Tochril, Inc. v. Texas Workforce Commission ( 2015 )

ACCEPTED
06-15-00078-cv
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
12/30/2015 7:05:47 PM
DEBBIE AUTREY
CLERK
NO. 06-15-00078-CV
______________________________________________
FILED IN
6th COURT OF APPEALS
IN THE COURT OF APPEALS FOR THE TEXARKANA, TEXAS
SIXTH DISTRICT OF TEXAS AT TEXARKANA 12/31/2015 9:24:00 AM
______________________________________________
DEBBIE AUTREY
Clerk
TOCHRIL INCORPORATED,
Appellant
VS.
TEXAS WORKFORCE COMMISSION,
Appellee
______________________________________________
ON APPEAL FROM 53rd JUDICIAL DISTRICT COURT OF
TRAVIS COUNTY, TEXAS
______________________________________________
BRIEF OF APPELLANT
______________________________________________
JULIANN H. PANAGOS
State Bar No. 06861100
jpanagos@craincaton.com
MICHAEL D. SEALE
State Bar No. 00784938
mseale@craincaton.com
1401 McKinney Street, Suite 1700
Houston, Texas 77010
Telephone: 713-752-8696
Facsimile: 713-658-1921
Counsel for Appellant
ORAL ARGUMENT REQUESTED
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Identity of Parties and Counsel
The following is a complete list of all parties to the trial court judgment, and
the names and addresses of all trial and appellate counsel:
Parties Counsel
Appellant Tochril Incorporated Juliann H. Panagos
Michael D. Seale
Crain, Caton & James, P.C.
1401 McKinney Street Suite 1700
Houston, Texas 77010
Appellee Texas Workforce Peter E. Laurie
Commission Assistant Attorney General
Financial and Tax Litigation
PO Box 12548
Austin, Texas 78711-2548
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Table of Contents
Identity of Parties and Counsel ...................................................................................i
Table of Contents ...................................................................................................... ii
Table of Authorities ................................................................................................... v
Statement of the Case.............................................................................................. vii
Statement Regarding Oral Argument .................................................................... viii
Statement Regarding Record References and Hyperlinks ..................................... viii
Issues Presented ........................................................................................................ix
Issue 1
Health Force included a lenghtly summary of evidence to its
response to the motion for summary judgment pursuant to
Texas Rule of Evidence 1006, which allows for presentation of
summary evidence when the underlying evidence is too
voluminous. The underlying sumarized evidence supporting
Health Force’s summary judgment response was also attached
to the response. The TWC filed a motion to strike this
summary judgment evidence. The trial court sustained the
TWC’s objections and struck the evidence. Did the trial court
err by excluding Health Force’s summary evidence?
Issue 2
Did the trial court err in finding the twenty worker
classification factors weighed in favor of the TWC?
Issue 3
In a 2007 Memorandum of Understanding, the Internal
Revenue Service (the “IRS”), Department of Labor (the
“DOL”) and a number of state workforce agencies (including
Texas) agreed to work towards achieving consistent worker
classification determinations across state and federal agencies.
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Both the IRS and DOL conducted worker classification audits
of the workers offered work opportunities by Health Force and
determined the nurses and other professional healthcare
providers were independent contractors. In this case, the trial
court granted summary judgment for the Texas Workforce
Commission finding these same workers were employees of
Health Force. Did the trial court erroneously grant summary
judgment for the TWC on the issue of worker classification?
Overview .................................................................................................................... 1
Statement of Facts ...................................................................................................... 1
1.  Background of the Parties................................................................................ 1
A.  Tochril Incorporated (“Health Force”).................................................. 1
B.  Texas Workforce Commission .............................................................. 2
2.  Texas Workforce Commission Investigation and Decision ............................ 3
3.  Procedural History ........................................................................................... 5
A.  Suit is filed............................................................................................. 5
B.  The motion for summary judgment....................................................... 6
C.  Objections to Health Force’s summary judgment
evidence ................................................................................................. 7
D.  Rulings on evidence and motion for summary judgment ..................... 8
Summary of the Argument......................................................................................... 8
Argument.................................................................................................................. 10
1.  Standard of Review........................................................................................ 10
2.  The trial court erred in excluding Health Force’s summary chart and
by ignoring the underlying evidence. ............................................................ 11
A.  Use of Summary Evidence for Alonzo and Pappillion
Testimony was Proper in this Case. .................................................... 12
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B.  Alonzo and Pappillion Provided Proper Witness
Statements. ........................................................................................ 16
C.  Alonzo and Pappillion had Personal Knowledge of
Relevant Facts. .................................................................................... 17
3.  The Twenty Factor Test Demonstrates Genuine Issues of Material
Fact 18
A.  Prior Precedent Indicates the Workers are Independent
Contractors .......................................................................................... 18
B.  Review of Health Force’s Evidence Demonstrates the Workers
were Independent Contractors ............................................................. 20
4.  The Memorandum of Understanding between the IRS, DOL and State
Agencies Favors a Finding that the Health Force Workers are
Independent Contractors. ............................................................................... 33
A.  The IRS Audit of the Workers ............................................................35
B.  The DOL Audit of the Workers ..........................................................36
Conclusion ............................................................................................................... 37
Certificate of Compliance ........................................................................................ 38
Certificate of Service ............................................................................................... 39
Index to Appendix .................................................................................................... 40
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Table of Authorities
Cases
Avchen v. Kiddo, 200 Cal. App. 3d 532 (Cal. 1988) ................................................18
C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768 (Tex. App.–
Houston [1 Dist.] 2004, no pet.) ....................................................................13
Cascade Nursing v. Employment Security Department, 856 P.2d 421
(Wash. 1993)..................................................................................................18
Champlin Oil & Ref. Co. v. Chastain, 403 S.W.2d 376 (Tex.1965) .......................13
Contract Management Services, Inc. of Texas v. State of Louisiana,
745 So.2d. 194 (La. Ct. App. 1999) ..............................................................18
Cooper Petroleum Co. v. LaGloria Oil & Gas Co., 436 S.W.2d 889
(Tex.1969) .....................................................................................................13
Elgin Nursing & Rehabilitation Center v. U.S. Department of Human
Health Services, 718 F.3d 488 (5th Cir. 2013) ...............................................20
Flutobo, Inc. v. Holloway, 419 S.W.3d 622 (Tex. App.—Houston
[14th Dist.] 2013, pet. denied) .......................................................................11
Ford Motor Company v. Auto Supply Company, Inc., 661 F.2d 1171
(8th Cir.1981) ................................................................................................13
Goodyear Tire & Rubber Co. v Mayes, 236 S.W.3d 754 (Tex.2007) .....................10
Guevara v. Lackner, 447 S.W.3d 566 (Tex. App.-Corpus Christi
2014), reh’g overruled (Dec. 11, 2014) .........................................................14
Health Care Associates, Inc. v. Oklahoma Employment Security
Commission, 26 P.3d 112 (Okla. 2001) .........................................................18
HRP of Tennessee, Inc. d/b/a Hospital Resources Personnel v. State of
Tennessee, Department of Employment Security, No. E2005-
01176-COA-R3-CV (Tenn. June 28, 2006) ..................................................18
McAllen State Bank v. Linbeck Construction Corp., 695 S.W.2d 10
(Tex.App.–Corpus Christi 1985, writ ref'd n.r.e.) .........................................13
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Mississippi Employment Security Commission v. PDN, Inc., 586 So. 2d
838 (Miss. 1991) ............................................................................................18
Rosenberg v. Collins, 624 F.2d 659 (5th Cir.1980) .................................................13
Speier v. Webster College, 616 S.W.2d 617 (Tex. 1981) ........................................13
Trucks, Inc. v. Tamez, 206 S.W.3d 572 (Tex. 2006) ...............................................10
Statutes/Regulations/Other
20 C.F.R., Section 639.3 ..........................................................................................34
40 Tex. Admin. Code, Section 815.134 ............................................ 7, 11, 20, 21, 40
40 Tex. Admin. Code, Section 821.5 .......................................................................33
Rev. Rul. 87-41, 1987-1 C.B. 296 ...........................................................................33
Revenue Act of 1978, Section 530 ..........................................................................36
Small Business Job Protection Act of 1996, Section 1122......................................36
Tex. Labor Code, Section 201.029 ............................................................................6
Tex. Labor Code, Section 212.021 ............................................................................5
Tex. Labor Code, Section 213.073 ........................................................................... 5
Tex. R. Civ. P., Rule 166a ................................................................................. 16-17
Tex. R. Evid. 1006 .................................................................................. 11-13, 16-17
TUCA Section 201.041 ..................................................................................... 15, 18
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Statement of the Case
Nature of the Case: Worker classification dispute under the Texas
Labor Code (the Texas Unemployment
Compensation Act).
Trial Court: The Honorable Stephen Yelenosky, 53rd Judicial
District Court, Harris County, Texas
Course of Proceedings: Appellant Tochril Incorporated (“Health Force”)
filed a petition in district court challenging the
administrative decision of the Texas Workforce
Commission (the “TWC”) classifying certain
workers offered work opportunities by Health
Force as employees (C8). Health Force sought a
declaratory judgment that the workers were
independent contractors and made a claim for
reimbursement of the unemployment taxes it
paid to the TWC under protest (C8). The TWC
answered the suit (C3) and filed a motion for
summary judgment in response to Health
Force’s claims (C41). Health Force responded
to the motion for summary judgment and
attached supporting evidence for its claims to
the response (C503). The parties exchanged
supplemental summary judgment statements
(C931 and C1226). The TWC filed objections
and motion to strike Health Force’s summary
judgment evidence (C1394). Health Force filed
a response to the TWC’s objections and motion
to strike its summary judgment evidence
(C1417).
Trial Court’s Disposition: The trial court sustained most of the TWC’s
objections and struck most of Health Force’s
summary judgment evidence (C1505-1517) and
granted summary judgment in favor of the TWC
(C1518).
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Statement Regarding Oral Argument
Appellant believes oral argument will assist the Court in dealing with the
issues of law raised in this appeal, as well as clarify any factual or procedural
questions that arise from this record.
Statement Regarding Record References and Hyperlinks
The Clerk’s Record in this case is one volume labeled Original Clerk’s
Record. Each page is numbered sequentially. References to the Original Clerk’s
Record will be shown by “C page number.”
Record references to items in the Appendix are hyperlinked (shown by blue
underlining), as are two non-Westlaw authorities included in the Appendix.
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Issues Presented
Issue 1
Health Force included a lenghtly summary of evidence to its response to the
motion for summary judgment pursuant to Texas Rule of Evidence 1006, which
allows for presentation of summary evidence when the underlying evidence is too
voluminous.1 The underlying sumarized evidence supporting Health Force’s
summary judgment response was also attached to the response. The TWC filed a
motion to strike this summary judgment evidence. The trial court sustained the
TWC’s objections and struck the evidence. Did the trial court err by excluding
Health Force’s summary evidence?
Issue 2
Did the trial court err in finding the twenty worker classification factors
weighed in favor of the TWC?
Issue 3
In a 2007 Memorandum of Understanding, the Internal Revenue Service (the
“IRS”), Department of Labor (the “DOL”) and a number of state workforce
agencies (including Texas) agreed to work towards achieving consistent worker
classification determinations across state and federal agencies. Both the IRS and
DOL conducted worker classification audits of the workers offered work
opportunities by Health Force and determined the nurses and other professional
healthcare providers were independent contractors. In this case, the trial court
granted summary judgment for the Texas Workforce Commission finding these
same workers were employees of Health Force. Did the trial court erroneously
grant summary judgment for the TWC on the issue of worker classification?
1
Eight witnesses were deposed in the underlying case and 5 witnesses testified in the Rule 13
administrative hearing.
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Overview
This dispute is an appeal of a Texas Workforce Commission (the “TWC”)
worker classification decision. The issue arose when the TWC conducted an audit
of Tochril Incorporated (“Health Force”)’s records and business medel to
determine if workers offered work opportunities by Health Force were
“employees” under the Texas Labor Code. The TWC found the workers to be
“employees” and assessed unemployment taxes against Health Force for the
workers. Health Force paid the taxes under protest and challenged the TWC’s
finding and tax assessment in trial court. The TWC filed a motion for summary
judgment which the trial court granted. Health Force appealed because the trial
court (i) improperly excluded evidence, (ii) ignored the abundant fact issues raised
by Health Force in the summary judgment proceeding and (iii) ignored and acted
inconsistently with findings made by two federal agencies regarding the same
workers.
Statement of Facts
1. Background of the Parties
A. Tochril Incorporated (“Health Force”)
Health Force is a multi-faceted provider of healthcare related services on a
state wide basis and, on a relatively small scale, a provider of ancillary
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medical/nursing staff relief for its health care and other business clients. Health
Force has always maintained unemployment compensation coverage for each of its
acknowledged employees. Health Force is comprised of several business segments
within the healthcare industry, including the following: (1) Health Force
Comprehensive Outpatient Rehabilitation Facility emphasizing unique pediatric
rehabilitation services (approximately 20 employees), (2) Health Force Home
Health Care (approximately 40 employees) and (3) Health Force Medical Staff
Relief (approximately 10 employees). For its medical/nursing staff relief business
component, Health Force does business as “Health Force Medical Staff Relief”
operating as a referral or placement agency for this purpose. Through an
independent contractor relationship, Health Force Medical Staff Relief provides
healthcare professionals, specifically Registered Nurses, Licensed Vocational
Nurses and Certified Nurse Assistants with opportunities for contract work at
healthcare institutions, including hospitals and health care facilities. (C8-C9, C29-
30).
B. Texas Workforce Commission
The TWC is a state agency established to operate an integrated workforce
development system in Texas through the consolidation of job training,
employment and employment-related educational programs and to administer the
unemployment compensation insurance program in Texas. (C9).
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2. Texas Workforce Commission Investigation and Decision
On October 9, 2008, at the request of the TWC, Health Force submitted (1) a
TWC Form C-1 (Amended Status Report) and (2) a TWC Form C-102 (Pre-Audit
Questionnaire). (C809-C818). Three weeks later, on October 31, 2008, TWC
auditor Mary Zerda concluded her “investigation” and the TWC issued its letter
setting forth the results of the purported investigation finding the workers were
employees. (C926). In her February 23, 2010 deposition, Ms. Zerda concedes she
interviewed only three (3) workers after she made her October 31, 2008
determination in preparation for the February 19-20, 2009 Rule 13 administrative
hearing. (C570).
The following additional events occurred prior to filing suit in the district
court:
 On October 14 and 16, 2008, the TWC issued its TWC Form C-7 Wage
List Adjustment Schedules for the period April 1, 2007 through
September 30, 2008) (6 quarters). (C819-C913).
 On October 16, 2008, the TWC issued its TWC Form C-5 Adjustment
Reports for the period October 1, 2005 through September 30, 2008) (12
quarters). (C914-C925).
 On November 14, 2008, the TWC issued its Employer’s Default Notice
stating Health Force owed a total of $25,677.99 of which approximately
$20,291.06 was assessed taxes and approximately $5,386.93 was interest
assessed on the taxes. (C927).
 On November 25, 2008, Health Force requested an administrative Rule
13 hearing regarding the miscalculated and incorrect assessment of
unemployment taxes for its independent contractors. (C928-C929).
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 On December 3, 2008, the TWC issued its administrative determination
that unemployment taxes were owed for Health Force's independent
contractors. (C930).
 On December 15, 2008, the TWC issued its Statement of Employer
Account insisting the assessment of unemployment taxes for Health
Force’s contractors was due and owing. (C546).
 On December 29, 2008, Health Force paid under protest, duress and
business compulsion, the miscalculated and incorrect amounts for taxes
(including interest) for 12 calendar quarters from October 1, 2005
through September 30, 2008. Health Force simultaneously requested a
refund of all such tax payments and interest payments it made. (C547-
C548). Health Force appealed to the TWC for a refund, but the refund
request was denied through the TWC’s May 13, 2009 decision. (C928-
C929 and C552-C563).
On May 13, 2009, the TWC Commissioners issued their decision making an
administrative finding approximately 600 workers for whom Health Force was
compelled to pay taxes for 12 calendar quarters from October 1, 2005 through
September 30, 2008 were employees and not independent contractors. (C552-
C563). The May 13, 2009 decision also denied Health Force’s request for a refund
and adjustment of miscalculated taxes Health Force was compelled to pay by
stating “[Health Force, Inc.] has paid outstanding taxes due on all workers,
including Debra Franklin, and asks for a refund of the taxes paid” and
“[u]nemployment insurance contributions, plus penalties accrued and incurred, are
payable to the Texas Workforce Commission.” (C555 and C562).
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The May 13, 2009 decision was a split decision, with TWC Chairman Tom
Pauken issuing a dissent in favor of independent contractor status stating:
I dissent from the decision of the majority in this case.
The nurses in question are not subject to the direction and control of
the company, may determine their own shifts, and pay for their own
professional licenses. They are already experienced professionals and
do not require training. Further, it is important to note that any
supervision of these professionals by doctors or charge nurses is more
for the appearance under specific state practice laws than a reflection
of practical reality. Finally, the company's role was that of a broker of
services, rather than as an employer of these licensed professionals.
Given that other states have found that similar professionals are not
employed by such services, and that there is no published Texas court
decision on this issue, I believe the Tax Department position is
without clear legal basis. Under these circumstances, I do not believe
that the registered nurses, licensed vocational nurses, and the certified
assistants are in the company’s employment.
