Waste Management of Texas, Inc. and Rigoberto Zelaya v. Robert Stevenson ( 2021 )

IN THE SUPREME COURT OF TEXAS
══════════
No. 19-0282
══════════
WASTE MANAGEMENT OF TEXAS, INC. AND RIGOBERTO ZELAYA, PETITIONERS,
v.
ROBERT STEVENSON, RESPONDENT
══════════════════════════════════════════
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS
══════════════════════════════════════════
Argued October 28, 2020
JUSTICE BLACKLOCK delivered the opinion of the Court, in which CHIEF JUSTICE HECHT,
JUSTICE GUZMAN, JUSTICE LEHRMANN, JUSTICE DEVINE, JUSTICE BUSBY, JUSTICE BLAND, and
JUSTICE HUDDLE joined.
JUSTICE BOYD filed a concurring opinion.
An employee of a temporary staffing agency was injured while on assignment to a client
of the agency. He recovered workers compensation benefits through the staffing agency and then
sued the client for whom he performed the work. The Court must decide whether the injured
worker can proceed with a tort claim against the client defendant, who argues that the plaintiff
qualifies as its employee under the Workers’ Compensation Act. If the plaintiff is the defendant’s
employee, then the Act’s exclusive-remedy provision bars the plaintiff’s claims. Because we
conclude that the plaintiff qualifies as the defendant’s employee under the Workers’ Compensation
Act, we reverse the court of appeals’ judgment and render judgment for the defendant.
I. Background
Robert Stevenson was hired by Taylor Smith Consulting, LLC, a temporary labor supplier.
Taylor Smith assigned Stevenson to work on a temporary basis for Waste Management of Texas,
Inc. (“Waste Management” or “Waste Management Texas”). Waste Management operates
garbage trucks, and Stevenson worked on one of those trucks.
The assignment of Stevenson to Waste Management Texas was subject to the “Master
Agreement,” a contract between Taylor Smith and Waste Management National Services, Inc.
Although Waste Management Texas is not a party to the Master Agreement, Taylor Smith has
assigned hundreds of workers to Waste Management Texas under the Master Agreement. The
parties agree that Waste Management Texas and Waste Management National Services are
affiliated corporations, though the briefing and record never precisely explain the legal relationship
between the two.
In May 2014, Stevenson was working on a Waste Management garbage truck. The truck
was on one of its usual garbage-collection routes. Rigoberto Zelaya, a Waste Management
employee, drove the truck. Zelaya accidentally backed the truck over Stevenson’s leg and foot,
seriously injuring Stevenson.
Both Waste Management and Taylor Smith carried workers compensation insurance for
their employees. Stevenson applied for benefits under Taylor Smith’s workers compensation
policy. He also sued Waste Management and Zelaya, alleging common-law negligence. The
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defendants1 moved for summary judgment, arguing that the exclusive-remedy provision of the
Workers’ Compensation Act barred Stevenson’s claims. The defendants argued that Stevenson
was, for workers compensation purposes, Waste Management’s employee at the time of the
accident. Stevenson argued in a cross-motion for summary judgment that no evidence existed that
he was Waste Management’s employee. Stevenson relied primarily on the Master Agreement,
which states that temporary laborers like Stevenson “shall be independent contractors in respect
of Waste Management.” The trial court granted summary judgment for Waste Management.
The court of appeals reversed and remanded, holding that a genuine fact issue existed on
whether Stevenson was Waste Management’s employee. Stevenson v. Waste Mgmt. of Tex., Inc.,
572 S.W.3d 707, 715 (Tex. App.—Houston [14th Dist.] 2019).
II. Analysis
A. Employer-Employee Status Under the Workers’ Compensation Act
“Recovery of workers’ compensation benefits is the exclusive remedy of an employee
covered by workers’ compensation insurance coverage . . . against the employer or an agent or
employee of the employer for the death of or a work-related injury sustained by the employee.”
TEX. LAB. CODE § 408.001(a). There is no dispute that Waste Management had workers
compensation insurance coverage for its employees. Stevenson’s claims against Waste
Management and Zelaya are therefore barred if Stevenson was “an employee covered by [Waste
1
For convenience, we may refer collectively to the defendants as Waste Management or Waste Management
Texas.
