Whose rules determine who can be classified as a contractor rather than an employee?

The Texas Workforce Commission (TWC) establishes the criteria to differentiate between contractors and employees within the state of Texas. This classification is crucial for various reasons, including taxation, labor rights, and benefits determination. The TWC outlines specific guidelines that help employers assess whether a worker is genuinely an independent contractor or an employee based on the nature of the work relationship and the degree of control asserted by the employer over the work being performed.

In the context of Texas laws, the TWC utilizes certain tests – such as the "Economic Realities" test and others – to enable companies to classify workers correctly. Accurate classification has significant legal and financial implications for both the employers and the classified individuals, impacting wage and hour laws, unemployment insurance, and more.

While other organizations, like the Federal Trade Commission, the U.S. Department of Labor, and the Internal Revenue Service have their criteria and regulations concerning labor and taxation, it is the Texas Workforce Commission that specifically delineates the context for contractor versus employee classifications under Texas law.