For the above reasons, I respectfully dissent from the decision of my
fellow Commissioners. (C563).
Health Force subsequently challenged the decision of the TWC in an Austin
district court. (C8-C40).
3. Procedural History
A. Suit is filed
On November 12, 2010, Plaintiff Health Force filed its First Amended
Original Petition. (C8). The petition alleged a suit under (a) Section 213.073 of the
Texas Labor Code to recover a refund of miscalculated taxes Health Force was
compelled to pay and (b) Section 212.021 of the Texas Labor Code to obtain
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declaratory relief (i) for violation of the United States and Texas Constitutions and
the Texas Administrative Code, and (ii) to require the TWC to properly classify
Health Force’s independent contractors and refrain from assessing miscalculated
taxes. The TWC answered the suit (C3).
B. The motion for summary judgment
The TWC filed a Motion for Summary Judgment on October 25, 2013.
(C41). It sought to dismiss Health Force’s claims and award judgment for the
TWC. The TWC alleged three grounds for why Health Force’s claims should be
dismissed: (i) Health Force is a “temporary help firm” required to pay
unemployment taxes under Section 201.029 of the Texas Labor Code, (ii) Health
Force cannot overcome the presumption that the workers are employees under the
Texas Labor Code, and (iii) Health Force’s common law claims are redundant of
its statutory causes of action and such common law claims are barred by sovereign
immunity.
On December 12, 2013, Health Force responded to the motion for summary
judgment. (C503). In conjunction with its response, Health Force attached worker
declarations, deposition testimony, IRS documents, the TWC hearing transcript
and other evidence to demonstrate the TWC did not meet its burden of showing
that there was no genuine issue of material fact. The body of the response also
contained a summary chart of the TWC Rule 13 hearing where, pursuant to Texas
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Rule of Evidence 1006, Health Force summarized the testimony of a Health Force
employees Holly Alonzo and Lita Pappillion.
The parties exchanged supplemental briefing in late July and early August of
2015. (C931 and C1226). In Health Force’s supplemental response, it attached
additional worker testimony and another chart summarizing the testimony of five
additional workers deposed in the case after the initial motion for summary and
response were filed. (C1226). Health Force relied on this testimony to demonstrate
material fact issues existed under application of the Twenty Factor Test mandated
under Section 815.134 of the Texas Administrative Code.
C. Objections to Health Force’s summary judgment evidence
The TWC filed objections to and motion to strike Health Force’s summary
judgment evidence on August 18, 2015. (C1395). The objections focused on
striking the summary chart used by Health Force in its response and striking the
testimony of Holly Alonzo, Chief Operating Officer of Health Force and Lita
Pappillion, President of Health Force, on various grounds including a failure to
include detailed citations to their testimony. Other objections included striking
alleged conclusory statements in the twenty worker affidavits attached to Health
Force’s response and striking portions of counsel for Health Force, Michael
Seale’s affidavit. Health Force responded to the objections on August 19, 2015.
(C1417).
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D. Rulings on evidence and motion for summary judgment
The trial court ruled of the objections in late August 2015. (C1505). In its
ruling, the trial court struck the summary charts, the testimony of Alonzo and
Pappillion, portions of the 20 declarations, and portions of Michael Seale’s
affidavit. Without such evidence, the court also ruled on the TWC’s motion for
summary judgement, granting the motion and dismissing Health Force’s suit.
(C1518). This appeal followed. (C1519).
Summary of the Argument
The decision of the trial court should be reversed because the trial court (i)
improperly excluded evidence, (ii) ignored the abundant fact issues raised by
Health Force in the summary judgment proceeding and (iii) ignored and acted
inconsistently with findings made by two federal agencies regarding the same
workers.
Texas law mandates summary judgment should only be granted if there is no
genuine issue of material fact. When reviewing a determination of an
administrative agency, the court should provide a certain level of deference to the
agency, however, this deference is not absolute. If it was, an administrative agency
would allow an agency to function not only as judge, but jury and executioner.
Health Force’s response to the TWC’s motion for summary judgment
contains a chart summarizing the testimony of the President and Chief Operating
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Officer of Health Force. The chart walked the trial court through the testimony of
these executives at a TWC hearing and applied the executives’ testimony to the
Twenty Factor analysis required to be examined in a worker classification case.
The TWC objected to the evidence on numerous grounds, but essentially because
the summary chart did not contain proper citations to record testimony. The trial
court sustained the objections. The Texas Rules of Civil Procedure only require a
nonmovant to point the evidence and the Texas Rules of Evidence allow for the
summary of testimony. Therefore, this evidence should have been considered and
the TWC’s motion for summary judgment should have been denied.
Even if this court determines that the summary chart evidence should be
excluded, Health Force presented further evidence in its supplemental response
after the deposition of five additional workers. This evidence was not struck by the
trial court. This worker testimony on each of the Twenty Factors alone
demonstrates that there is a genuine issue of material fact.
Apart from the testimonial evidence presented by Health Force, Health
Force attached audit investigation findings from two federal agencies, the IRS and
DOL. Both of these agencies found the workers to be independent contractors.
Based upon a Memorandum of Understanding between Texas, the IRS and DOL
which notes the importance of consistency in tax determinations, the trial court
should have made a closer examination at the TWC’s decision (made after a three
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week investigation) that is inconsistent with the IRS and DOL investigations
collectively lasting 49 months. The failure to do so is a failure to recognize
genuine issues of material fact.
For these reasons, the TWC’s motion for summary judgment should have
been denied.
Argument
1. Standard of Review
Summary judgments are reviewed de novo and this Court must consider all
the evidence in the light most favorable to the nonmovant, crediting evidence
favorable to the nonmovant if reasonable jurors could, and disregarding contrary
evidence unless reasonable jurors could not.2 The evidence raises a genuine issue
of fact if reasonable and fair-minded jurors could differ in their conclusions in light
of all of the summary judgment evidence.3 In a traditional motion for summary
judgment, if the movant’s motion and summary judgment evidence factually
establish its right to judgment as a matter of law, the burden shifts to the
nonmovant to raise a genuine, material fact issue sufficient to defeat summary
2
Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006).
3
Goodyear Tire & Rubber Co. v Mayes, 236 S.W.3d 754, 755 (Tex.2007).
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judgment.4 The non-movant “is not required to marshal [his] proof; [his] response
need only point out evidence that raises a fact issue on the challenged elements.”5
2. The Trial Court Erred in Excluding Health Force’s Summary Chart
and by Ignoring the Underlying Evidence.
In both its response to the TWC’s motion for summary judgment and its
supplemental brief, Health Force incorporated charts summarizing the testimony of
13 witnesses under Texas Rule of Evidence 1006. (C503 and C1226). The charts
demonstrate the testimony of these witnesses is consistent with an independent
contractor classification when compared to the twenty worker classification factors
found in Section 815.134 of the Texas Administrative Code (“Twenty Factor
Test”). The TWC and the trial court were required to review the Twenty Factor
Test as part of their inquiry into the relationship between Health Force and its
worker.
The TWC did not dispute the accuracy of Health Force’s summaries.
Instead, the TWC filed an objection to the use of the first summary chart arguing
the following:
4
Flutobo, Inc. v. Holloway, 419 S.W.3d 622, 629-30 (Tex. App.—Houston [14th Dist.] 2013,
pet. denied).
5
Tex. R. Civ. P. 166a(i) cmt.1.
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 Statements attributed to Alonzo and Pappillion do not reference
summary judgment evidence.
 Objections to summary of testimony under Tex. R. Evid. 1006.
 Alonzo and Pappillion have not provided proper witness statements.
 Alonzo and Pappillion have not demonstrated that they have personal
knowledge of relevant facts.
(C1394). The trial court sustained the TWC’s objections and struck the summary
evidence (C1505). Texas Rule of Evidence 1006 allows for the use of summary
evidence (even a summary of testimony), the trial court erred in excluding this
vital evidence.
A. Use of Summary Evidence for Alonzo and Pappillion Testimony
was Proper in this Case.
Texas Rule of Evidence 1006 states:
The proponent may use a summary, chart, or calculation to prove the
content of voluminous writings, recordings, or photographs that
cannot be conveniently examined in court. The proponent must make
the originals or duplicates available for examination or copying, or
both, by other parties at a reasonable time and place. And the court
may order the proponent to produce them in court.
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Texas courts recognize the value in allowing the use of summary evidence
especially when the underlying records supporting the summary are voluminous.6
Many courts have found charts and diagrams that summarize, or perhaps
emphasize, testimony are admissible if the underlying information is admissible.7
As illustrated above, the main requirement for a summary chart under Texas Rule
of Evidence 1006 is that the underlying records must be available for inspection by
the opposing counsel. The court may require the party presenting the summary to
produce all of the underlying records.8 (In this case, Health Force attached the
summarized testimony the TWC already had it in its possession long before the
summary judgment hearing.)
6
See Speier v. Webster College, 616 S.W.2d 617, 618–19 (Tex.1981) (charts and diagrams that
summarize testimony are admissible if the underlying information has been admitted into
evidence); Ford Motor Company v. Auto Supply Company, Inc., 661 F.2d 1171, 1176 (8th
Cir.1981) (trial court properly admitted into evidence product line profitability analyses made
annually and compiled from numerous “spread sheets”); Rosenberg v. Collins, 624 F.2d 659, 665
(5th Cir.1980) (trial court properly admitted a summary of the commodity firm's yearly trading
activities); C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 800 (Tex. App.–Houston [1
Dist.] 2004, no pet.) (one page summary of eighty-seven pages of supporting data was
admissible if it upheld the standards of TRE 1006 and was prepared by a qualified individual);
c.f. McAllen State Bank v. Linbeck Construction Corp., 695 S.W.2d 10, 16 (Tex.App.–Corpus
Christi 1985, writ ref'd n.r.e.) (trial court admitted into evidence two computer printout summary
breakdowns, each a summary of underlying labor and material records; the court held that the
printouts were entitled to be treated as business records, a not just as summaries of business
records).
7
See Speier v. Webster College, 616 S.W.2d 617, 618–19 (Tex.1981); Cooper Petroleum Co. v.
LaGloria Oil & Gas Co., 436 S.W.2d 889, 891 (Tex.1969); Champlin Oil & Ref. Co. v.
Chastain, 403 S.W.2d 376, 389 (Tex.1965).
8
See id.
13
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To defeat a motion for summary judgment, the non-movant “is not required
to marshal [his] proof; [his] response need only point out evidence that raises a fact
issue on the challenged elements.”9 Attaching an entire document or deposition to
a response to a motion for summary judgment and referencing them only generally
does not relieve the party of the need to point out to the trial court where in the
documents the issues set forth in the response are raised.10 The requirement to
point out portions of evidence prevents parties from casually referring to
voluminous evidence (e.g. see attached deposition testimony) and creates a level of
efficiency for the court to make its decision.
In this case, Health Force’s response went well beyond a casual reference to
hearing testimony as the TWC implies. Health Force prepared two summary
charts to assist the trial court in examining the Twenty Factor Test.11 The first
chart contained both direct quotations and summary of the testimony of Health
Force’s President and Chief Operating Officer from the February 19, 2009
administrative hearing before the TWC. Health Force also attached the hearing
testimony to its response in order to make the document available to the TWC.
9
Tex. R. Civ. P. 166a(i) cmt.1.
10
Guevara v. Lackner, 447 S.W.3d 566, 572 (Tex. App.-Corpus Christi 2014), reh’g overruled
(Dec. 11, 2014).
11
See Appendix 1 and 2.
14
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The TWC’s objection focused on the fact that Health Force did not provide
direct citations to the pages and lines where the quoted and other summarized
testimony is found in the attached transcripts.12 Texas Rule of Civil Procedure
166a(i) at its comment 1 simply requires a party point to the testimony. This rule
was not intended to provide a party with the ability to escape the substance of
testimony on a mere technicality. Health Force’s summary chart meets the spirit of
Texas Rule of Civil Procedure 166a and the trial court erred in excluding it.
The chart provided in Health Force’s supplemental response did contain
direct citations to the testimony of five worker witnesses.13 While this chart was
challenged in the TWC’s objections and motion to strike, it appears the trial court
ignored this evidence. As will be discussed in Section 3 below, both of the charts
overwhelmingly demonstrate a genuine issue of material fact existed with regard to
the issue of workers classification on each of the Twenty Factors.14
12
The TWC does not contest any transcript quotation or point to any transcript quotation to be
an inaccurate quotation. The transcripts are in the possession of the TWC and are searchable.
13
See Appendix 2.
14
Application of the Twenty Factors to a particular worker or class of workers is intended to
determine whether such worker (or class of similarly situated workers) “has been and will
continue to be free from control or direction under the contract and in fact” and therefore not an
employee under Section 201.041 of the Texas Unemployment Compensation Act.
15
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B. Alonzo and Pappillion Provided Proper Witness Statements.
The witness statements of Alonzo and Pappillion are proper evidence and
are authenticated by the Declaration of Juliann H. Panagos. (C737-C739). As
stated, Health Force provided a summary chart in its response pursuant to Texas
Rule of Evidence 1006. The entire transcribed record of the February 19, 2009
hearing was also attached to the response along with the court reporter’s certificate.
Juliann H. Panagos authenticated these records by making the following statement
in her affidavit attached to the response:
7. I attended the February 19, 2009 TWC Rule 13 hearing before
Hearing Officer Thomas Mann. A copy of the February 19-20, 2009
hearing transcript (the “Transcript”) is attached to this
Declaration as Exhibit D(S). I prepared a summary of (a) the hearing
testimony given by witnesses [Pappillion, Alonzo and TWC auditor
Mary Zerda] on the Twenty Factors and (b) the TWC discovery
responses regarding the Twenty Factors. In accordance with Rule
1006 of the Texas Rules of Evidence, this summary is necessary
because the “voluminous underlying materials” (the Transcript)
cannot conveniently be examined by the Court. A copy of the
summary is attached to this Declaration as Exhibit D(6). A copy of
the TWC's March 18, 2010 Letter Responses to Health Force’s
Discovery Requests is attached to this Declaration as Exhibit D(7).
In addition, Health Force complied with Texas Rule of Civil Procedure
166a(d) providing:
Appendices, References and Other Use of Discovery Not
Otherwise on File.
Discovery products not on file with the clerk may be used as summary
judgment evidence if copies of the material, appendices containing the
evidence, or a notice containing specific references to the discovery or
specific references to other instruments, are filed and served on all
16
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parties together with a statement of intent to use the specified
discovery as summary judgment proofs: (i) at least twenty-one days
before the hearing if such proofs are to be used to support the
summary judgment; or (ii) at least seven days before the hearing if
such proofs are to be used to oppose the summary judgment.
The TWC did not allege that the first summary chart was inaccurate. The
TWC is merely trying to create a technicality in order to exclude critical evidence
that creates clear fact issues in this case. Because the spirit of both Texas Rule of
Civil Procedure 166a and Texas Rule of Evidence 1006 were met, the trial court
erred in excluding the summary chart and testimony of Alonzo and Pappillion.
C. Alonzo and Pappillion had Personal Knowledge of Relevant Facts.
At the February 19, 2009 Rule 13 hearing, both Alonzo and Pappillion were
placed under oath and testified to their personal knowledge, experience and
operations of Health Force.15 In sum, for the above described reasons, the
testimony and summary chart containing the testimony of Alonzo and Pappillion
were improperly excluded in this case. Such evidence was important evidence to
Health Force’s claims. The trial court erred in excluding this evidence and such
error caused the rendition of an incorrect judgment in favor of the TWC.
15
See C593-C643 (Pappillion Rule 13 hearing transcript pp. 107-12 et seq.; See Pappillion Rule
13 hearing transcript pp. 45-47 et seq.).
17
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3. The Twenty Factor Test Demonstrates Genuine Issues of Material Fact
As stated above, summary judgment should not be granted if there is a
genuine issue of material fact. Through its various responses and associated
evidence, Health Force demonstrated that genuine issues of material fact existed
under each of the Twenty Factors with regard to the workers offered work
opportunities by Health Force.
A. Prior Precedent Indicates the Workers are Independent
Contractors
Courts finding hospital workers to be independent contractors is not without
precedent. There are at least seven states that have addressed cases involving
nurse workers, unemployment tax and the application of the “control or direction”
standard under virtually identical statutes to the TUCA Section 201.041.16 In most
or all circumstances, the judicial courts overturned the state unemployment
commission’s assessment of unemployment tax against the referral/placement
agency and classification of the workers as employees.
16
HRP of Tennessee, Inc. d/b/a Hospital Resources Personnel v. State of Tennessee, Department
of Employment Security, No. E2005-01176-COA-R3-CV (Tenn. June 28, 2006); Mississippi
Employment Security Commission v. PDN, Inc., 586 So. 2d 838 (Miss. 1991); Health Care
Associates, Inc. v. Oklahoma Employment Security Commission, 26 P.3d 112 (Okla. 2001);
Contract Management Services, Inc. of Texas v. State of Louisiana, 745 So.2d. 194 (La. Ct. App.
1999); Avchen v. Kiddo, 200 Cal. App. 3d 532 (Cal. 1988); Cascade Nursing v. Employment
Security Department, 856 P.2d 421 (Wash. 1993).