3
Management’s] workers’ compensation insurance coverage.” The dispositive question in this case
is whether, for workers compensation purposes, Stevenson was Waste Management’s employee.
The Workers’ Compensation Act defines “employee” as “each person in the service of
another under a contract of hire, whether express or implied, or oral or written.” Id. § 401.012(a).
An “employer” is “a person who makes a contract of hire, employs one or more employees, and
has workers’ compensation insurance coverage.” Id. § 401.011(18).2 Although determining
whether a plaintiff is the defendant’s employee is ultimately a matter of applying these statutory
definitions, courts have not often found the definitions alone to be dispositive. Frequent litigation
over the exclusive-remedy provision has yielded a large body of case law, including several
decisions of this Court, addressing whether the plaintiff was the defendant’s employee for workers
compensation purposes. Under those cases, “[t]he test to determine whether a worker is an
employee rather than an independent contractor is whether the employer has the right to control
the progress, details, and methods of operations of the work.” Limestone Prods. Distrib., Inc. v.
McNamara, 71 S.W.3d 308, 312 (Tex. 2002) (per curiam). The parties agree that this “right-to-
control” test arises from this Court’s decisions, but they disagree about what “right to control”
means and whether Waste Management had it.
Several previous decisions of this Court under similar facts help to answer those questions.
All involved plaintiff workers provided by employment agencies to the client defendant. In
2
“An employee may have more than one employer within the meaning of the TWCA, and each employer
may raise the exclusive remedy provision as a bar to the employee’s claims.” W. Steel Co. v. Altenburg, 206 S.W.3d
121, 123 (Tex. 2006) (per curiam). The undisputed fact that Stevenson was Taylor Smith’s employee does not dictate
whether Stevenson was also Waste Management’s employee. See, e.g., Garza v. Excel Logistics, Inc., 161 S.W.3d
473, 475 (Tex. 2005); Wingfoot Enters. v. Alvarado, 111 S.W.3d 134, 140 (Tex. 2003).
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Wingfoot Enterprises v. Alvarado, 111 S.W.3d 134 (Tex. 2003), the plaintiff Alvarado was hired
by Wingfoot Enterprises, a temporary staffing agency. Alvarado was assigned to work at a
manufacturing facility owned by Web Assembly, Inc., where he was injured. Alvarado sued
Wingfoot, alleging negligence and gross negligence under several theories. Wingfoot argued that
it was Alvarado’s employer and that the exclusive-remedy provision of the Workers’
Compensation Act barred the claims. We agreed with Wingfoot and held that “[a]n employee
injured while working under the direct supervision of a client company is conducting the business
of both the [employment agency] and that employer’s client.” Id. at 143.
In Garza v. Exel Logistics, Inc., 161 S.W.3d 473 (Tex. 2005), the plaintiff Garza was hired
by an employment agency and assigned to work at Exel’s premises. Garza was injured on the job
while following the instructions of an Exel employee. Id. at 477. He sued both the employment
agency and its client, Exel. We stated that “in determining if a general employee of a temporary
employment agency is also an employee of a client company for purposes of the Act, we consider
traditional indicia, such as the exercise of actual control over the details of the work that gave rise
to the injury.” Id. at 477. We held that Exel was Garza’s employer because the “undisputed
evidence establishes that at the time Garza was injured, he was working on Exel’s premises, in the
furtherance of Exel’s day-to-day business, and the details of his work that caused his injury were
specifically directed by Exel.” Id.
Finally, in City of Bellaire v. Johnson, 400 S.W.3d 922 (Tex. 2013) (per curiam), we
revisited the issue under facts nearly identical to those before us today. Magnum Staffing
employed plaintiff Johnson and provided him to the City of Bellaire as a garbage collector.
5
Johnson was injured working on a truck driven by a City employee. Both Magnum and the City
had workers compensation coverage. Johnson sued the City, which asserted the exclusive-remedy
provision of the Workers’ Compensation Act. This Court applied the standard articulated in
Limestone Products, under which a worker is an employee rather than an independent contractor
if the employer “has the right to control the progress, details, and methods of operations of the
work.” Id. at 923–24 (quoting Limestone Prods., 71 S.W.3d at 312). The overwhelming evidence
indicated that “[t]he City set Johnson’s work schedule, gave him his assignments, and supervised
his work.” Id. at 923. We concluded that “undisputed evidence does establish as a matter of law
that the City controlled the details of Johnson’s work and thus, that Johnson was its employee.”
