment, whether by time or by the job.

Id. at *3.

Importantly, the Poyner court looked outside the independent contractor agreement between BMW NA and Classic BMW to determine the issue of control. The evidence in the Poyner case revealed that BMW NA did not control the sales representative or Classic BMW during the test drive or training the sales representative for test drives. Therefore, the Dallas Court of Appeals in Poyner ruled that BMW NA is not liable for the actions of the sales representative.

Takeaways

Having a written contract between you and your independent contractors is the first step in establishing that the independent contractor is not your employee. It is very important to remember, however, that Courts will not just look at the contract to rule on ‘control.’ Courts will look at the nature of the relationship and the actions in the relationship to see if you really ‘control’ the actions of your independent contractor.

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