18
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Indeed, three of the workers the TWC determined were employees and
for whom Health Force paid associated taxes under protest had been
previously determined to be independent contractors by the TWC:
 On January 14, 2009, the TWC issued its Appeal Tribunal Decision in
Appeal No. 10897280102 regarding worker Debra Franklin. After an
evidentiary hearing, the TWC found Ms. Franklin was an independent
contractor and thus, not entitled to unemployment benefits. (C575-
C580).
 On September 11, 2009, the TWC issued its Appeal Tribunal Decision
in Appeal No. 1122881-1-1 regarding worker Lucy Reyna. After an
evidentiary hearing, the TWC found Ms. Reyna was an independent
contractor and thus, not entitled to unemployment benefits. (C582-
C585).
 On October 29, 2009, the TWC issued its Appeal Tribunal Decision in
Appeal No. 1206651-1-1 involving worker Maria Guzman. After an
evidentiary hearing, the TWC found Ms. Guzman was an independent
contractor and thus, not entitled to unemployment benefits. (C587-
C589).
(C513-C514). The TWC collected unemployment taxes from Health Force for
these three nurses. However, when the nurses filed for unemployment benefits,
after three evidentiary administrative hearings, the TWC found the nurses to be
independent contractors. These three workers are identically situated to the
approximately 600 hospital staff workers that were found to be “employees” by the
TWC on October 31, 2009.
19
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B. Review of Health Force’s Evidence Demonstrates the Workers
were Independent Contractors
The trial court was imbued with the power to review the TWC’s decision to
classify all approximately 600 workers as “employees.” As stated by the Fifth
Circuit Court of Appeals regarding a Texas state agency’s interpretation of its own
statute:
…granting deference to [the agency]’s interpretation…would leave no
role for the courts—taken to its logical conclusion, it could effectively
insulate agency action from judicial review. It is not within the
province of the Executive Branch to determine the final meaning of a
vague document…any more than it would be to interpret the final
meaning of a contract entered into by the Executive Branch…[and]
would allow agencies to punish “wrongdoers” without first giving fair
notice of the wrong to be avoided.
***
Affording deference to agency interpretations…would allow the
agency to function not only as judge, jury, and executioner...17
In all instances, the TWC must satisfy the Twenty Factor Test found in
Section 815.134 of the Texas Administrative Code. There is no presumption of
employment, rebuttable or otherwise, under TUCA or Texas case law upon
payment alone to a worker.18 In all instances, the TWC must satisfy the Twenty
Factor Test and the trial court must verify the TWC correct applied the Twenty
Factor Test.
17
Elgin Nursing & Rehabilitation Center v. U.S. Department of Human Health Services, 718
F.3d 488 (5th Cir. 2013) found at http://www.ca5.uscourts.gov/opinions/pub/12/12-60086-
CV0.wdp.pdf.
18
If there was such a presumption, simply paying an individual to mow a lawn would make the
worker an employee of the homeowner.
20
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It appears, however, when granting summary judgment, the trial court
overlooked or discounted many of the genuine fact issues raised by Health Force’s
evidence. For example, the second summary chart above contains testimony from
five workers.19 This testimony creates genuine issues of material facts, since many
of the factors point to an independent contractor relationship. In the testimony of
Kay Strahan alone (C1251-C1264 and C1339-C1366), the following factors
favored a finding of independent contractor relationship:
Factor Kay Strahan
40 TAC Section 815.134 Testimony
1. Instructions: LVNs are subcontractors. They
An Employee receives instructions work when they want, if they want,
about when, where and how the and where they want.20
work is performed.
An Independent Contractor does
the job his or her own way with
few, if any, instructions as to the
details or methods of the work.
1. Instructions: An employee must
comply with instructions about
when, where, and how to work.
Even if no instructions are given,
the control factor is present if the
employer has the right to give
instructions.
2. Training: Doesn’t recall any training provided
by Health Force.21
19
See Appendix 1.
20
See Appendix 2 (Kay Strahan Testimony, Tr. p. 69).
21
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Factor Kay Strahan
40 TAC Section 815.134 Testimony
Employees are often trained by a
more experienced Employee or are
required to attend meetings or take
training courses.
An Independent Contractor uses
his or her own methods and thus
need not receive training from the
purchaser of those services.
2. Training: An employee is
trained to perform services in a
particular manner, independent
contractors ordinarily use their own
methods and receive no training
from the purchasers of their
services.
3. Integration: Did not spend much time at the
Services of an Employee are Health Force office. Mainly, would
usually merged into the firm’s stop by to drop off time sheets or
overall operation; the firm’s success pick up a check.22
depends on those Employee
services.
An Independent Contractor’s
services are usually separate from
the client’s business and are not
integrated or merged into it.
3. Integration: An employee’s
services are integrated into the
21
See Appendix 2 (Kay Strahan Testimony, Tr. p. 97).
22
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 63-65).
22
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Factor Kay Strahan
40 TAC Section 815.134 Testimony
business operations because the
services are important to the success
or continuation of the business.
This shows that the employee is
subject to direction and control.
Integration of worker’s services in
the business operation of Health
Force generally indicated that the
worker is subject to control or
direction. The corporation Health
Force is principally engaged in a
nurse placement business.
4. Services Rendered Personally:
An Employee’s services must be
rendered personally; Employees do
not hire their own substitutes or
delegate work to them.
A true Independent Contractor is
able to assign another to do the job
in his or her place and need not
perform services personally.
4. Services Rendered Personally:
An employee renders services
personally. This shows that the
employer is interested in the
methods as well as the results.
5. Hiring, Supervising & Paying
Helpers:
An Employee may act as a foreman
for the employer but, if so, helpers
are paid with the employer’s funds.
Independent Contractors select,
hire, pay and supervise any helpers
used and are responsible for the
results of the helpers’ labor.
23
084891/000006
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Factor Kay Strahan
40 TAC Section 815.134 Testimony
5. Hiring Assistants: An employee
works for an employer who hires,
supervises, and pays assistants. An
independent contractor hires,
supervises, and pays assistants
under a contract that requires
him/her to provide materials and
labor and to be responsible only for
the results. Nurses cannot hire
assistants to do patient care for
them.
6. Continuing Relationship: Could have worked for other
An Employee often continues to placement companies or hospitals.23
work for the same employer month
after month or year after year. Declined employment opportunities
An Independent Contractor is at hospitals because he would lose
usually hired to do one job of the independence he had at Health
limited or indefinite duration and Force.24
has no expectation of continuing
work.
6. Continuing Relationship: An
employee has a continuing
relationship with an employer. A
continuing relationship many exist
where work is performed at
frequently recurring although
irregular intervals.
23
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 77-78).
24
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 77-78).
24
084891/000006
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Factor Kay Strahan
40 TAC Section 815.134 Testimony
7. Set Hours of Work: “[I] provide my own schedule. They
An Employee may work “on call” [Health Force] do not provide a
or during hours and days as set by schedule for me.”25
the employer.
A true Independent Contractor is
the master of his or her own time
and works the days and hours he or
she chooses.
7. Set Hours of Work: An
employee has set hours or work
established by an employer. An
independent contractor is the master
of his or her own time.
8. Full Time Required: LVNs are subcontractors. They
An Employee ordinarily devotes work when they want, if they want,
full-time service to the employer, or and where they want.26
the employer may have a priority on
the employee’s time. Could have worked for other
A true Independent Contractor placement companies or hospitals.27
cannot be required to devote full-
time service to one firm exclusively.
8. Full Time Work: An employee
normally works full time for an
employer. An independent
contractor can work when and for
whom he or she chooses. Nurses
are worker 30, 40, and even 60
hours a week this constitutes full
25
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 38, 43-44).
26
See Appendix 2 (Kay Strahan Testimony, Tr. p. 69).
27
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 77-78).
25
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Factor Kay Strahan
40 TAC Section 815.134 Testimony
time.
9. Location where services LVNs are subcontractors. They
performed. work when they want, if they want,
Employment is indicated if the and where they want.28
employer has the right to mandate
where services are performed.
Independent Contractors
ordinarily work where they choose.
The workplace may be away from
the client’s premises.
9. Work Done on Premises: An
employee works on the premises of
an employer, or works on a route or
at a location designated by an
employer.
10. Order or Sequence Set: Health Force does not direct LVNs
An Employee performs services in how to do their job.29
the order or sequence set by the
employer. This shows control by
the employer.
A true Independent Contractor is
concerned only with the finished
product and sets his or her own
order or sequence of work.
10. Order or Sequence Set:
Employee must perform services in
the order or sequence set by an
employer. This shows that the
employee is subject to direction and
control. Nurses are not permitted to
28
See Appendix 2 (Kay Strahan Testimony, Tr. p. 69).
29
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 131-132).
26
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Factor Kay Strahan
40 TAC Section 815.134 Testimony
follow his/her own pattern of work
but rather must follow the
established routines/schedules of
the facilities.
11. Oral or Written Reports:
An Employee may be required to
submit regular oral or written
reports about the work in progress.
An Independent Contractor is
usually not required to submit
regular oral or written reports about
the work in progress.
11. Reports: Employee submits
reports to an employer. This shows
that the employee must account to
the employer for his or her actions.
12. Payment by the Hour, Week or Hospitals pay Tochril and Tochril
Month: pays the LVNs after taking out a
An Employee is typically paid by referral fee.30
the employer in regular amounts at
stated intervals, such as by the hour
or week.
An Independent Contractor is
normally paid by the job either a
negotiated flat rate or upon
submission of a bid.
12. Payments: Employees are paid
by the hour, week or month. Nurses
are paid through Health Force.
13. Payment of Business & Travel Health Force does not pay for CPR
30
See Appendix 2 (Kay Strahan Testimony, Tr. p. 37).
27
084891/000006
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Factor Kay Strahan
40 TAC Section 815.134 Testimony
Expenses: and LVN licenses.31
An Employee’s business and travel
expenses are either paid directly or Provides his own transportation. Not
reimbursed by the employer. reimbursed for any business
Independent Contractors expenses by Health Force.32
normally pay all of their own
business and travel expenses
without reimbursement.
13. Expenses: An employee’s
business and travel expenses are
paid by an employer. This shows
that the employee is subject to
regulation and control.
14. Furnishing Tools & Equipment: Provides his own transportation. Not
Employees are furnished all reimbursed for any business
necessary tools, materials and expenses by Health Force.33
equipment by their employer.
An Independent Contractor
ordinarily provides all of the tools
and equipment necessary to
complete the job.
14. Tools and Materials: An
employee is furnished significant
tools, materials, and other
equipment by an employer.
15. Significant Investment: Invests in business by buying
An Employee generally has little or uniforms, cellphone, blood pressure
no investment in the business. cuff, stethoscope, and shoes.34
31
See Appendix 2 (Kay Strahan Testimony, Tr. p. 97).
32
See Appendix 2 (Kay Strahan Testimony, Tr. p. 54).
33
See Appendix 2 (Kay Strahan Testimony, Tr. p. 54).
34
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 56-58).
28
084891/000006
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Factor Kay Strahan
40 TAC Section 815.134 Testimony
Instead, an Employee is
economically dependent on the Provides own transportation to
employer. assignments.35
True Independent Contractors
usually have a substantial financial
investment in their independent
business.
15. Investment: An independent
contractor has a significant
investment in the facilities he/she
uses in performing services for
someone else.
16. Realize Profit or Loss: Could lose money if hospital
An Employee does not ordinarily cancels her shift.36
realize a profit or loss in the
business. Rather, Employees are
paid for services rendered.
An Independent Contractor can
either realize a profit or suffer a loss
depending on the management of
expenses and revenues.
16. Profit or Loss: An independent
contractor can make a profit or
suffer a loss.
17. Working For More Than One LVNs are subcontractors. They
Firm At A Time: work when they want, if they want,
An Employee ordinarily works for and where they want.37
one employer at a time and may be
prohibited from joining a Could have worked for other
competitor. placement companies or hospitals.38
35
See Appendix 2 (Kay Strahan Testimony, Tr. p. 54).
36
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 94-95).
37
See Appendix 2 (Kay Strahan Testimony, Tr. p. 69).
29
084891/000006
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Factor Kay Strahan
40 TAC Section 815.134 Testimony
An Independent Contractor often
works for more than one client or
firm at the same time and is not
subject to a non-competition rule.
17. Works For More Than One
Person or Firm: An independent
contractor gives his/her services to
two or more unrelated persons or
firms at the same time.
18. Making Service Available to No advertising budget. He will
the Public: sometimes buy gifts for coworkers
An Employee does not make his or as a form of advertising.39
her services available to the public
except through the employer’s
company.
An Independent Contractor may
advertise, carry business cards, hand
out a shingle or hold a separate
business license.
18. Offer Services to General
Public: An independent contractor
makes his/her services available to
the general public or more unrelated
persons or firms at the same time.
38
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 77-78).
39
See Appendix 2 (Kay Strahan Testimony, Tr. pp. 40-41).
30
084891/000006
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19. Right to Discharge Without
Liability:40
An Employee can be discharged at
any time without liability on the
employer’s part.
If the work meets the contract
terms, an Independent Contractor
cannot be fired without liability for
breach of contract.
19. Right to Fire: An employee
can be fired by an employer. An
independent contractor cannot be
fired so long as he or she produces a
result that meets the specifications
of the contract.
20. Right To Quit Without
Liability:41
40
At the Rule 13 hearing, Health Force’s CEO Holly Alonzo testified:
13 Q. If you were to discharge a nurse in the middle of the job, could that nurse
14 sue your company and hold you financially liable?
15 A. We don’t discharge, so, they are aware that there is no relationship; just
16 come and go, work as you please.
C512; February 19, 2009 Holly Alonzo Rule 13 Hearing Testimony, Tr. p. 39; 2013 Response p.
27.
41
At the Rule 13 hearing, Health Force’s CEO Holly Alonzo testified:
25 Q. If the worker accepts a shift as offered by the hospital, is that worker
1 expected to work that shift?
2 A. They're expected, but, that, at many times, cannot happen, or does not happen.
3 They have the right to accept a shift and cancel it.
4 Q. What happens if they do cancel?
5 A. They don’t get paid, obviously, for the shift, but, there's no repercussions
6 as far as discipline.
***
9 Q. If a nurse quits in the middle of the job, can your company sue that nurse and
10 hold that nurse financially liable?
11 A. No. But, I mean, as a licensed individual, they can get in big trouble; it's
12 abandonment of patients. But, you know, that's through the state.
31
084891/000006
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An Employee may quit work at any
time without liability on the
Employee’s part.
An Independent Contractor is
legally responsible for job
completion and, on quitting,
becomes liable for breach of
contract.
20. Right To Quit: An employee
can quit his/her job at any time
without incurring liability. An
independent contractor usually
agrees to complete a specific job
and is responsible for its
satisfactory completion, or is legally
obligated to make good for failure
to complete it.
Health Force counts at least 15 of Twenty Factors listed above weigh in
favor of an independent contractor relationship between Health Force and Kay
Strahan. The similarly cited testimony of the other four workers demonstrates a
similar number of factors weighing in favor of a finding the worker are
independent contractors.42 The above testimony and summary chart were not
objected to by the TWC (see C1394) and struck by the trial court. Therefore, this
uncontested evidence confirms there are genuine issues of material fact in this
C512; February 19, 2009 Holly Alonzo Rule 13 Hearing Testimony, Tr. pp. 37-39; 2013
Response p. 28.
42
See Appendix 2.
32
084891/000006
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case. Even if this Court upholds the ruling by the trial court striking other
evidence, there are numerous portions of Health Force’s summary charts and the
worker declarations that were filed, admissible and weigh heavily in favor of
finding the workers were independent contractors.
The trial court thus erred in granting summary judgment in favor of the
TWC.
4. The Memorandum of Understanding between the IRS, DOL and State
Agencies Favors a Finding that the Health Force Workers are
Independent Contractors.
Beyond the failure to consider important evidence in the summary judgment
proceeding, the need to create consistency with other agency interpretations
compels a finding that the workers are independent contractors. The IRS and the
DOL both audited Health Force’s records and business model. Both agencies
determined Health Force workers to be independent contractors for tax purposes.
The TWC should be compelled to follow such precedent. It is important to note
both the IRS and the TWC use the same Twenty Factors to classify workers as
either employees or independent contractors.43 The DOL and state and federal
courts use the “economic reality test” which is a partial list of five of the same
43
See Rev. Rul. 87-41, 1987-1 C.B. 296 (providing guidance with respect to Section 530 of the
Revenue Act of 1978); 40 Tex. Admin. Code § 821.5.
33
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Twenty Factors with the remaining Twenty Factors collapsed into one factor “the
degree of control exercised by the alleged employer.”44
In a November 2007 Information on the Questionable Employment Tax
Practices Memorandum of Understanding (the “MOU”), the IRS, the DOL and a
number of state workforce agencies agreed to be consistent with worker
classification determinations.45 The MOU enables agencies to share information
and coordinate enforcement efforts with states in order to “create a level playing
for all employers” and ensure employees receive the protections to which they are
entitled under federal and state law, e.g., proper overtime compensation, FICA and
Unemployment Insurance taxes or workers’ compensation premiums. Twenty-nine
states, including Texas, have signed the MOU. The MOU states its important
objectives:
The IRS and the states will strive to be consistent with their
examination results, reducing the chances that states might classify a
worker as an employee while the IRS classifies the worker as an
independent contractor, or vice versa.
***
[F]ocus on reducing taxpayer burden and confusion, promote fairness
and confidence in the tax system.
44
20 C.F.R. § 639.3(a)(2) and United States Department of Labor WH Publication 1297 (5 DOL
Factors).