Id.3
In each of these dual-employment cases, the fact that the defendant did not directly employ
the worker provided by the staffing agency did not factor prominently in the analysis. Nor did the
result turn on the contractual relationship between the staffing agency and its client. Instead, we
determined whether the defendant qualified as the worker’s employer under the Act by examining
3
In Garza, we noted that the worker was injured on the client employer’s premises. 161 S.W.3d at 477. The
court of appeals distinguished Garza because “Stevenson was not working on Waste Management’s premises” but
was instead working on a garbage-collection route. Stevenson, 572 S.W.3d at 711. However, in City of Bellaire, we
found the injured temporary worker was an employee of the client under precisely these circumstances, where the
accident occurred on the client’s garbage truck route. As in City of Bellaire, whether Stevenson’s accident occurred
on property owned by Waste Management is not a relevant consideration. The Act itself reinforces this point by
defining “course and scope of employment” to cover activities “conducted on the premises of the employer or at other
locations.” TEX. LAB. CODE § 401.011(12) (emphasis added); see also id. § 406.031(a) & (a)(2) (“An insurance carrier
is liable for compensation for an employee’s injury without regard to fault or negligence if . . . the injury arises out of
and in the course and scope of employment.”). Thus, Stevenson may qualify as an employee of Waste Management
even if his injury did not occur on Waste Management’s premises. Stevenson does not argue otherwise, conceding in
his brief that the “issue about location of the injury is not presented here because Stevenson was hurt while working
on the ‘normal route’ picking up garbage around Mason Road and Highway 290, in the Fairfield subdivision near
Houston.”
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the parties’ conduct at the jobsite. Rather than focus on the legal question of who had the
contractual right to control the plaintiff’s work, we looked instead to the factual question of who
exercised the right to control as a practical matter in the course of the parties’ daily work.
The approach reflected in our prior dual-employment cases is consistent with the statutory
definition of “employee” provided by the Workers’ Compensation Act. An “employee” is “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). The definition expressly includes workers operating
under a written contract, so long as they are “in the service of” the employer. As our prior cases
indicate, whether a plaintiff employed by a staffing agency was “in the service of” the agency’s
client has always depended on the extent to which the parties’ conduct at the jobsite demonstrated
the client’s right to control the plaintiff’s daily work.
Applying the same approach to the facts of this case, there is no doubt Waste Management
controlled Stevenson’s work, both as a general matter and in the specific circumstances of his
accident. The summary judgment evidence shows the following. Stevenson was injured while on
assignment to Waste Management. He was working on a garbage truck owned by Waste
Management and on a garbage hauling route operated by Waste Management. In his deposition,
Stevenson agreed that Waste Management route managers had “the ability to tell you what to do
and how to do your job.” He also agreed that the garbage truck driver, a Waste Management
employee, was “the captain of the ship” and “the guy in charge.” He agreed that the driver had
the authority to tell him that he was doing his job incorrectly and that “[y]ou need to do it this
way.” The driver was “in charge of the work that was done.” The driver would decide where the
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helper would stand on the truck and when they would break for lunch. The driver even had
authority to decide which side of the street the helper could use.
The driver, Zelaya, testified that, on the day of the accident, “I was controlling [Stevenson]
with respect to how to do the job.” He testified that in the morning he would instruct the helpers
as to “what we’re going to do and how we’re going to do it.” He gave instructions to the helpers
at the beginning of the route. Zelaya had “the right to control how the helpers did their work on
the day of the accident.”
Waste Management’s operations manager testified that Stevenson, while assigned to Waste
Management, was a Waste Management employee and was under the control of Zelaya, the driver.
Zelaya was the “captain” of the truck and was in “full control” of the helpers. He was continuously
in control of the crew beginning in the morning. Waste Management provided helpers with
instructions and training. Waste Management had the authority to assign tasks and to tell the
helper to stop unauthorized conduct.
The owner of Taylor Smith testified that Taylor Smith did not control Stevenson’s work
and that Stevenson was not an independent contractor but instead worked for Waste Management.