45
C543-C545 (See IRS November 2007 Information on the Questionable Employment Tax
Practices Memorandum of Understanding).
34
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(Emphasis added).
State and federal laws are not designed or intended to foster inconsistencies
to financially punish a company. Requiring Health Force, or any business, to treat
and classify the same workers differently under the Texas Unemployment
Compensation Act (“TUCA”) (i.e., as employees) than under the Fair Labor
Standards Act and Internal Revenue Code (i.e., as independent contractors) forces
Health Force to maintain two sets of financial and payroll related records and
reports.46 Given current governmental policies favoring and encouraging
uniformity in the treatment and classification of the same workers by all governing
agencies, the TWC’s position that the workers are Health Force’s employees and
not independent contractors for purposes of TUCA and unemployment taxes is
irrational and wrong. Such a result would require Health Force to treat the same
workers differently for purposes of complying with TUCA where employment
taxes and wage and hour obligations for the same workers are not required by the
IRS, the DOL or any other governmental agency.
A. The IRS Audit of the Workers
On April 4, 2012, the IRS issued its Summary of Employment Tax
Examination (IRS Form 4666). The Form 4666 reflects findings made by IRS
agent Maureen Molyneaux regarding her 34 month audit of Health Force. The IRS
46
For example, Health Force is not required to pay Federal Unemployment Tax Contributions
(“FUTA”), but is being asked to pay state unemployment taxes for the same workers.
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audit reviewed the independent contractor worker classification status of the nurses
and other healthcare providers contracting with Health Force for work
opportunities. After an investigation using, examining and applying the same or
substantially the same Twenty Factors,47 after close to three years, the IRS made
the following determination:
The examination of [Health Force] employment tax returns as
reflected on this report [Form 4666 Summary of Employment Tax
Examination] included an examination for employment tax purposes
of whether any individuals should be treated as employees of the
taxpayer [Health Force] for the purpose of Section 530 of the Revenue
Act of 1978, as amended by Section 1122 of the Small Business Job
Protection Act of 1996. The examination concluded that the following
classes of workers should not be treated as employees: Hospital
staffing workers.48
According to the IRS, Health Force properly classifies the Workers as
independent contractors.
B. The DOL Audit of the Workers
In addition to and consistent with the IRS’s determination, on March 29,
2012, the DOL informed Health Force it completed its 15 month wage and hour
47
As opposed to Mary Zerda’s investigation undertaken in large part after she made her October
31, 2008 determination (HF 0011) in preparation for the February 19-20, 2009 Rule 13 hearing.
C567-C574 (See November 23, 2010 Deposition of Mary Zerda pp. 36-37, 77 (“Q. And that's
something you consider in your investigation, what the...worker considers herself to be? A. Yes”
and on January 23, 2009, one of the three workers told Ms. Zerda “self-employed, prefer to be
self-employed”)).
48
C538-C545 (See Declaration of Michael D. Seale 3; Form 4666 (HF 753-54)). Note Ms.
Molyneaux’s handwritten note on the first page of Form 4666 (C541): “Mike [Seale]. My group
manager said this should suffice for informing you or TWC, etc. that we looked at Staff relief
Worker, but did not reclassify them. Maureen.”
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compliance audit involving the workers provided work opportunities by Health
Force. The DOL did not request or demand that Health Force make any changes to
the independent contractor status of the workers or any other business or
operational practices.49
According to the DOL, Health Force properly classifies the Workers as
independent contractors.
Conclusion
The trial court granted summary judgment for the TWC. In doing so, it the
trial judge improperly struck important evidence and ruled without considering the
numerous fact issues shown in the testimony of the numerous workers and two
Health Force employees. There is no basis for sustaining the grant of a motion for
summary judgment in favor of the TWC in this case because it did not establish
there are no genuine issues of material fact regarding the Twenty Factors as a
matter of law.
The proceeding in this Court involves three overlapping issues. Evidence
was improperly struck by the trial court and should be considered in determining
whether the workers are independent contractors. The Twenty Factor Test the trial
court and the TWC are required to apply under the Texas Administrative Code
demonstrates that genuine issues of material fact exist. Lastly, the TWC should
49
C538-C545 (Declaration of Michael D. Seale).
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maintain consistency with the determinations of the IRS and DOL. As both the IRS
and DOL found the workers to be independent contractors, the trial court erred in
failing to overturn the TWC’s decision.
Each of the above legal principles provides a basis for this Court to reverse
and remand this case back to the trial court. Appellant Tochril Incorporated
requests that relief and any further relief to which it may be entitled.
Respectfully submitted,
/s/ Juliann H. Panagos
JULIANN H. PANAGOS
State Bar No. 06861100
jpanagos@craincaton.com
MICHAEL D. SEALE
State Bar No. 00784938
mseale@craincaton.com
1401 McKinney Street, Suite 1700
Houston, Texas 77010
Telephone: 713-752-8696
Facsimile: 713-658-1921
Counsel for Appellant
Certificate of Compliance
Pursuant to TRAP 9.4(i)(3), the undersigned certifies that this document,
excluding those parts not counted pursuant to TRAP 9.4(i)(1) contains 8,161
words.
/s/ Juliann H. Panagos
Juliann H. Panagos
38
084891/000006
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Certificate of Service
I certify that a true and correct copy of this document has been served on the
following counsel of record through the electronic filing manager on December 30,
2015:
Peter E. Laurie
Assistant Attorney General
Financial and Tax Litigation
PO Box 12548
Austin, Texas 78711-2548
/s/ Juliann H. Panagos
Juliann H. Panagos
39
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375 - 1842976v1
Index to Appendix
1. Twenty Factor Chart – Alonzo and Papillion Testimony (C515-C530).
2. Twenty Factor Chart – Sabala, Sifuentes, Chapman, Strahan and Rojas
Testimony (C1251-C1265).
3. Orders on the Texas Workforce Commission’s Objections to Plaintiff’s
Summary Judgment Evidence (C1505-C1517).
4. Order Granting Texas Workforce Commission’s Motion for Summary
Judgment (C1518).
5. 40 Tex. Admin. Code § 815.134.
6. 40 Tex. Admin. Code § 821.5
7. T.R.C.P. 166a
8. Tex. R. Evid. 1006
9. 20 C.F.R. § 639.3
10. Rev. Rul. 87-41, 1987-1 CB 296
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C. Fact Issues Regarding the Twenty Factors
In its Motion, and without citation to any authority, the TWC incorrectly states " ... under
the plain language ofTUCA [Section 201.041], once workers are paid any remuneration for their
services, those workers are presumed to be employees of the remunerating employer." There is
no presumption of employment, rebuttable or otherwise, under TUCA or Texas case law upon
payment alone to a worker. 28 In all instances, the TWC must satisfy the Twenty Factor test.
Health Force creates facts issues on each of the Twenty Factors identified by the TWC in
its Motion 29 as follows: 30
Factor Holly Alonzo Lita Pappillion l\1:ary Zerda TWC Discovery
40 TAC Section 815.134 (Bates No.· Indicated Hearing Responses
vs .. Tninscript Page No.) (3-18-10 Letter
TWC 03•18-10 Letter Responses)
1. Instructions: If a nurse has a problem On a sporadic and informal basis, Facts: The nurses referred
An Employee receives while working at a I go out and visit these facilities by Health Force are
instructions about when, facility and doesn't that we send the nurses to for instructed as to when and
where and how the work know how to handle work. I visit the nurses as well, where there services are
is performed. that problem, the nurse but it is nothing set in advance. I required. Once the nurse
An Independent will go to someone at see the nurses a little more reports to work they are
Contractor does the job the facility to resolve it regularly because they come in supervised in the
his or her own way with (e.g. doctor, charge and out of here with wanting to be performance of their
few, if any, instructions as nurse, HR, etc.). We paid for their services. services by either a charge
to the details or methods have no policies nurse or a house nurse
of the work. addressing how the I don't have meetings. I may drop supervisor, both of whom
workers are to dress, in there to see a nurse, more for are employees of the
1. Instructions: An where to smoke, drug marketing of home health care medical facility where the
employee must comply use, etc. services because our patients services are performed.
with instructions about come from these facilities.
when, where, and how to The facilities, however, Keeping a good relationship with
work. Even if no likely do maintain such the nurses in the facility is my
instructions are given, the policies. goal, how are you, whoever's
control factor is present if Health Force does not there who I talk to; nothing
the employer has the right counsel or provide formal, no meetings. The typical
to give instructions. discipline or instruction scenario is I go in there with a bag
on any type of work of cookies and drop it off at the
28
If there was such a presumption, simply paying an individual to mow a lawn would make the worker an
employee of the homeowner.
29
Motion Section V(C) pp. 24-31.
30
In accordance with Rule 1006 of the Texas Rules of Evidence, the following Twenty Factors chart is a summary
of the testimony presented at the February 19-20, 2013 administrative hearing (the "Summary Chart"). The
summary is necessary because the "voluminous underlying materials" (the transcript) cannot conveniently be
examined by the Court. See Declaration of Juliann H. Panagos~ 7, attached as Exhibit D; February 19-20, 2009
hearing transcript, attached as Exhibit D(5); Summary Chart, attached as Exhibit D(6); TWC's March 18, 2010
Letter Responses to Health Force's Discovery Requests, attached as Exhibit D(7).
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Factor Holly Alorizo Lita Pappillion Mary Zenia TWC Discovery
40 TAC Section 815.134 (Bates No. Indicated Hearing· Responses
vs. Transcript Page No.) (3-18-10 Letter
TWC 03-18-10 Letter Responses)
performance relating to nurses' station. Pretty much
services provided by the whoever is there is who I see.
nurse workers.
I did not go there to supervise any
No hiring process of the independent contracting
because they're not nurses. We market to them, as
employees. We do well as to their facilities. More
have them fill out than anything, we like to see the
certain paperwork to patients of those facilities,
verify credentials as ultimately, be patients of Health
licensed professionals. Force.
Paperwork completed
consists of health info,
e.g. TB questionnaires,
immunization records,
work references to
verify licensure history.
We obtain information
such as names,
addresses, phone
numbers, driver's
license numbers, Social
Security, tax ID
numbers for tax
purposes and issue
l 099s. They're not
required to complete
anything that they
choose not to. They
seek our services. For
credentialing purposes,
they can provide a
resume if desired. An
application seeks
current and prior
employment history and
references to verify they
are licensed
professionals.
We don't do interviews
with them, but we do
ask them for their
preferences as far as
where do they like to
go, what shifts do they
like to work so we can
better fill their needs.
Tochril does not have a
leave of absence policy
for the nurses. If the
nurse wants a day off or
is ill, he or she does not
have to call in or
request it, but it is wise
to call if cancellation is
necessary to maintain
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Factor Holly Alorizo Lita Pappillion Mazy Zenia TWC Discovery
40 TAC Section 815.134 (Bates No. Indicated Hearing· Responses
vs. Transcript Page No.) (3-18-10 Letter
TWC 03-18-10 Letter Responses)
good business relations.
We do not set work
related deadlines for the
nurses. Unsure about
any facility imposed
deadlines.
They are not subject to
the policies and
procedures that our
employees are subject
to.
2. Training: We do not provide any Facts: Nurses are licensed
Employees are often kind of training or and have accomplished
trained by a more related manuals to the sufficient training and
experienced Employee or nurses. I don't know if passed state testing.
are required to attend or to what extent the Health Force places nurses
meetings or take training hospitals, doctors or in shifts and facilities to
courses. nursing homes provide provide nursing services
An Independent any training. We do not within the scope of their
Contractor uses his or her hold regular meetings authorized practice and as
own methods and thus with the nurses or give requested by the health
need not receive training instructions to the facility. Nurses may be
from the purchaser of workers on how they do provided training at the
those services. their work. facilities on facility
procedures.
2. Training: An The doctors and charge
employee is trained to nurses at the facilities
perform services in a provide general
particular manner, instructions to the
independent contractors nurses, such as location
ordinarily use their own oflunchroom, smoking
methods and receive no policies, parking
training from the policies, general
purchasers of their information about the
serv1ces. facility, or any strange
or uncommon policies
within their facility, but
instructions on their
duties is dictated by the
Texas Board of Nursing
and licensure rules.
I assume (but don't
know for sure) the
facilities have medical
protocols they ask the
nurses to follow,
including patient care
instructions.
Tochril does not
provide any orientation
prior to offering an
opportunity for a nurse
to work at a particular
facility or hospital.
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3. Integration: If Health Force Medical We regard the staff relief aspect Bates No. 0677 Facts: Integration of
Services of an Employee Staff Relief is unable to of Tochril's business primarily as The nurses said they worked workers' services in the
are usually merged into work through its a way to market or cross-sell continuously as they were business operation of
the firm's overall independent Tochril's primary business called for assignments. They Health Force generally
operation; the firm's contractors, there would purpose. Tochril, of course, uses work at a rate set by Health indicated that the worker
success depends on those be no significant impact many other methods to market or Force and not the facility. is subject to control or
Employee services. on the overall business cross-sell it's business, the direction. Health Force is
An Independent ofTochril. business of Health Force. MZ also bases the importance principally engaged in a
Contractor's services are Tochril does not For example, we may have home of the staffing unit on the nurse placement business.
usually separate from the employ any nurses at health staff cross-sell pediatric wages reported to TWC and the A form provided showing
client's business and are Health Force Medical rehab services through the care l 099s provided by the set rates that RN's, LVN's
not integrated or merged Staff Relief. The l 0 provided home health services. company. & CNA's are paid. They
into it. employees that we have Health Force's business would do not get to negotiate the
are non-nurse, which is not be significantly diminished if Bates No. 0716 rate with the facilities.
3. Integration: An clerical staff. Neither! the company no longer provided The fact that Health Force pays Health Force bills the
employee's services are nor Lita Pappillion is a staff relief services. money to advertise and exerts facilities for the services
integrated into the nurse. efforts in locating these nurses provided by said nurses.
business operations State regulations require Our website has an employment also indicates integration. Health Force pays the
because the services are nurses to have photo opportunities web page available nurses. Nurses wear a
important to the success or identification while to the general public. If one was Bates No. 0718 badge to identify
continuation of the working in a medical interested in applying, they could Independent contractors themselves as Health
business. This shows that facility. That is their apply online for home health and advertise on their own and Force nurses. Without the
the employee is subject to badge with their photo rehab positions. There is nothing negotiate their own contracts. nurses Health Force
direction and control. ID on it. about medical staffing on the These nurses are not Medical Staff Relief
Integration of worker's Some facilities require employment opportunity page. negotiating their own contracts Division would not be in
services in the business they carry their nursing with the facilities. It is clear operation.
operation of Health Force license and their CPR that if they did, they would be
generally indicated that while working. making a profit, not going
the worker is subject to through a third person.
control or direction. The
corporation Health Force [Comments: Using MZ's
is principally engaged in a logic, a nurse dealing directly
nurse placement business. with the facilities makes them a
contractor whereas they are an
employee if they go through
Health Force. What happened
to the delegation theory i.e.
transfer of direction and
control?]
Bates No. 0688
The integration of the workers
into the business, operations of
the business, and services were
rendered personally, the
continuum relationship,
employer/employee
relationship, set work hours.
The work was done at the
premises of the facilities that
the medical staff relief was
instructed to attend. The
payments, expenses, tools,
materials, investment, profit
and loss were rendered
personally, whether they offer
their services to the general
public.
Bates No. 0711
They have the right to fire, the
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right to quit, whether they work
for more than one person or
firm.
Bates No. 0717
The definition that the
commission goes by to identify
independent contractors are
integrated into the common
factors.
Information was not provided
in regards to the integration
factor other than what the
nurses said they worked and
were continuously called for
assignments. The integration is
clear that Health Force is
making a profit, by having the
nurses and sending them out
for assignments.
Bates No. 0683, 0685
Zerda's two witnesses both
indicated that they wore badges
identifying themselves and they
have continuous contact with
Health Force. If any changes
as far as addresses, phone
numbers, or changes in the
schedules they contact Health
Force.
4. Services Rendered The nurses can The nurses may delegate or The following documents or Facts: Health Force
Personally: subcontract or delegate subcontract the work. The nurses information support the nurses render his/her
An Employee's services the staff relief work out that come through us to utilize the factor that services were services personally.
must be rendered to someone else in place services that we provide to them provided personally:
personally; Employees do of the nurse. The are independent contractors. If the
not hire their own facility needs a nurse. nurse that chooses to work selects Bates No. 0681
substitutes or delegate They really do not care another nurse to work in her Time sheets submitted to
work to them. which agency. They stead, and we have records on that Health Force and signed by the
A true Independent need a nurse to take nurse, that nurse can get a check individual nurses stating the
Contractor is able to care of their patients. from us. She could also send it dates and times worked. If
assign another to do the through another staffing agency. they turn in the time record to
job in his or her place and She can contact another nurse someone else they work under
need not perform services from any other source. The and report to when they are
personally. hospital gets staff from multiple assigned to a facility (i.e.
sources. These nurses are able to Health Force), the nurse is an
4. Services Rendered substitute however they desire. If Health Force employee.
Personally: An employee the initial nurse and the substitute
renders services nurse are both registered with us, Bates No. 0681
personally. This shows then whoever works, we just get Time sheets are submitted and
that the employer is told who to pay. If they, copies of the sheets are signed
interested in the methods however, substitute that same by individual nurses stating the
as well as the results. shift through another agency or dates and times that were
through another nurse that's worked.
independent, then, that is not our
lSSUe. Bates No. 0682
If a person goes to a personnel
staffing service or Goodwin
Personnel to be sent on an
assignment then they would be
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Goodwin Personnel employee.
5. Hiring, Su11ervising & Some nurse workers Bates No. 0718 Facts: Nurses cannot hire
Paying Hel11ers: have assistants or Nurses do not hire staff or assistants to do patient
An Employee may act as helpers, some do not. helpers and independent care for them. Nurses
a foreman for the For example, they keep contractors advertise on their provide the services
employer but, if so, up with all their own. They are not able to themselves.
helpers are paid with the information for tax negotiate their own contracts
employer's funds. purposes, sort of like with the facilities. Nurses are
Independent their own little CPA or not negotiating their own
Contractors select, hire, their own little person contracts with the facilities. If
pay and supervise any who keeps up with the independent contractors
helpers used and are whole business aspect - negotiate the contracts with the
responsible for the results bookkeeping, mileage, facilities, they would make a
of the helpers' labor. travel expenses, profit. They have a right to
business expenses. hire assistance, the nurses, or
5. Hiring Assistants: An staff nnder them to bring in
employee works for an revenue for profit and loss.
employer who hires, They maintain their own place
supervises, and pays of business.
assistants. An
independent contractor
hires, supervises, and pays
assistants nnder a contract
that requires him/her to
provide materials and
labor and to be responsible
only for the results.
Nurses cannot hire
assistants to do patient
care for them.
6. Continuing The nurse contractors Bates No. 0684-6 Facts: Nurses remain on
Relationshii1: do not work exclusively The nurses wear a badge that Health Force list for
An Employee often through Tochril or at says Health Force on it, they referrals and are in
continues to work for the the same facility month turn in time sheets to Health continued contact with
same employer month after month or year after Force and sign independent Health Force and Health
after month or year after year. Some of them contractor agreements. The Force with the nurses.
year. may work only one shift nurses are being contacted This resembles an
An Independent and then they go away by Health Force. They go employer-employee
Contractor is usually for a while and come through an initial interview relationship. Nurses are
hired to do one job of back. We have no with Health Force. referred for shifts over a
limited or indefinite control over it. Backgronnd information is continued period of time.
duration and has no Tochril enters into investigated by Health Force. Nurses can be referred to
expectation of continuing written contracts with They're not given a choice if multiple shifts and to
work. the nurses. they want to be employees or multiple clients. A new
Tochril does not enter not, only the choice of whether contract is not signed with
6. Continuing into a new contract each they want taxes deducted. The the nurses with each new
Relationshi11: An time a nurse works at a nurses have continuous contact referral.
employee has a continuing facility. However, with Health Force and contact
relationship with an the relationship between Health Force when there are
employer. A continuing Health Force and the any changes in addresses,
relationship many exist nurses is based strictly phone numbers or schedules
where work is performed on a contractual they're going to work. Health
at frequently recurring relationship. We Force also provides workers'
although irregular provide numerous comp and liability insurance.
intervals. opportnnities for nurses They are not providing it for
throughout south Texas themselves. (I do know
to provide services at employers and non-employers
the facilities. The can volnntarily provide
written contract workers' compensation
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confirms they are insurance to whoever they
independent want).
contractors, not
employees. [Comments: MZ is incorrect-
Health Force does not pay for
the nurses' liability insurance.]
Bates No. 0683
From the two nurses there is a
continuing relationship as far as
the time sheets, the contract
agreement that was signed and
the facility's agreement.
7. Set Hours of Work: The workers may work Bates No. 0688 Facts: Nurses are called
An Employee may work shift by shift at their Health Force is instructing the by Health Force with
"on call" or during hours choosing. We don't nurse that if they take the predetermined
and days as set by the assign them to a assignment, to go at a certain time/place/date of where
employer. particular shift or series hour or shift and it's going to worker needs to report to.
A true Independent of shifts - we give them extend to a certain hour and a This work schedule is set
Contractor is the master opportunities to work. certain location. Thus, Health by Health Force clients.
of his or her own time and We have no control Force is setting the time, date This factor indicates
works the days and hours whether they choose to and the facility where they are control or direction
he or she chooses. work a shift, multiple working. The hospitals call because it bars the worker
shifts in a row or Health Force. The hospitals are from being master of
7. Set Hours of Work: several days in a row as the ones in need of the nurses his/her own time. The
An employee has set hours that is their choice and, and Health Force provides that evidence shows that the
or work established by an at times, when they go need to them. medical facilities set the
employer. An to facilities, they hours for the workers.
independent contractor is schedule themselves. Bates No. 0688 The clients tell Health
the master of his or her We don't have Health Force is giving the Force when it needs a
own time. knowledge of it, and nurses instruction to take the worker, what shift the
that's fine because they assignments or shifts and it worker is needed for, and
work for themselves. extends to a certain hour and a the time/place for the
certain location. Health Force worker to report. This
Work shifts vary, but is setting the time, date, and the shows that through
typically 6 A.M. to 6 facility that they are working. delegation to their clients,
P.M. There is no Health Force sets the
"typical" or average Bates No. 0689 hours of work for the
number of hours Health Force can't change the nurses, and also
worked; some nurses instructions provided by the constitutes evidence of an
work once a year, some hospital. If Health Force employment relationship.
work once a week. It changes the instructions from
can be anywhere from the hospital the hospital will
zero to 60 plus. probably go somewhere else to
find someone to work the shift
that is needed Health Force has
a contract with the hospital.
The hospitals call Health Force
and are the ones that need
nurses.
8. Full Time Reguired: The nurses' work Bates No. 0687 Facts: Nurses work 30,
An Employee ordinarily schedule is what they Zerda's interviews with the 40, or even 60 hours a
devotes full-time service choose it to be, which nurses where full-time nurses week and constitutes full
to the employer, or the could be any number of who were taking assignments. time. The evidence shows
employer may have a hours, day or night, and And were working to earn extra that some nurses have full
priority on the employee's at one facility or at money. This makes them an time employment and are
time. many facilities. employee in this relationship. picking up shifts for extra
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A true Independent The doctor, hospital or money. Others are just
Contractor carmot be nursing home will Bates No. 0712 working on referrals
required to devote full- inform us what work is By the restrictions of the hours through Health Force and
time service to one firm available. We then call that they can work for Health can picking up as many as
exclusively. the nurse and let them Force. 60 hours. Shifts are 12
know what work the hours and nurses can
8. Full Time Work: An facility requests. The reject a shift with Health
employee normally works nurses can either choose Force calls but are
full time for an employer. to accept what the expected to work if shift is
An independent contractor facility offers, be late or accepted.
can work when and for even earlier. It's their
whom he or she chooses. choice.
Nurses are worker 30, 40,
and even 60 hours a week
this constitutes full time.
9. Location where If the nurses choose, we Bates No. 0690-l Facts: Nurses are
services 12erformed. may refer them to the Health Force has a contract expected to show up at the
Employment is indicated same client hospital, with the facility to provide the facility for the shift they
if the employer has the doctor or nursing home nurses as needed. While Health have accepted to work.
right to mandate where more than once. We Force is not a hospital, it is an All work is done at the
services are performed. give them the employment agency for these facilities where assigned
Independent opportunity. The nurses to go and work and and all work is done in
Contractors ordinarily location of work is make extra money. I agree the person. Nurses wear a
work where they choose. mandated by location of nurse's can say "no, I'm not badge to identify
The workplace may be the patients and patient going," but this is no different themselves with their
away from the client's care. than what employees can do if name and Health Force
premises. the employer agrees to it. appears on the badge.
9. Work Done on Bates No. 0691
Premises: An employee MZ contends it depends on the
works on the premises of understanding or guidelines
an employer, or works on whether one can be fired in a
a route or at a location traditional employment sense if
designated by an the nurse tells Health Force
employer. he/she is not coming to work
for e.g. a month. MZ believes
Health Force can hire a nurse
as an employee and provide
work hours flexibility to the
nurse, allowing the nurse to
choose what hours they're
going to work.
[Comment: MZ does not
recognize the greater the work
flexibility becomes, the less
"direction and control" there
is.]
Bates No. 0688
Health Force is giving nurses
the instruction to take the
assignments and to go at a
certain hour or shift. It could
extend to a certain hour and a
certain location. Health Force
is in fact setting the time, date,
and the facility that they are
working.
l 0. Order or Sequence Tochril does not set the Facts: Nurses are required
Set: order or sequence of the to follows the order and
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An Employee performs nurse workers' tasks. sequence set by the head
services in the order or Not sure about the nurse or facility. The
sequence set by the doctors and facilities - order or sequence of work
employer. This shows they could. As nurses, is delegated to Health
control by the employer. they have to keep their Force clients and is
A true Independent license. evidence of control and
Contractor is concerned There are certain things direction through
only with the finished they have to comply delegation.
product and sets his or her with under licensure
own order or sequence of laws and I assume the
work. facility nurses and
doctors will do this to
I 0. Order or Seguence comply with the law.
Set: Employee must
perform services in the
order or sequence set by
an employer. This shows
that the employee is
subject to direction and
control. Nurses are not
permitted to follow his/her
own pattern of work but
rather must follow the
established
routines/schedules of the
facilities.
II. Oral or Written The nurses are not Facts: Nurses submit
Reports: required to provide reports to doctor or head
An Employee may be reports or logs to nurse as to patient care
required to submit regular Tochril, the facilities or provided which would
oral or written reports doctors regarding the consist of vitals of patients
about the work in work they do. and med's administered to
progress. patients during shift.
An Independent
Contractor is usually not
required to submit regular
oral or written reports
about the work in
progress.
II. Reports: Employee
submits reports to an
employer. This shows
that the employee must
account to the employer
for his or her actions.
12. Payment by the Hour, We agree to pay the Bates No. 0694 Facts: Nurses are paid by
Week or Month: workers for the work The checks the nurses are the hour and must submit
An Employee is typically performed. It's not in receiving are from Health to Health Force time cards
paid by the employer in the contract. Once work Force and Health Force bank initialed by charge nurse
regular amounts at stated is completed, we accounts. at facilities. Health Force
intervals, such as by the verbally agree to pay pays the nurse the next
hour or week. them for their work [Comments: MZ does not day or the next week
An Independent generally within the understand the money source depending on what the
Contractor is normally following hourly rate issues and how the facilities nurse wants to get paid.
paid by the job either a ranges (depending on pay Health Force for the Deductions are applied if
negotiated flat rate or the facility): nurses' services.] nurse wants deductions
upon submission of a bid. RNs- $32.00-$38.00. taken out of the pay.
LVNs- $22.00-$28.00. Bates No. 0685 Health Force bills the
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12. Payments: CNAs- $10.00-$12.00. Nurses are not given a choice if facilities for those nurses
Employees are paid by the These rates are they want to be employees or referred to the facilities.
hour, week or month. determined through not. They are also given the
Nurses are paid through negotiations between choice of whether they want
Health Force. the facilities and the taxes to be deducted.
nurse contractors based
on their experience, Bates No. 0692
specialty areas, etc. Health Force is paying the
Both are our clients. nurses who are not getting paid
Through this process, directly from the facilities.
we negotiate a Bill Rate
with the facility clients. Bates No. 0694
The nurses can Checks that the nurses are
negotiate the rate receiving are from Health
directly with the facility Force and are not from a
if they choose, at facility like Detar or Citizens.
whatever rate they
choose. The facility
client pays us directly
for the Bill Rate and we
in turn pay the
negotiated contractor
rate to the contracted
nurse.
The nurses are paid
when they choose and
when they bring in their
service record. Normal
practice is to turn in the
completed and signed
service records to verify
the shift was completed.
There is no time or date.
Some hold them for
weeks and some turn
them in immediately.
No taxes are withheld
from the nurses' pay
unless they request it.
All income is reported
on IRS 1099 forms
annually. No
deductions are taken
from the nurses' pay.
The workers are not
eligible for bonuses,
fringe benefits (e.g.
sick, vacation, holiday
or severance pay,
insurance) or pay
advances. They are not
eligible for 40l(k),
PTO, vision, dental,
Aflac.
13. Payment of Business Tochril does not Bates No. 0695 Facts: Health Force pays
& Travel Ex12enses: reimburse the nurses for While the meals and gas to for Worker Comp
An Employee's business any business or travel- travel to the facility is not Insurance and the Nurses
and travel expenses are related expenses. The reimbursed by Health Force liability insurance. Nurses
either paid directly or nurses can and some do and the nurses buy their own do not pay for their own
reimbursed by the carry malpractice uniforms (scrubs), this is no liability insurance or
employer. insurance at their different from expenses insurance if they get hurt
Independent expense. Tochril carries incurred by an employee. Take on the job.
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Contractors normally pay professional myself, I go to work, I pay for
all of their own business malpractice insurance my own gas to get there. I pay
and travel expenses for the for the company for my own meal, and I also
without reimbursement. and its employees, but pay for my own business attire.
not for the staff relief Due to the nature of the nurses'
13. Ex12enses: An nurse workers. The work, they wear the scrubs and
employee's business and nurses claim business pay for their own meals as
travel expenses are paid related expenses as anyone else that's employed
by an employer. This income tax deductions working outside of the home.
shows that the employee is and declare themselves
subject to regulation and as self-employed nurses Bates No. 0696
control. on their federal income MZ recognizes an independent
tax returns. contractor deducts the above
types ofbusiness expenses on
their income tax (Schedule C)
and receives a l 099 and that
this is inconsistent with
employee behavior.
Bates No. 0685
Health Force is providing
workmen's comp insurance and
liability insurance.
Bates No. 0695
Meals and the gas to travel to
the facility are reimbursed by
Health Force. Nurses buy their
own uniforms and scrubs. This
is no different from expenses
incurred by an employee.
Bates No. 0696
Well, when you are getting a
l 099 and you file a Schedule
C, then, yes, you're going to
deduct certain different
expenses.
Bates No. 0697
Zerda advised them of different
procedures and benefits of
being an employee versus
being a contract laborer. Both
nurses stated they would prefer
to be employees. Although,
Zerda is not going to tell them
they have to amend their l 040.
14. Furnishing Tools & Tools and equipment Our company does not furnish Bates No. 0698 Facts: Nurses provide
Egui12ment: that are important to the any tools, equipment and While the nurses have their their own stethoscope,
Employees are furnished work include; materials to the contracted nurse own stethoscopes, scissors, scrubs, shoes, gloves,
all necessary tools, stethoscope, uniforms, workers for doing the work. The maybe blood pressure cuff, if scissors, and blood
materials and equipment medical bags, tablets, doctors, the hospitals, and the they don't take them to the pressure cuffs, however
by their employer. scissors, shoes, tape nursing homes furnish anything facility, the facility can provide the facilities prefer nurses
An Independent measures, pill crushers, patient specific for the duration of those to them. They initially to use their (facility)
Contractor ordinarily blood pressure cuffs, their work stay, but the nurses do purchase equipment in order to equipment for accuracy.
provides all of the tools and other things of that bring in much of their own complete their training and Health Force clients
and equipment necessary nature, personal vehicle, equipment. schooling (e.g. stethoscope, provide the major tools
to complete the job. nursing equipment, blood pressure, etc.). They get and equipment for doing
anything else needed to old and they don't need to buy the work. The clients
14. Tools and Materials: do theirjob and provide them again if they are provide the EKG
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An employee is furnished care for patients. furnished. So, at least some machines, pulse
significant tools, Tochril does not would prefer to use equipment oximeters, beds, linen,
materials, and other provide any of these at the facilities because they are gloves, wheel chairs, Cat
equipment by an things. updated and working correctly. Scan machines, equipped
employer. The nurses have their emergency rooms and
own equipment, but, Bates No. 0700 equipped operating rooms.
there is some equipment The nurses do not carry MRI
needed for the patients machines or X-ray or
that would be held at cardiovascular machines and
the facility, such as IV s, like equipment with them to the
hospital bed, hospital. All the expensive
wheelchair, CAT scan, machinery investments are
some facilities have furnished at the hospital.
EKG machines, bed
linens, gloves. Some Bates No. 0699
nurses bring Pulse-ox Zerda knows from going to
machines. Some nurses different stores that you can
have them, some don't. buy scrubs anywhere and
doesn't understand why nurses
would want scrubs that say
Detar Hospital if they're not
employees of Detar Hospital.
15. Significant The nurses have Bates No. 0702 Facts: Nurses do not have
Investment: financial investment in They do not advertise. They a substantial investment in
An Employee generally their own business do not invest in advertising in facilities or equipment.
has little or no investment related to newspaper ads, TV ads, which They have a relatively
in the business. Instead, Providing nursing are quite expensive. They do small investment in
an Employee is services. Some not offer their services to the stethoscope, scrubs, shoes,
economically dependent examples are; tools, public. They do not have the gloves, scissors, and blood
on the employer. their equipment, their expensive equipment furnished pressure cuffs. By
True Independent cars, travel, gas, by the facilities. contrast facilities have
Contractors usually have housing when they substantial investment in
a substantial financial travel, expenses relating Bates No. 0702 equipment such as EKG
investment in their to professional license, MZ recognizes the Texas Nurse machines, pulse
independent business. continuing education, Practices Act precludes nurses oximeters, beds, linen,
license renewal fees, from advertising nursing gloves, wheel chairs, Cat
15. Investment: An cost of CPR courses, services to the general public. Scan machines, equipped
independent contractor has tuberculosis screening. emergency rooms and
a significant investment in equipped operating rooms.
the facilities he/she uses in
performing services for
someone else.