He stated that once Taylor Smith sent workers to Waste Management, Waste Management
supervised the workers, controlled their work, and told them what to do. “Once we put the person
on the assignment at the site we—we don’t manage them at that point. We don’t tell them what
to do. We don’t give them directives.” Once workers are assigned, they are “managed and fired
and all those things by the client.” Waste Management had “the right to control the details of the
work for helpers who are out on a route.” Once assigned to Waste Management the worker is
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trained, managed, and disciplined by the client, and Waste Management decided Stevenson’s
hours.
All these facts regarding the daily relationship between Waste Management and Stevenson
at the workplace indicate that Stevenson was Waste Management’s employee under the Act. In
response, Stevenson points to evidence that Waste Management did not directly, physically control
his every movement. For example, Zelaya testified that, as the driver, he could not control
Stevenson because “he’s on the side of the street,” and that Stevenson “is a grown-up man” who
knew “what he was doing.” Zelaya further testified that Stevenson knew “what to do” and “how
to do it.” But employer status does not depend on whether the employer physically controls every
action of the employee. Every employee is to some extent self-directed in the physical carrying
out of his daily work. This limited sphere of personal autonomy does not mean that the worker
has no employer under the Workers’ Compensation Act.
The foregoing evidence conclusively established that Waste Management controlled the
“progress, details, and methods of operations of the work.” Limestone Prods., 71 S.W.3d at 312.
Waste Management “set [Stevenson’s] work schedule, gave him his assignments, and supervised
his work.” City of Bellaire, 400 S.W.3d at 923. Moreover, at the time of the accident, Waste
Management exercised “actual control over the details of the work that gave rise to the injury.”
Garza, 161 S.W.3d at 477. There is no evidence that Taylor Smith or Stevenson exercised any
control over the details of Stevenson’s work, either as a general matter or at the time of his injury.
Just as in City of Bellaire, the evidence “establish[es] as a matter of law that [Waste Management]
9
controlled the details of [Stevenson’s] work and thus, that [Stevenson] was its employee.” 400
S.W.3d at 923.
B. The Effect of the Master Agreement
There remains the question of the Master Agreement. Without it, this case is
indistinguishable from City of Bellaire, 400 S.W.3d 922. With it, Stevenson contends that Waste
Management has contracted away its exclusive-remedy protections—or at least created a fact issue
as to Stevenson’s employment status, as the court of appeals concluded. For the following reasons,
we disagree.
The Agreement was between Taylor Smith and Waste Management National Services, an
affiliate of Waste Management Texas. It states:
[Taylor Smith] Responsibilities: [Taylor Smith] is in the business of supplying
trained and qualified temporary labor (“Personnel”) to perform work as requested
by [Waste Management National Services]. [Taylor Smith] is solely responsible
for performing all hiring, firing, discipline, training and other responsibilities
necessary to discharge its legal obligations as the employer of the Personnel
suppled to [Waste Management National Services]. [Taylor Smith] and Personnel
shall be independent contractors in respect of [Waste Management National
Services] and shall not be employees of [Waste Management National
Services]. Furthermore, [Taylor Smith] and Personnel understand that they have
no authority to make or imply any commitments which are binding upon [Waste
Management National Services]. [Taylor Smith] is solely responsible for all
payments whatsoever required to be made to or in respect of its Personnel,
including, without limitation, all wages, salaries and benefits (including health
insurance and/or medical payments), all federal, state and local payroll taxes, and
all Workers’ Compensation insurance coverage and payments. Upon demand,
[Taylor Smith] shall provide [Waste Management National Services] with proof
that such payments have been made. For any lawful reason (including, without
limitation, an adverse result on drug and background screening) and without
disclosing such reason to [Taylor Smith], [Waste Management National Services]
may request that [Taylor Smith] terminate Personnel’s engagement at [Waste
Management National Services] immediately. [Waste Management National
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Services] shall reimburse [Taylor Smith] for services performed and expenses
incurred in accordance herewith up to the date of such termination notice.
(Emphasis added).
Stevenson argues that because Waste Management agreed by contract that workers
supplied by Taylor Smith would be independent contractors, Waste Management cannot now
contend that Stevenson is a Waste Management employee. This argument has rhetorical power,
to be sure. There is a “have your cake and eat it too” flavor to Waste Management’s position. It
wants Stevenson to be its employee in this case, but if Stevenson had injured a third party while
on the job, Waste Management would likely try to use the Master Agreement to defeat vicarious
liability by arguing that Stevenson was an independent contractor. Stevenson is undoubtedly
correct that Waste Management is not entitled to unilaterally switch his status between employee
and independent contractor whenever one label or the other suits Waste Management. But that is
not what is happening here. Instead, in the dual-employment context, this Court has previously
observed that determining employment status for workers compensation purposes is not always
the same thing as determining employment status for vicarious liability:
In this case, we are construing only the Labor Code, specifically the Workers’
Compensation Act; we are not applying general common-law principles regarding
vicarious liability for injuries to third parties. We reiterate what we said in
Wingfoot: “The common-law principles that define when there will be vicarious
liability are designed to assign liability for injury to third parties to the party who
was directing the details of the negligent actor’s conduct when that negligence
occurred.” The Workers’ Compensation Act was not.
Garza, 161 S.W.3d at 481 (quoting Wingfoot, 111 S.W.3d at 146).4
4
The concurrence sees no difference between determining employment status under the common law and
doing so under the Workers’ Compensation Act. It is no doubt true in many cases that the two inquiries will look
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Stevenson asks us to rely on Newspapers, Inc. v. Love, 380 S.W.2d 582 (Tex. 1964), which
holds that a contract stating a person is an independent contractor is given effect unless (1) it was
a subterfuge, (2) it was modified by later agreement, or (3) the exercise of control was “so
pronounced” and “so persistent” as to raise an inference that the parties acquiesced in the
principal’s right to control the details of the work. Id. at 590–92. The court of appeals relied on
Love. Stevenson, 572 S.W.3d at 711. Love, however, acknowledges that contractual independent-
contractor labels are not controlling if “[t]he assumption of an exercise of control [is] so persistent
and the acquiescence therein so pronounced as to raise an inference that at the time of the act or
omission giving rise to liability, the parties by implied consent and acquiescence had agreed that
the principal might have the right to control the details of the work.” 380 S.W.2d at 592. The
facts of Waste Management’s daily control over Stevenson’s garbage-collection work are indeed
“so pronounced” and “so persistent” as to satisfy the standard articulated in Love for looking
beyond contractual labels.
identical, and the concurrence’s position is supported by statements from this Court prior to Wingfoot and Garza. But
we find the concurrence’s position impossible to square with Wingfoot’s clear holding, reiterated in Garza, that the
two inquiries serve different purposes and can diverge to some extent in the dual-employment context. Wingfoot
settled the question of whether an employee can have two employers under the Workers’ Compensation Act, and it
did so with reference to the Act’s definitions of “employee” and “employer.” 111 S.W.3d at 137–40. It did not do so
under the common law of employment and did not resolve the dual-employment question for vicarious liability
purposes. The contours of dual employment under the common law remain a separate question, one which has often
been disputed both before and after Wingfoot. See In re Merrill Lynch Tr. Co. FSB, 235 S.W.3d 185, 199 (Tex. 2007)
(Hecht, J., concurring and dissenting) (“Whether one can serve two masters, the law allows it and generally makes
both employers liable for the agent’s actions” (footnote omitted)) (citing RESTATEMENT (SECOND) OF AGENCY § 226
(1958)); see also White v. Liberty Eylau Sch. Dist., 880 S.W.2d 156, 159–60 (Tex. App.—Texarkana 1994, writ
denied) (holding that plaintiff could seek damages against two employers for negligence of employee); Gulf Oil Corp.
v. Williams, 642 S.W.2d 270, 272 (Tex. App.—Texarkana 1982, no writ) (same). But see Coronado v. Schoenmann
Produce Co., 99 S.W.3d 741, 752 (Tex. App.—Houston [14th Dist.] 2003, no writ) (“The Coronados do not cite, and
we have not found, a case in which a Texas court has applied section 226 and the joint employer doctrine when a
purported employee pursues a common-law negligence claim against two or more non-subscribers. We decline to do
so now because application of the joint employer doctrine in such cases is inequitable and problematic.”).