16. Realize Profit or Loss: The nurses make a Bates No. 0703 Facts: No profit or loss is
An Employee does not profit or suffer a loss The nurses do not invest in suffered by the nurses in
ordinarily realize a profit doing the work that they expensive equipment. If the doing the work and no
or loss in the business. do. For example, the only loss is they do not take an substantial investment in
Rather, Employees are expense of traveling to assignment, there is no profit the business is made by
paid for services rendered. a facility that could be there. They're just working to the nurses. Nurses are
An Independent far away, the gas make extra money to make paid a predetermined
Contractor can either involved. If they have a ends meet and support their amount, which is dictated
realize a profit or suffer a 12-hour shift, and they families. by Health Force's client.
loss depending on the are sent home after two The nurses do not make a
management of expenses hours, that could be a Bates No. 0706 significant financial
and revenues. great loss, i.e. expecting These nurses do not have staff investment in equipment
to work and it does not under them. They do not have used by him/her in
16. Profit or Loss: An occur for some reason revenues coming in to offset rendering his/her services.
independent contractor (e.g. personal issues their expenses. Thus, the All essential equipment is
can make a profit or suffer requiring them to leave expense (e.g. gas expense provided by the facilities.
a loss. early). incurred when an assignment is
cancelled or cut short) would
not be classified as a profit and
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loss.
Bates No. 0706
MZ recognizes a nurse can
deduct an expense (e.g. apt rent
loss when an assignment
cancels) on his Schedule C, but
she does not consider it a loss
because the nurse would have
the tax deduction on Schedule
C to offset the tax.
Bates No. 0707
[MZ Quote - "I don't know
what the Schedule C is based
on all the expenses he's going
to put on there, whether there's
going to be a loss or a gain as
far as what he's going to gain
on the benefits of saving the
tax."]
17. Working For More An independent Bates No. 0711-3 Facts: Nurses make their
Than One Firm At A contracting nurse can From my interviews with the services available to
Time: work for more than one nurses, they had full-time jobs, Health Force, but can also
An Employee ordinarily hospital, different and were working to earn extra be on the list for referrals
works for one employer at employers, different money. This places restrictions with other firms offering
a time and may be agencies on the hours they can work for same type of service.
prohibited from joining a Simultaneously, in Health Force. The 90 day However, nurses cannot
competitor. sequence, or not work "non-compete" clause of the advertise their services.
An Independent at all. The relationship staffing agreement (2.06) also
Contractor often works between Tochril and a restricts the nurses from
for more than one client or contracting nurse is not working for more than one
firm at the same time and permanent or exclusive. facility.
is not subject to a non- The nurses work
competition rule. through multiple [Comments: Nurse contractors
agencies and at more are not parties to the staffing
17. Works For More Than than one facility, or agreement and therefore not
One Person or Firm: An with an employer, bound to any restrictions on
independent contractor performing similar work or employment at
gives his/her services to serv1ces. facilities]
two or more unrelated
persons or firms at the Bates No. 0713
same time. The non-compete clause says
that a facility caunot hire a
nurse to work for them unless
it's been 90 days. Health Force
is excluding nurses from
working at the facility or
becoming their employee and is
penalizing the facility if the
nurses are hired on at the
facility.
Bates No. 0715
Because Health Force is saying
by having that restriction in
there, they are saying that if the
facility is going to hire them,
then they are taking a qualified
person that they could use
elsewhere to work at the
facility. Therefore, Health
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Force would not be making a
profit off of them.
Bates No. 0716
If you consider them to be
contract employees or contract
labor, what gives you the right
to limit them to where they're
going to work full-time and put
that clause into the contract?
18. Making Service They seek our services Bates No. 0688 Facts: The Nurses do not
Available to the Public: and hire us. It could be Health Force contacts the offer their services to the
An Employee does not by working in facilities nurses to see if they want to general public. They can
make his or her services or for other agencies. work. The nurses do not work at a health facility by
available to the public They come in and seek advertise their services. They referral or by being an
except through the our services. I'm not rely on getting calls from employee of that facility.
employer's company. sure how they find out Health Force, which is
An Independent about us. It is mostly advertising for the nurses (see
Contractor may by word of mouth. Factor 3 integration).
advertise, carry business They come to us, we
cards, hand out a shingle verify credentials, we Bates No. 0702
or hold a separate business verify that they are a Nurses do not advertise
license. licensed professional. because they offer their
Once that happens, they services to the public.
18. Offer Services to tell us where they want
General Public: An to work. They tell us if
independent contractor they want to work.
makes his/her services The nurses can carry
available to the general business cards if they
public. choose.
The nurses can
represent themselves to
the public or to others
as being in business to
provide nursing
services, but not sure if
they do. They do work
at multiple agencies.
They have the option to
tell people about their
services to get more
work for their personal
business.
I don't know whether
they do any advertising
in the newspapers or the
Yellow Pages.
There are even
occasions where we
have been offering
opportunities to these
nurses by telephone or
email and, for extended
periods of time, we
wouldn't know if you
ran into them on the
street. They are free
and independent
workers.
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19. Right to Discharge We don't discharge, so Bates No. 0707-8 Facts: Health Force has
Without Liabili!J'.: the nurses are aware Section 2.02 of the facility the right to discharge a
An Employee can be there is no relationship supplemental staffing worker. The right to
discharged at any time whereby we can agreement between the facility discharge is a factor of
without liability on the discharge them; they and Health Force states that the control or direction
employer's part. come and go and work facility can dismiss if they're through the ever-present
If the work meets the as they please. unhappy with the work that threat of dismissal. Health
contract terms, an they're doing. For whatever Force gives their clients
Independent Contractor reason, they can dismiss them. through contract the right
carmot be fired without That's a right to fire. It is an to dismiss a nurse and
liability for breach of agreement between Health request another to replace
contract. Force and the facility whereby the nurse for the shift.
Health Force is delegating the
19. Right to Fire: An right to discharge control over
employee can be fired by to the facility.
an employer. An
independent contractor Bates No. 0710
cannot be fired so long as Health Force can also evaluate
he or she produces a result the nurses and send a report.
that meets the 2.05 says the nurses
specifications of the periodically report to Health
contract. Force. If it is a negative
evaluation, then they will not
be sent to that facility or be
assigned another assignment.
Bates No. 0710
MZ says the nurses she
interviewed were not aware of
any such evaluations and she is
not aware 2.05 has ever been
implemented.
[Comments: the nurse
contractors are not parties to
the staffing agreement and are
not bonnd by them.]
Bates No. 0693
If Health Force is going to hire
a nurse, and they're going to
have the flexibility of the hours
that they work then that
flexibility is given to the nurse
to choose what hours they're
going to work.
Bates No. 0707
Right to fire. If you go back to
your facility supplemental
staffing agreement between the
facility and Health Force. The
facility can dismiss which is
the right to fire.
Bates No. 0709
"And the dismissal of staffing
personnel will not be assigned
to the facility thereafter." That
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is firing. They do not want
them to return. But it's an
agreement between Health
Force and the facility
delegating Health Force is
delegating that control over the
facility with this agreement.
20. Right To Quit If the worker accepts a Bates No. 0710-l Facts: Nurses can
Without Liabili!J'.: shift offered by the The nurses have the right to terminate or quit the work
An Employee may quit hospital or facility, they quit and can take their name off without incurring a
work at any time without are expected to work it, the list by contact Health Force liability by refusing to
liability on the but many times, that and say they no longer want to work the shifts assigned or
Employee's part. cannot or does not work additional shifts or they requesting to be removed
An Independent happen. They have the no longer want to work, to earn from the list. Also, the
Contractor is legally right to accept a shift extra money. contract between Health
responsible for job and cancel it. If the Force and its clients the
completion and, on nurse cancels, the nurse client is prohibited from
quitting, becomes liable worker does not get hiring the nurses referred
for breach of contract. paid for the shift, but to the clients by Health
there are no disciplinary Force within a 90 day
20. Right To Quit: An repercussions. period after the last
employee can quit his/her If a nurse quits in the referral.
job at any time without middle of the job, we
incurring liability. An carmot sue and hold that
independent contractor nurse financially liable.
usually agrees to complete But, as a licensed
a specific job and is individual, they can get
responsible for its in big trouble by the
satisfactory completion, or state if they abandon
is legally obligated to patients. They
make good for failure to necessarily wouldn't
complete it. quit since they were not
hired in the first place,
but they can stop all
communication at any
time, or not even show
up.
D. The TWC Cannot Rely on the Temporary Help Firm Statute
1. The Temporary Help Firm Statute Does Not Presume Employee Status
Section 201.029 of the Texas Labor Code states:
TEMPORARY HELP FIRM. For purposes of this subtitle, a temporary help firm
is the employer of an individual employed by the firm as a temporary employee.
(the "THF Statute"). Sections 201.011(20) and 201.011(21) of the Texas Labor Code defines
"temporary employee" and "temporary help firm" as follows:
(20) "Temporary employee" means an individual employed by a temporary help
firm for the purpose of being assigned to work for the clients of a temporary help
firm.
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20 FACTOR CHART
Deposition Testimony of Worker Witnesses
Sabala, Sifuentes, Chapman, Strahan, and Rojas
Factor Patricia Sabala Salvador Sifuentes Erika Chapman Kay Strahan Rosa Rojas
40 TAC Section 815.134 ExhibitC ExhibitD ExhibitE Exhibit F Exhibit G
1. Instructions: Licensed Vocational Health Force does not She can work for LVNs are Doctors determine the
An Employee receives Nurses ("LVNs") are require a specific other placement subcontractors. services performed by
instructions about when, not committed to schedule. 4 companies (like They work when the LVNs orRNs and
where and how the work accepting Health Force) they want, if they direct their work. 11
is performed. assignments from Health Force does not wherever she wants. 7 want, and where
An Independent Health Force. 1 set the hours they want. 10 Health Force does not
Contractor does the job worked. 5 She can apply at have doctors on
his or her own way with Instructions regarding hospitals not staff. 12
few, if any, instructions as services performed Health Force does not associated with
to the details or methods come from the supervise the work at Health Force. 8
of the work. hospital directly. 2 the hospitals or
facilities. 6 Health Force does not
l. Instructions: An LVN s can say "yes" supervise the LVN s
employee must comply or "no" to a shift or Registered Nurses
with instructions about offered by Health ("RNs") work at
when, where, and how to Force. 3 facilities or
work. Even if no hospitals. 9
instructions are given, the
control factor is present if
the employer has the right
to give instructions.
1
Patricia Sabala Testimony, Tr. pp.43-44, 45.
2
Patricia Sabala Testimony, Tr. pp.48.
3
Patricia Sabala Testimony, Tr. pp.61-62.
4
Salvador Sifuentes Testimony, Tr. p. 79.
5
Salvador Sifuentes Testimony, Tr. p. 79.
6
Salvador Sifuentes Testimony, Tr. p. 80.
7
Erika Chapman Testimony, Tr. pp. 53-54.
8
Erika Chapman Testimony, Tr. p. 54.
9
Erika Chapman Testimony, Tr. pp. 57-58.
10
Kay Strahan Testimony, Tr. p. 69.
11
Rosa Rojas Testimony, Tr. p. 74.
12
Rosa Rojas Testimony, Tr. p. 74.
EXHIBIT B 1251
2. Training: Health Force does Health Force has not Never took any Doesn't recall any Health Force would
not provide training. 13 given any training to training or classes at training provided by provide an orientation
Employees are often RNs. Health Force. 14 Health Force. 15 on some facilities. No
trained by a more other training
experienced provided. 16
Employee or are
required to attend
meetings or take
training courses.
An Independent
Contractor uses his
or her own methods
and thus need not
receive training from
the purchaser of those
services.
2. Training: An
employee is trained to
perform services in a
particular mam1er,
independent
contractors ordinarily
use their own
methods and receive
no training from the
purchasers of their
services.
3. Integration: Never performed any Never provided Never performed Did not spend much
Services of an LVN services or other services at Health services at Health time at the Health
Employee are usually work at Health Force's company Force's office. 19 Force office. Mainly,
merged into the firm's Force's office. 17 office. 18 would stop by to drop
overall operation; the off time sheets or pick
firm's success up a check. 20
depends on those
Employee services.
An Independent
Contractor's services
are usually separate
from the client's
13
Patricia Sabala Testimony, Tr. p. 58.
14
Erika Chapman Testimony, Tr. pp. 39-40.
15
Kay Strahan Testimony, Tr. p. 97.
16
Rosa Rojas Testimony, Tr. pp. 50-51.
17
Patricia Sabala Testimony, Tr. p. 53.
18
Salvador Sifuentes Testimony, Tr. p. 81.
19
Erika Chapman Testimony, Tr. p. 59.
2
°Kay Strahan Testimony, Tr. pp. 63-65.
0848911000006
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EXHIBIT B 1252
business and are not
integrated or merged
into it.
3. Integration: An
employee's services
are integrated into the
business operations
because the services
are important to the
success or
continuation of the
business. This shows
that the employee is
subject to direction
and control.
Integration of
worker's services in
the business operation
of Health Force
generally indicated
that the worker is
subject to control or
direction. The
corporation Health
Force is principally
engaged in a nurse
placement business.
4. Services Rendered Could have a
Personally: coworker take over
An Employee's his shift, if needed. 21
services must be
rendered personally;
Employees do not
hire their own
substitutes or delegate
work to them.
A true Independent
Contractor is able to
assign another to do
the job in his or her
place and need not
perform services
personally.
4. Services Rendered
21
Salvador Sifuentes Testimony, Tr. pp. 46-47. In addition, Health Force's CEO Holly Alonzo testified at the Rule
13 hearing:
5 Q. You said that some do have helpers or assistants?
6 A. They can.
7 Q. Well, do you know if they have them?
8 A. Yes.
9 Q. And how are you aware of that fact?
10 A. The nurses tell us.
February 19, 2009 Holly Alonzo Rule 13 Hearing Testimony, Tr. p. 41, attached as Exhibit F; 2013 Response p. 18.
0848911000006
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EXHIBIT B 1253
Personally: An
employee renders
services personally.
This shows that the
employer is interested
in the methods as well
as the results.
5. Hiring, Could have a
Su11ervising & Paying coworker take over
Hel11ers: his shift, if needed. 22
An Employee may
act as a foreman for
the employer but, if
so, helpers are paid
with the employer's
funds.
Independent
Contractors select,
hire, pay and
supervise any helpers
used and are
responsible for the
results of the helpers'
labor.
5. Hiring Assistants:
An employee works
for an employer who
hires, supervises, and
pays assistants. An
independent
contractor hires,
supervises, and pays
assistants under a
contract that requires
him/her to provide
materials and labor
and to be responsible
only for the results.
Nurses caunot hire
assistants to do
patient care for them.
22
Salvador Sifuentes Testimony, Tr. pp. 46-47. In addition, Health Force's CEO Holly Alonzo testified at the Rue
13 hearing:
5 Q. You said that some do have helpers or assistants?
6 A. They can.
7 Q. Well, do you know if they have them?
8 A. Yes.
9 Q. And how are you aware of that fact?
10 A. The nurses tell us.
February 19,2009 Holly Alonzo Rule 13 Hearing Testimony, Tr. p 41; 2013 Response p. 18.
0848911000006
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EXHIBIT B 1254
6. Continuing While providing Able to work at other LVNs and RNs can Could have worked Can refuse an
Relationshi11: services for Health hospitals other than work for other for other placement assignment from
An Employee often Force, she worked for the ones Health Force companies if they companies or Health Force. 33
continues to work for other companies. 23 offered assignments want. 29 hospitals. 31
the same employer at.27 Can work for other
month after month or Not committed to LVNs and RNs can Declined employment hospitals that do not
year after year. accepting assignments Has worked at places apply for positions at opportunities at have a contract with
An Independent from Health Force. 24 other than those hospitals not hospitals because he Health Force. 34
Contractor is usually assignments offered associated with would lose the
hired to do one job of Could refuse patient by Health Force. 28 Health Force. 30 independence he had
limited or indefinite assignments. 25 at Health Force. 32
duration and has no
expectation of Could say "yes" or
continuing work. "no" to a shift offered
by Health Force. 26
6. Continuing
Relationshi11: An
employee has a
continuing
relationship with an
employer. A
continuing
relationship many
exist where work is
performed at
frequently recurring
although irregular
intervals.
7. Set Hours of Health Force does not Shifts are determined "[I] provide my own Hours for a shift are
Work: require a specific by the facility, not schedule. They predetermined by the
An Employee may schedule. 35 Health Force; Health [Health Force] do not hospital. 39
work "on call" or Force does not set the provide a schedule for
during hours and days Health Force does not LVNs or RNs hours me."3s Can refuse an
as set by the set the hours worked in a day. 37 assignment. 40
employer. worked. 36
23
Patricia Sabala Testimony, Tr. p. 50.
24
Patricia Sabala Testimony, Tr. pp. 43-45.
25
Patricia Sabala Testimony, Tr. p. 61.
26
Patricia Sabala Testimony, Tr. p. 62.
27
Salvador Sifuentes Testimony, Tr. p. 77.
28
Salvador Sifuentes Testimony, Tr. p. 77.
29
Erika Chapman Testimony, Tr. p. 53.
30
Erika Chapman Testimony, Tr. p. 54.
31
Kay Strahan Testimony, Tr. pp. 77-78.
32
Kay Strahan Testimony, Tr. pp. 77-78.
33
Rosa Rojas Testimony, Tr. pp. 37-38.
34
Rosa Rojas Testimony, Tr. pp. 63-64.
35
Salvador Sifuentes Testimony, Tr. p. 79.
36
Salvador Sifuentes Testimony, Tr. p. 79.
0848911000006
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EXHIBIT B 1255
A true Independent LVNs and RNs are in
Contractor is the control of their own
master of his or her schedule. 41
own time and works
the days and hours he
or she chooses.
7. Set Hours of
Work: An employee
has set hours or work
established by an
employer. An
independent
contractor is the
master of his or her
own time.
8. Full Time While providing Able to work at other Can work for other LVNs are Can refuse an
Required: services for Health hospitals other than placement companies subcontractors. They assignment from
An Employee Force, she worked for the ones Health Force (like Health Force) work when they want, Health Force. 51
ordinarily devotes other companies. 42 offered assignments wherever she wants. 47 if they want, and
full-time service to at.45 where they want. 49
the employer, or the Not committed to Can apply at hospitals
employer may have a accepting Has worked at places not associated with Could have worked
priority on the assignments from other than those Health Force. 48 for other placement
employee's time. Health Force. 43 assignments offered companies or
A true Independent by Health Force. 46 hospitals. 50
Contractor carmot be Could say "yes" or
required to devote "no" to a shift offered
full-time service to by Health Force. 44
one firm exclusively.
37
Erika Chapman Testimony, Tr. pp. 55-57.
38
Kay Strahan Testimony, Tr. pp. 38, 43-44.
39
Rosa Rojas Testimony, Tr. pp. 37-38.
40
Rosa Rojas Testimony, Tr. pp. 37-38.
41
Rosa Rojas Testimony, Tr. pp. 64-65.
42
Patricia Sabala Testimony, Tr. p. 50.
43
Patricia Sabala Testimony, Tr. pp. 43-45.
44
Patricia Sabala Testimony, Tr. p. 62.
45
Salvador Sifuentes Testimony, Tr. p. 77.
46
Salvador Sifuentes Testimony, Tr. p. 77.
47
Erika Chapman Testimony, Tr. pp. 53-54.
48
Erika Chapman Testimony, Tr. p. 54.
49
Kay Strahan Testimony, Tr. p. 69.
5
°Kay Strahan Testimony, Tr. pp. 77-78.
51
Rosa Rojas Testimony, Tr. pp. 37-38.
0848911000006
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EXHIBIT B 1256
8. Full Time Work:
An employee
normally works full
time for an employer.
An independent
contractor can work
when and for whom
he or she chooses.
Nurses are worker 30,
40, and even 60 hours
a week this constitutes
full time.
9. Location where Could say "yes" or Has worked at places Health Force would LVNs are Can tell Health Force
services 12erformed. "no" to a shift offered other than those contact LVNs orRNs subcontractors. They Where she is going to
Employment is by Health Force. 52 assignments offered about different work when they want, work.6o
indicated if the by Health Force. 54 assignments. 56 Could if they want, and
employer has the right Never performed any refuse a shift or where they want. 59 Can refuse an
to mandate where LVN services or Never provided assignment. 57 assignment from
serv1ces are other work at Health services at Health Health Force. 61
performed. Force's office. 53 Force's company Never performed
Independent office. 55 services at Health Can work for other
Contractors Force's office. 58 hospitals that do not
ordinarily work where have a contract with
they choose. The Health Force. 62
workplace may be
away from the client's
premises.
9. Work Done on
Premises: An
employee works on
the premises of an
employer, or works on
a route or at a location
designated by an
employer.
52
Patricia Sabala Testimony, Tr. p. 62.
53
Patricia Sabala Testimony, Tr. p. 53.
54
Salvador Sifuentes Testimony, Tr. p. 77.
55
Salvador Sifuentes Testimony, Tr. p. 81.
56
Erika Chapman Testimony, Tr. p. 19.
57
Erika Chapman Testimony, Tr. pp. 29-30.
58
Erika Chapman Testimony, Tr. p. 59.
59
Kay Strahan Testimony, Tr. p. 69.
60
Rosa Rojas Testimony, Tr. pp. 66.
61
Rosa Rojas Testimony, Tr. pp. 37-38.
62
Rosa Rojas Testimony, Tr. pp. 63-64.
0848911000006
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EXHIBIT B 1257
10. Orderor Instructions regarding Health Force does not Health Force does not Health Force does not Doctors at the
Seguence Set: a LVN's work come supervise a RN s' supervise the LVN s direct LVN s how to facilities/hospitals had
An Employee from the hospital and work.64 or RNs at the do their job. 66 the final say on how
performs services in its doctors, not Health facilities. 65 patients are treated. 67
the order or sequence Force. 63
set by the employer.
This shows control by
the employer.
A true Independent
Contractor is
concerned only with
the finished product
and sets his or her
own order or
sequence of work.
10. Order or
Seguence Set:
Employee must
perform services in
the order or sequence
set by an employer.
This shows that the
employee is subject to
direction and control.
Nurses are not
permitted to follow
his/her own pattern of
work but rather must
follow the established
routines/schedules of
the facilities.
11. Oral or Written No requirement that a Only required to Other than time Reports regarding
Reports: weekly or monthly report time and sheets, not required to patient status updates
An Employee may be report was turned into licensing to Health submit any reports to were provided to
required to submit Health Force. 68 Force. 70 Health Force. 71 hospital staff and
regular oral or written doctors, not Health
reports about the work Only time sheets Force. 72
in progress. were turned in. 69
An Independent
Contractor is usually
63
Patricia Sabala Testimony, Tr. pp. 48, 59.
64
Salvador Sifuentes Testimony, Tr. p. 80.
65
Erika Chapman Testimony, Tr. pp. 57-58.
66
Kay Strahan Testimony, Tr. pp. 131-132.
67
Rosa Rojas Testimony, Tr. p. 54.
68
Patricia Sabala Testimony, Tr. p. 58.
69
Patricia Sabala Testimony, Tr. pp. 57-58.
70
Salvador Sifuentes Testimony, Tr. p. 60.
71
Erika Chapman Testimony, Tr. pp. 40-41.
72
Rosa Rojas Testimony, Tr. pp. 54-55.
0848911000006
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EXHIBIT B 1258
not required to submit
regular oral or written
reports about the work
in progress.
ll. Re11orts:
Employee submits
reports to an
employer. This shows
that the employee
must account to the
employer for his or
her actions.
12. Payment by the Hospitals pay Health Hospitals pay Health Hospitals pay Tochril
Hour, Week or Force and Health Force and Health and Tochril pays the
Month: Force pays the RNs. Force pays the LVN s LVN s after taking out
An Employee is Health Force keeps or RNs, after keeping a referral fee. 76
typically paid by the some of the money a fee. 74
employer in regular paid by hospitals. 73
amounts at stated Rate of pay could be
intervals, such as by different based on the
the hour or week. hospital assignment. 75
An Independent
Contractor is
normally paid by the
job either a negotiated
flat rate or upon
submission of a bid.
12. Payments:
Employees are paid
by the hour, week or
month. Nurses are
paid through Health
Force.
13. Payment of Health Force never Registered nurses Deducted business Health Force does not Pays for her own
Business & Travel provided uniforms, utilized by Health expenses on federal pay for CPR and business expenses,
Ex11enses: equipment, Force pay for their tax returns. 80 LVN licenses. 82 including gas and
An Employee's medication, or other own expenses. 78 car. 84
business and travel items that were used Never submitted Provides his own
expenses are either to work as a LVN. 77 He has deducted his business expenses for transportation. Not She has deducted
paid directly or expenses on federal reimbursement form reimbursed for any expenses on her
reimbursed by the tax returns, including Health Force. 81 business expenses by federal tax return,
employer. such items as Health Force. 83 including for mileage,
Independent uniforms, uniforms, and
Contractors normally stethoscopes, cellphone. 85
pay all of their own cellphone, continuing
73
Salvador Sifuentes Testimony, Tr. pp. 74-75.
74
Erika Chapman Testimony, Tr. pp. 67-68.
75
Erika Chapman Testimony, Tr. p. 71.
76
Kay Strahan Testimony, Tr. p. 37.
77
Patricia Sabala Testimony, Tr. p. 54.
78
Salvador Sifuentes Testimony, Tr. pp. 84-85.
0848911000006
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EXHIBIT B 1259
business and travel education classes,
expenses without CPR certification,
reimbursement. license fees, and
mileage. 79
13. Ex11enses: An
employee's business
and travel expenses
are paid by an
employer. This shows
that the employee is
subject to regulation
and control.
14. Furnishing Tools Health Force never Deducted uniform, Purchased own Provides his own Deducted uniform and
& Egui11ment: provided uniforms, cellphone,and equipment, including transportation. Not cellphone on federal
Employees are equipment, stethoscope on federal blood pressure cuff, reimbursed for any tax return. 91
furnished all medication, or other tax returns. Health stethoscope, and fax business expenses by
necessary tools, items that were used Force does not machine. 88 Health Force. 90
materials and to work as a LVN. 86 provide these items. 87
equipment by their Deducted uniform,
employer. stethoscope, and other
An Independent expenses on her
Contractor ordinarily federal tax return. 89
provides all of the
tools and equipment
necessary to complete
the job.
14. Tools and
Materials: An
employee is furnished
significant tools,
materials, and other
equipment by an
employer.
80
Erika Chapman Testimony, Tr. p. 64.
81
Erika Chapman Testimony, Tr. p. 65.
82
Kay Strahan Testimony, Tr. p. 97.
83
Kay Strahan Testimony, Tr. p. 54.
84
Rosa Rojas Testimony, Tr. p. 47.
85
Rosa Rojas Testimony, Tr. p. 72.
79
Salvador Sifuentes Testimony, Tr. pp. 87-88.
86
Patricia Sabala Testimony, Tr. p. 54.
87
Salvador Sifuentes Testimony, Tr. pp. 87-88.
88
Erika Chapman Testimony, Tr. pp. 38-39.
89
Erika Chapman Testimony, Tr. pp. 64.
9
°Kay Strahan Testimony, Tr. p. 54.
91
Rosa Rojas Testimony, Tr. p. 72.
0848911000006
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EXHIBIT B 1260
15. Significant Purchased uniforms, Purchased a Purchased equipment, Invests in business by Pays for her own
Investment: equipment (a stethoscope and including blood buying uniforms, business expenses,
An Employee stethoscope), and cellphone for work as pressure cuff, cellphone, blood including gas and
generally has little or other items that were a registered nurse. 94 stethoscope, and fax pressure cuff, car. 100
no investment in the used to work as a machine. 97 stethoscope, and
business. Instead, an LVN. 92 Provides his own shoes. 98 She has deducted
Employee is transportation. 95 expenses on her
economically She paid for licenses Provides own federal tax return,
dependent on the LVN s are required to He has deducted his transportation to including for mileage,
employer. have. 93 expenses on federal assignments. 99 uniforms, and
True Independent tax returns, including cellphone. 101
Contractors usually such items as
have a substantial uniforms,
financial investment stethoscopes,
in their independent cellphone, continuing
business. education classes,
15. Investment: An CPR certification,
independent license fees, and
contractor has a mileage. 96
significant investment
in the facilities he/she
uses in performing
services for someone
else.
16. Realize Profit or If her shift was He would incur a loss If her shift was Could lose money if Took a loss and end
Loss: cancelled by a for the day if a shift cancelled, she was hospital cancels her up paying back
An Employee does hospital, it could was cancelled. 103 only paid for 2 hours. shift. 105 taxes. 106
not ordinarily realize result in a loss for the She considers this to
a profit or loss in the day. 102 be a loss for the
business. Rather, day.1o4
Employees are paid
for services rendered.
92
Patricia Sabala Testimony, Tr. pp. 39, 54.
93
Patricia Sabala Testimony, Tr. p. 58.
94
Salvador Sifuentes Testimony, Tr. p. 56.
95
Salvador Sifuentes Testimony, Tr. p. 54.
96
Salvador Sifuentes Testimony, Tr. pp. 87-88.
97
Erika Chapman Testimony, Tr. pp. 38-39.
98
Kay Strahan Testimony, Tr. pp. 56-58.
99
Kay Strahan Testimony, Tr. p. 54.
100
Rosa Rojas Testimony, Tr. p. 47.
101
Rosa Rojas Testimony, Tr. p. 72.
102
Patricia Sabala Testimony, Tr. pp. 53-54.
103
Salvador Sifuentes Testimony, Tr. p. 81.
104
Erika Chapman Testimony, Tr. pp. 69-70.
105
Kay Strahan Testimony, Tr. pp. 94-95.
106
Rosa Rojas Testimony, Tr. pp. 32-33.
0848911000006
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EXHIBIT B 1261
An Independent
Contractor can either
realize a profit or
suffer a loss
depending on the
management of
expenses and
revenues.
16. Profit or Loss:
An independent
contractor can make a
profit or suffer a loss.
17. Working For While providing Has worked at places Can work for other LVNs are Can work for other
More Than One Firm services for Health other than those placement companies subcontractors. They hospitals that do not
At A Time: Force, she worked for assignments offered (like Health Force) work when they want, have a contract with
An Employee other companies. 107 by Health Force. 108 wherever she if they want, and Health Force. 114
ordinarily works for wants. 109 where they want. 112
one employer at a
time and may be Can apply at hospitals Could have worked
prohibited from not associated with for other placement
joining a competitor. Health Force. 110 companies or
An Independent hospitals. 113
Contractor often Never worked
works for more than exclusively for Health
one client or firm at Force.m
the same time and is
not subject to a non-
competition rule.
17. Works For More
Than One Person or
Firm: An
independent
contractor gives
his/her services to two
or more unrelated
persons or firms at the
same time.
107
Patricia Sabala Testimony, Tr. p. 50.
108
Salvador Sifuentes Testimony, Tr. p. 77.
109
Erika Chapman Testimony, Tr. p. 53-54.
110
Erika Chapman Testimony, Tr. p. 54.
111
Erika Chapman Testimony, Tr. p. 67.
112
Kay Strahan Testimony, Tr. p. 69.
113
Kay Strahan Testimony, Tr. pp. 77-78.
114
Rosa Rojas Testimony, Tr. pp. 63-64.
0848911000006
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EXHIBIT B 1262
18. Making Service He could spend his Does not spend No advertising
Available to the own money on money on advertising, budget. He will
Public: advertising, but but that is her sometimes buy gifts
An Employee does chooses not to. 115 decision. 116 for coworkers as a
not make his or her form of
services available to advertising. 117
the public except
through the
employer's company.
An Independent
Contractor may
advertise, carry
business cards, hand
out a shingle or hold a
separate business
license.
18. Offer Services to
General Public: An
independent
contractor makes
his/her services
available to the
general public or
more unrelated
persons or firms at the
same time.
19. Right to
Discharge Without
Liability: ill.
An Employee can be
discharged at any time
without liability on
the employer's part.
If the work meets the
contract terms, an
Independent
Contractor carmot be
fired without liability
for breach of contract.
19. Right to Fire: An
employee can be fired
by an employer. An
115
Salvador Sifuentes Testimony, Tr. p. 85.
116
Erika Chapman Testimony, Tr. p. 76.
117
Kay Strahan Testimony, Tr. pp. 40-41.
118
At the Rule 13 hearing, Health Force's CEO Holly Alonzo testified:
13 Q. If you were to discharge a nurse in the middle of the job, could that nurse
14 sue your company and hold you financially liable?
15 A. We don't discharge, so, they are aware that there is no relationship; just
16 come and go, work as you please.
February 19, 2009 Holly Alonzo Rule 13 Hearing Testimony, Tr. p. 39, attached as Exhibit F; 2013 Response p. 27.
0848911000006
375 - 1704437vl
EXHIBIT B 1263
independent
contractor cannot be
fired so long as he or
she produces a result
that meets the
specifications of the
contract.
20. Right To Quit Once an assignment is
Without Liabili!J'.: 119 accepted, a LVN or
An Employee may RN is expected to
quit work at any time perform. 120
without liability on
the Employee's part.
An Independent
Contractor is legally
responsible for job
completion and, on
quitting, becomes
liable for breach of
contract.
20. Right To Quit:
An employee can quit
his/her job at any time
without incurring
liability. An
independent
contractor usually
agrees to complete a
specific job and is
responsible for its
satisfactory
completion, or is
legally obligated to
make good for failure
to complete it.
119
At the Rule 13 hearing, Health Force's CEO Holly Alonzo testified:
25 Q. Ifthe worker accepts a shift as offered by the hospital, is that worker
1 expected to work that shift?
2 A. They're expected, but, that, at many times, cannot happen, or does not happen.
3 They have the right to accept a shift and cancel it.
4 Q. What happens if they do cancel?
5 A. They don't get paid, obviously, for the shift, but, there's no repercussions
6 as far as discipline.
***
9 Q. If a nurse quits in the middle of the job, can your company sue that nurse and
10 hold that nurse financially liable?
11 A. No. But, I mean, as a licensed individual, they can get in big trouble; it's
12 abandonment of patients. But, you know, that's through the state.
February 19, 2009 Holly Alonzo Rule 13 Hearing Testimony, Tr. pp. 37-39, attached as Exhibit F; 2013 Response
p. 28.
120
Rosa Rojas Testimony, Tr. p. 38.