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There are yet other reasons for looking beyond the contractual label here. To begin with,
all our previous cases in the dual-employment context have looked solely to the parties’ daily
relationship on the job—to whether the plaintiff was “in the service of” the defendant, as the Act
puts it—not to contractual arrangements between the staffing agency and the client company. See
TEX. LAB. CODE § 401.012(a). In Garza, we relied on the Workers’ Compensation Act’s definition
of “employee,” which includes “each person in the service of another under a contract of hire,
whether express or implied, or oral or written.” 161 S.W.3d at 476–77 (quoting TEX. LAB. CODE
§ 401.012(a)). We interpreted the definition to require “consider[ation of] traditional indicia, such
as the exercise of actual control over the details of the work that gave rise to the injury.” Id. We
also noted that, in the dual-employment context, construing the Act’s definitions is not always the
same enterprise as determining employment under the common law. Id. at 481.
Similarly in Wingfoot, we grounded our employment analysis in the text of the Act and
noted the potential distinction between applying the Act’s definitions and determining employment
under the common law. Wingfoot, 111 S.W.3d at 146 (distinguishing between “common-law
principles” and “whether a general employer remains an ‘employer’ for workers’ compensation
purposes”). We also acknowledged that the dual-employment context, involving staffing agencies
who provide workers to client companies who direct them on the job, adds complexity to the
application of traditional legal standards governing employment status. Id. at 145–46.
Here, there can be no doubt that Stevenson was “in the service of” Waste Management
when this accident occurred. See TEX. LAB. CODE § 401.012(a). Under any application of
“traditional indicia, such as the exercise of actual control,” he was Waste Management’s employee
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under the Workers’ Compensation Act. Garza, 161 S.W.3d at 477. The only question is whether
the labels used in the Master Agreement authorize a factfinder to ignore the facts on the ground
and treat Stevenson as an independent contractor despite the lack of any factual indication that
Waste Management ever relinquished the right to control its garbage-collection workers. They do
not.
We addressed the effect of a contract on employer status under the Workers’ Compensation
Act in Exxon Corp. v. Perez, 842 S.W.2d 629 (Tex. 1992) (per curiam), a borrowed-servant case.
We stated: “A contract between two employers providing that one shall have the right of control
. . . is a factor to be considered, but it is not controlling.” Id. at 630. Thus, even a contract speaking
directly to the controlling factor—the right of control—did not dictate whether the plaintiff was
the defendant’s borrowed servant covered by the defendant’s workers compensation policy.
Instead, “[b]ecause the record . . . is replete with evidence of Exxon’s right of control over Perez,
the court of appeals erred by concluding that the contract between the parties was conclusive.” Id.
(footnote omitted). Under Perez, a contract between two companies purporting to dictate the
nature of a worker’s employment relationship with the companies is merely “a factor to be
considered” if the right of control is “a controverted issue.” Id.
As explained above, control is not in any real sense controverted here. Waste Management
exclusively controlled Stevenson’s work, both in general and when the accident occurred. And
even if the Master Agreement’s independent-contractor label were “considered” as a “factor,” its
bare existence does not create a genuine fact issue as to whether Waste Management actually had
the right to control Stevenson. There is simply no evidence—whether in the contract or in the
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parties’ behavior—indicating that the Master Agreement’s independent-contractor label ever had
any bearing on Waste Management’s right to control the workers on its garbage-collection routes.
The concurrence takes issue with our treatment of the Master Agreement. Yet the
disagreement may not be as deep as it appears. The concurrence champions the freedom of
contract, a position with which we agree entirely. However, the concurrence acknowledges—as
it must under Perez—that a contractual label is not conclusive when determining workers
compensation coverage in these circumstances. The concurrence would hold that the contractual
label creates a fact issue regardless of the facts on the ground, while we conclude that no fact issue
is raised when the only evidence cutting against Waste Management’s right to control Stevenson
on his garbage-collection route is a bare contractual label. The dispute is no deeper than that.
Despite the Master Agreement’s “independent-contractor” label, the Workers’
Compensation Act and our prior cases in the dual-employment context counsel that we examine
the parties’ behavior at the jobsite, perhaps more so than would the concurrence. All agree,
however, that the touchstone is Waste Management’s “right to control” Stevenson. In the end, the
only question is whether a genuine fact issue arises as to Waste Management’s right to control its
garbage-collection workers merely because its contract with a staffing agency labels them
independent contractors. We conclude no such fact issue exists on this record. Nothing in the
parties’ behavior indicates Waste Management did not have the right to control the workers on its
garbage-collection routes, and nothing in the Master Agreement indicates the parties intended their
use of the independent-contractor label to withdraw from Waste Management the right to control
its garbage-collection workers.
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Perhaps if daily control of Stevenson’s work were split between Waste Management and
Taylor Smith—or if there were evidence that Stevenson somehow controlled his own garbage-
collection work—the Master Agreement’s language about who employed the worker and who did
not would come into play as a “factor to be considered” in determining which party had the right
to control Stevenson. But a contract between a staffing agency and its client labeling temporary
workers “independent contractors” of the client cannot defeat employee status where the evidence
of the actual events surrounding the work conclusively establishes that the client had the right to
control the temporary worker, who was therefore “in the service of” the client for purposes of the
Workers’ Compensation Act.5
This approach, which considers the factual, on-the-ground realities of whether the client
company directed the activities of the staffing agency’s employee—without deferring
automatically to the terms of a written contract between the companies purporting to dictate
employment status—flows from the language of the Workers’ Compensation Act. The Act
provides “express definitions of ‘employer’ and ‘employee’ that should be given effect when
applicable, even if that results in an employee’s having more than one employer for purposes of
workers’ compensation.” Wingfoot, 111 S.W.3d at 145. The Act’s definitions encompass workers
5
The Fifth Circuit adopted similar reasoning in deciding borrowed-servant status under the Longshore and
Harbor Workers’ Compensation Act. “We recognize and reiterate that the terms of a contract and the related factual
issues do not automatically prevent summary judgment or direct verdict. If the remaining borrowed employee factors
overwhelmingly point to borrowed employee status, a summary judgment or direct verdict is appropriate.” Brown v.
Union Oil Co. of Cal., 984 F.2d 674, 678 n.5 (5th Cir. 1993) (per curiam). “The Fifth Circuit has repeatedly found
borrowed employee status to exist as a matter of law even when the contract between the employers provides that the
worker is to be classified as an independent contractor or that the worker is not considered an employee of the
borrowing entity.” Lomeli v. Sw. Shipyard, L.P., 363 S.W.3d 681, 689 (Tex. App.—Houston [1st Dist.] 2011, no
pet.). As with Texas workers compensation law, the factor of “control over the employee and the work he is
performing” is “the central factor” in the Fifth Circuit’s borrowed-employee determination. Brown, 984 F.2d at 676.
16
operating under a written contract, so long as they are “in the service of” the employer. And as
this Court’s precedent in the dual-employment context indicates, whether a worker was “in the
service of” the client company depends not exclusively on contractual labels but rather on the
extent to which the defendant exercised the right to control the plaintiff’s daily work.
We are mindful, as well, that workers compensation coverage is a two-way street. It
“benefit[s] both employees and employers.” Port Elevator–Brownsville, L.L.C. v. Casados, 358
S.W.3d 238, 241 (Tex. 2012). Employers who cover their employees benefit from the exclusive-
remedy protection asserted by Waste Management in this case. On the other hand, workers who
qualify as employees receive compensation for injuries “without regard to fault or negligence.”
TEX. LAB. CODE § 406.031. The Workers’ Compensation Act “provide[s] employees with
certainty that their medical bills and lost wages will be covered if they are injured. An employee
benefits from workers’ compensation insurance because it saves the time and litigation expense
inherent in proving fault in a common law tort claim.” HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 350
(Tex. 2009). Not all injured workers wish to sue their employers, and the Act ensures they are
compensated without having to demonstrate an entitlement to recover in court.
We historically have “construe[d] the TWCA liberally in favor of coverage as a means of
affording employees the protections the Legislature created.” Casados, 358 S.W.3d at 241. “If
there be any reasonable doubt which may arise in a particular case as to the right of the injured
employee to compensation [under the Act], it should be resolved in favor of such right.” Navarette
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v. Temple Indep. Sch. Dist., 706 S.W.2d 308, 310 (Tex. 1986).6 Declining to automatically defer
to contractual agreements between two potential employers ensures these rights cannot be denied
to workers by contracts over which they have no control. Although this longstanding preference
for finding workers compensation coverage developed to ensure employees receive compensation,
it applies with equal force when, as here, the effect of finding coverage is to protect the employer
from lawsuits.
While in this case Stevenson does not want the Act to apply to him, many other temporary
workers may want the certainty and prompt payment of benefits the Act provides without the need
for litigation. If Stevenson were correct that a contract between his direct employer and its client
can dictate whether he is entitled to workers compensation through the client, he might benefit in
that he could proceed with his lawsuit against Waste Management. Other workers in similar
circumstances could be harmed, however, by a rule that allowed two companies to execute a
contract—over which the worker has no influence—dictating whether the worker is covered by
either company’s workers compensation coverage. Stevenson had the benefit of seeking workers
compensation benefits from Taylor Smith and then taking his chances in a lawsuit against Waste
Management. But in other cases, if the temporary agency does not have coverage or is insolvent
and the agency and client have agreed that assigned workers are independent contractors, giving
6
The concurrence’s view that the employment inquiry is always the same no matter the context cannot be
squared with the precedent’s clear preference for finding employment in workers compensation cases “[i]f there be
any reasonable doubt which may arise in a particular case.” Navarette, 706 S.W.2d at 310. No such preference exists
outside the workers compensation context.
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effect to the agreement between the employers could deprive the worker of all benefits under the
Act.
A related reason the Master Agreement does not dictate the outcome is that Stevenson was
not a party to it.7 The Agreement states that both Taylor Smith and its personnel shall be
independent contractors, but there is no indication that Stevenson ever saw the Master Agreement
or agreed to be bound by it. If two employers could bargain away their employees’ rights in this
way without an examination of how the employment operated in practice, workers provided by
staffing agencies could be cut out of the Act’s protections altogether, even if the client company
provided coverage for its other workers.
We agree with the concurrence, of course, that “Texas strongly favors parties’ freedom
of contract,” under which parties may “bargain for mutually agreeable terms and allocate risks as
they see fit.” Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905, 912 (Tex. 2007). “Texas
courts regularly . . . reject legal claims that are artfully pleaded to skirt unambiguous contract
language, especially when that language is the result of arm’s length negotiations between
sophisticated business entities.” Energy Transfer Partners, L.P. v. Enter. Prods. Partners, L.P.,
593 S.W.3d 732, 738 (Tex. 2020). But “[c]ontracts bind parties, not nonparties.” NRG Power
7
As noted, Waste Management was not a party to the Agreement either. Its affiliate, Waste Management
National Services, was the party to the Agreement. “[A] contract with one corporation . . . is generally not a contract
with any other corporate affiliates.” In re Merrill Lynch Tr. Co. FSB, 235 S.W.3d 185, 191 (Tex. 2007); see also TEX.
BUS. ORGS. CODE § 21.223 (providing that affiliates are not liable for contractual and other obligations of a corporation
absent actual fraud). However, the Agreement states that affiliates such as Waste Management Texas “are intended
third party beneficiaries of this Agreement” and that references in the Agreement “shall be deemed to include Affiliates
as the context requires.” We do not resolve the parties’ dispute about the Master Agreement’s applicability to Waste
Management Texas. Even if Stevenson is correct that the Master Agreement binds Waste Management Texas, the
contractual designation of Stevenson as an independent contractor does not affect the outcome in the face of the
overwhelming evidence of Waste Management’s right to control Stevenson’s work.
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Mktg., LLC v. Me. Pub. Utils. Comm’n, 558 U.S. 165, 175 n.4 (2010). In this dual-employment
context, there are three concerned parties, not just the two who executed the Master Agreement.
Determining a worker’s employment status in this context is not always as simple as consulting a
contract between his two potential employers.
III. Conclusion
There is no genuine issue of material fact as to whether Waste Management had “the right
to control the progress, details, and methods of operations of [Stevenson’s] work.” Limestone
Prods., 71 S.W.3d at 312. Even if the Master Agreement is a “factor to be considered,” it does
not create a fact issue sufficient to avoid summary judgment given the conclusive nature of the
countervailing facts. Summary judgment for Waste Management was appropriate, and the court
of appeals erred by concluding otherwise. We reverse the court of appeals’ judgment and render
a take-nothing judgment against Stevenson.
__________________________________
James D. Blacklock
Justice
OPINION DELIVERED: April 30, 2021
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