0848911000006
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EXHIBIT B 1264
0848911000006
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EXHIBIT B 1265
DC BK15252 PG1272
Filed in The District Court
of Travis County, Texas
CAUSE NO. D-1-GN-09-001957
TOCHRIL, INC., IN THE DISTRICT COURT
Plaintiff,
v. 53rd JUDICIAL DISTRICT
TEXAS WORKFORCE
COMMISSION,
TRAVIS COUNTY, TEXAS
Defendants.
ORDERS ON THE TEXAS WORKFORCE COMMISSION'S OBJECTIONS TO
PLAINTIFF'S SUMMARY JUDGMENT EVIDENCE
After considering the Texas Workforce Commission's (TWC) objections to
Plaintiffs summary-judgment evidence, the Court orders as follows:
I. OBJECTIONS TO PAGES 13-28 OF PLAINTIFF'S RESPONSE TO
MOTION FOR SUMMARY JUDGMENT.
A. Statements attributed to Alonzo and Pappillion do not reference summary
judgment evidence.
The TWC object to Plaintiffs attempt to introduce evidence in its response to the
TWC motion for summary judgment that is not supported by references to admissible
summary judgment evidence. No statement by Alonzo or Pappillion include citations to
specific supporting evidence.
A party cannot rely on factual statements contained in its own motion for summary
judgment as proof. 1 A party may not use general citations to support a summary judgment
1
Hidalgo v. Surety S&L Ass 'n, 462 S.W.2d 540, 545 (Tex. 1971 ).
/~·--
.. :.-...
j_ :.i\ '.)
j
I
_/.
1505
DC BK15252 PG1273
motion. 2 When presenting summary-judgment proof, a party must specifically identify the
supporting proof that it wants the court to consider; generally referencing the documents
does not relieve the party of pointing out to the court where in the documents the evidence
can be found. 3 Courts must not consider summary judgment evidence that is offered
without guidance as to where specific support can be found. 4 For summary judgment
evidence to be considered, the motion should at least have a substantial number of citations
to that evidence. 5
The Alonzo and Pappillion columns do not include any citations to evidence
whatsoever. Because the statements contained in those columns do not contain citations to
evidence as required, the TWC objects to and move to strike those columns from Plaintiffs
response to the TWC's motion for summary judgment.
ORDER:_L
Sustained Overruled- - -
B. Alonzo and Pappillion have not provided proper witness statements.
The TWC objects to the Alonzo and Pappillion columns on the grounds that the
statements contained therein do not qualify as an affidavit or an unsworn declaration and
thus are incompetent summary-judgment evidence. The statements attributed to Alonzo
2
Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 81 (Tex. 1989).
3
Arredondo v. Rodriguez, 198 S.W.3d 236,238-39 (Tex. App.-San Antonio 2006, no pet.).
4
Guthrie v. Suiter, 934 S.W.2d 820, 826 (Tex. App.-Houston [1st Dist.] 1996, no pet.).
5
Barraza v. Eureka Co., 25 S.W.3d 225, 229-30 (Tex. App.-EI Paso 2000, pet. denied)
2
1506
DC BK15252 PG1274
and Pappillion do not comply with Texas Government Code section 312.011(1), which
defines an affidavit as "a statement in writing of a fact or facts signed by the party making
it, sworn to before an officer authorized to administer oaths, and officially certified to by
the officer under his seal of office. " 6 The statements also fails as an unsworn declaration
because it does not comply with Texas Civil Practice & Remedies Code section 132.001
because none are made under penalty of perjury.
Because the Alonzo and Pappillion columns are a series of unsworn statements, they
are not competent summary-judgment proof. 7 Because the statements are not competent
summary-judgment proof, the TWC objects to those statements and moves to strike them.
ORDER:_j
Sustained Overruled- - -
C. Objections to summary of testimony under Tex. R. Evid. 1006
The TWC further objects to Plaintiff's use of summaries instead of specific citations
to summary judgment evidence. On page 13, footnote 30, Plaintiff explains that, pursuant
to Tex. R. Evid. 1006, it is not providing citations to summary judgment evidence from a
hearing on its administrative appeal before the TWC because the transcript is too
voluminous. Instead, Plaintiff summarizes Alonzo's and Pappillion's testimony from that
hearing and presents that summary in the chart on pages 13-28.
6
Mansions in the Forest, L.P. v. Montgomery Cnty., 365 S.W.3d 314,316-17 (Tex. 2012).
7
Jd; Perkins v. Crittenden, 462 S.W.2d 565, 568 (Tex. 1970).
3
1507
DC BK15252 PG1275
Rule 1006 applies to documents, not testimony. 8
ORDER: I
Sustained~ Overruled- - -
Also, the evidence Plaintiff attempts to summarize 1s testimony Alonzo and
Pappillion provided under oath. Any "summary" of that testimony is hearsay. Hearsay
statements are not competent summary-judgment evidence. 9
ORDER:
Sustained- - - Overruled- - -
In addition, allowing Plaintiff to take advantage of Rule 1006 in this fashion would
undermine long-standing rules requiring parties to specifically cite summary judgment
evidence. When presenting summary-judgment proof, a party must specifically identify the
supporting proof that it wants the court to consider. 10 Summaries do not excuse Plaintiff of
its obligation to specifically identify evidence that supports its arguments.
ORDER:
Sustained _L Overruled- - -
8
United States v. Winn, 948 F .2d 145, 158 (5th Cir. 1991) (Summary of purely testimonial evidence is not within
purview of rule which provides that contents of voluminous writings, may be presented in form of chart, summary
or calculation.)
9
Kerlin v. Arias, 274 S.W.3d 666, 668 (Tex. 2008); Southland Corp. v. Lewis, 940 S.W.2d 83, 85 (Tex. 1997); Fid
& Cas. Co. v. Burts Bros., 744 S.W.2d 219, 224 (Tex. App.-Houston [1st Dist.] 1987, writ denied).
10
Arredondo v. Rodriguez, 198 S.W.3d 236, 238-39 (Tex. App.-San Antonio 2006, no pet.).
1508
DC BK15252 PG1276
Finally, even if Rule 1006 applied to transcripts of testimony, to take advantage of
Rule 1006, Plaintiff must prove that records are (1) voluminous; (2) have been made
available to the opponent for inspection; and (3) are admissible. II Plaintiff has established
none of these elements. Thus it cannot rely on Rule 1006, even if that rule applied to
testimony offered as summary judgment evidence.
ORDER:
Sustained / Overruled- - -
/
~
f'o
(} l'}oi,.J
lL
~?
D. Alonzo and Pappillion have not demonstrated that they ave personal J' \' \
knowledge of the relevant facts. fl"ei?J d
v
The statements by Alonzo and Pappillion fail to establis at the facts related to the ~a-~
providers' work are within Alonzo's and Pappillion' ersonal knowledge. A witnesses' &t ``o(
status cannot establish personal knowled . 2
Neither Alonzo nor Pappillion have ( J\) ."~1'1
\,.,•
established that they have any perso knowledge of the provider's working condition. 13 ~? -of
\~' (/jt
The TWC objects to s ements made by Alonzo and Pappillion on the ground that ovj e.-``~
the testimony is not b ed on personal knowledge. Testimony is not competent summary- ~0 y
Y"vJV
nee unless evidence shows that it is based on the witness's personal G
11
Duncan Dev., Inc. v. Haney, 634 S.W.2d 811, 812-13 (Tex. 1982)
@
12
Spradlin v. State, 100 S.W.3d 372,381, (Tex.App.-Houston [1st Dist.] 2002, no pet.).
13
Tex. R. Civ. P. 166a.
14
Tex. R. Civ. P. 166a(f); Tex. R. Evid. 602; Kerlin v. Arias, 274 S.W.3d 666,668 (Tex. 2008); Ryland Grp., Inc. v.
Hood, 924 S.W.2d 120, 122 (Tex. 1996); Garner v. Long, 106 S.W.3d 260,267 (Tex. App.-Fort Worth 2003, no
pet.); Geiselman v. Cramer Fin. Grp., Inc., 965 S.W.2d 532, 537 (Tex. App.-Houston [14th Dist.] 1997, no writ).
1509
DC BK15252 PG1277
II. OBJECTIONS TO DECLARATION OF MICHAEL SEALE
Exhibit A to Plaintiffs response to the TWC's motion for summary judgment is an
affidavit of Plaintiffs counsel, Michael Seale. It does not present competent summary
judgment evidence for the following reasons.
A. The Court should strike the Seale affidavit because a party's attorney cannot
act as a witness regarding disputed factual matters.
The TWC objects to the Seale affidavit on the grounds that the testimony of
Plaintiffs attorney is not proper summary-judgment evidence. A person who is an
attorney for one of the parties cannot act as a witness about disputed factual matters. 64 In
paragraph 3 of Seale's declaration, he makes statements regarding an Internal Revenue
Service audit of Plaintiff. In paragraph 4 of the Seale declaration, he makes statements
regarding a Department of Labor investigation of Plaintiff.
Based on those paragraphs, Plaintiff argues that there is a fact issue as to whether
the TWC properly classified the providers as Plaintiffs employees. Because Seale's
statements are not competent summary-judgment evidence, the Court should strike them.
ORDER:L
sustained
B.
~Xicroverruled a.~ -1-o 861 S.W.2d 869, 870 (Tex. 1993).
1510
DC BK15252 PG1278
probative value in this case. To be admissible, evidence must be relevant. 65 Because the
evidence is not competent summary-judgment evidence, the Court should strike it.
ORDER: /
Sustained- - - Overruled- - -
C. The Seale affidavit contains hearsay.
The TWC objects to paragraphs 3 and 4 of the Seale affidavit on the grounds that
they contain hearsay. Those paragraphs contain detailed summaries of audits by the IRS
and DOL that are not supported by admissible evidence. Hearsay statements are not
competent summary-judgment evidence. 66
Because hearsay statements are not competent summary-judgment evidence, the
::::~uld/strike
the:rp.
Sustained Overruled- - -
D. Exhibit A(l) to the Seale affidavit is not properly authenticated.
The TWC objects to Exhibit A(l) to the Seale affidavit on the ground that it has not
been properly authenticated. Seale's affidavit does not contain the proper predicate for
65
Tex. R. Evid. 402; see E.!. duPont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 556 (Tex. 1995).
66
Kerlin v. Arias, 274 S.W.3d 666, 668 (Tex. 2008) (affidavits); Southland Corp. v. Lewis, 940 S.W.2d 83, 85 (Tex.
1997) (same); Fid & Cas. Co. v. Burts Bros., 744 S.W.2d 219, 224 (Tex. App.-Houston [1st Dist.] 1987, writ
denied) (same).
1511
DC BK15252 PG1279
admissibility and the evidence was filed without an affidavit verifying its authenticity.
Evidence that is not properly authenticated is not competent summary-judgment
evidence. 67 Because the evidence is not competent summary-judgment evidence, the Court
should strike it.
ORDER:
Sustained- - -
III. OBJECTIONS TO EXHffiiT E
Plaintiff attached 20 declarations as Exhibit E to its response to the TWC's motion
for summary judgment. The declarations are identical in every respect, save for
handwritten portions at the beginning and end of the declarations. The TWC objects to
paragraphs in those declarations as follows
A. The declarations contain legal conclusions.
The TWC objects to this paragraph on the grounds that it is a legal conclusion.
Witnesses must state facts and cannot merely recite legal conclusions. 68 The TWC
objects to the following paragraphs on that basis
67
Blanche v. First Nationwide Mortg. Corp., 74 S.W.3d 444,451-52 (Tex. App.-Dallas 2002, no pet.); Banowsky
v. State Farm Mut. Auto. Ins. Co., 876 S.W.2d 509, 513 (Tex. App.-Amarillo 1994, no writ); see, e.g., Seidner v.
Citibank (S.D.) NA., 201 S.W.3d 332, 334-35 (Tex. App.-Houston [14th Dist.] 2006, pet. denied) (business-record
affidavit must meet requirements ofTex. R. Evid. 902(10)); Cottrell v. Carrillon Assocs., Ltd., 646 S.W.2d 491, 494
(Tex. App.-Houston [1st Dist.] 1982, writ refd n.r.e.) (affidavit did not lay proper predicate required by Business
Records Act).
68
Brownlee v. Brownlee, 665 S.W.2d Ill, 112 (Tex. 1984). 801 Nolana, Inc. v. RTC Mortg. Trust, 944 S.W.2d 751,
754 (Tex.App-Corpus Christi, 1997, writ denied.). McDuffv. Chambers, 895 S.W.2d 492, 500 (Tex. App.-Waco
1995, writ denied).
1512
DC BK15252 PG1280
5. I am a self-employed business person and an
independent contractor.
ORDER:_/
Sustained Overruled.___
7. I am not an employee of Health Force.
ORDER:
Overruled- - -
10. Under the terms of the Independent Contractor
Agreement I signed with Health Force, if either party
seeks to terminate the contract, it must provide
~:::~_/vane:::~: notice or be liable for damages.
11. My contractual relationship with Health Force
recognizes that I may perform independent contractor
services for more than one company at a time and I am
not prevented from doing so.
ORDER: /
Sustained_£ Overruled._ __
1513
DC BK15252 PG1281
18. Health Force does not have the right to control the
details of or the manner in which I perform my services.
Health Force cannot delegate control over the details of
or the manner in which I perform my services.
ORDER:
Sustained /
21.
Overruled- - -
Health Force does not require me to personally perform
my services. I can hire additional or substitute persons
to perform services for Health Force's clients or assist
me in providing the services.
::~n:dL Overruled___
22. Health Force reports payments made to me on a federal
tax Form I 099-MISC. Because I am not an employee,
Health Force does not deduct Social Security, Medicare
or withhold any taxes from the payments made to me. I
am responsible for paying my all taxes. I am responsible
for providing my own liability, auto and health
insurance. I am not able to submit a claim for
unemployment benefits against Health Force because I
am not employed by Health Force.
ORDER:
Overruled- - -
/0
1514
DC BK15252 PG1282
23. I am not eligible for employee benefits provided by
Health Force to its employees, such as bonuses, paid
vacation, or sick pay.
ORDER:
Sustained _L_ , ~ \
..e..J(fOverruled_____!__[ nc- : 'f \1:> \c. IJ f(l" « H ~ CJ 0
lz\\J_- cHl
t
J
25. Health Force reported no wages for me because I am not ()() }- a.£.-hJfl,\J)'
an employee and did not earn wages. {"G Cc ', Vc::... J, / «
ORDER:L b t_ )'\ 'fz:, I
Sustained Overruled- - -
B. The Declarations contain factual conclusions.
The TWC objects to statements made in the Exhibit E declarations on the ground
that they contain factual conclusions. A factual conclusion without supporting facts is not
competent summary-judgment evidence. 69 Because these statements are not competent
summary-judgment evidence, the Court should strike them.
6. I work for myself and consider Health Force to be my
agent and marketing tool because Health Force brings
me work opportunities without any effort on my part.
ORDER:L
Sustained Overruled" - - -
69
See Ryland Grp., Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (affidavits); Hovorka v. Cmty. Health Sys., Inc.,
262 S.W.3d 503,511 (Tex. App.--El Paso 2008, no pet.) (deposition testimony); see, e.g., Haynes v. City of
Beaumont, 35 S.W.3d 166, 178 (Tex. App.-Texarkana 2000, no pet.) (affidavit that plaintiff was fired because of
unacceptable behavior was factual conclusion and incompetent as summary-judgment evidence); Rizkallah v.
Conner, 952 S.W.2d 580,587-88 (Tex. App.-Houston [1st Dist.] 1997, no writ) (affidavit that defendant caused
problem with plaintiff's car by steam cleaning engine was factual conclusion and incompetent as summary-
judgment evidence).
II
1515
DC BK15252 PG1283
8 I am responsible for my own profits and losses.
ORDER: (' I\ II , l{ I
.r '"'t... :f (IV'l">: ~ ~ ""c:. , (\. '> c..'
~ \-r s. 0 • . I
Sustained Overruled v/ ; ~ fl"~ .. Y\ ... h-/~Ac_ )'lit"> ~orN.- C{,t, J,
b c. md uc.J- +-o C(f-l..-c..c....~- i: nc.o ~ flo+
10. I did not agree to a set t~e period for providing my :pro``' J-
services to Health Force's clients. ~.
ORDER:
Sustained- - - Overruled / 0£j
11. I am allowed to perform services as an independent
contractor for companies that are not clients of Health
Force. I am not required to perform services for clients
ORDER: +o
a.~
I /i~J~!'t\J~.rt rOverruled
L
of Heath Force on a full-time basis.
Sustaine~ L a~ h.<- f'"v- \ ~ t:
e6'"f\-\l ctc:. 't1 r
14. Health Force does not set or require that I work a
particular schedule for performing my services.
ORDER:
Sustained- - - Overruled _L
17. Health Force does not supervise my performances of
services. /
ORDER:
Sustained- - - Overruled___JL_
IZ--
1516
DC BK15252 PG1284
18. Health Force does not have the right to control the
details of or the manner in which I perform my services.
Health Force cannot delegate control over the details of
or the manner in which I perform my services.
ORDER:
Sustained I Overruled- - -
21. Health Force does not require me to personally perform
my services. I can hire additional or substitute persons
to perform services for Health Force's clients or assist
me in providing the services.
ORDER:
Sustained I Overruled I
1517
DC BK15240 PG794
Filed in The D!st;ict Court
of Travis County, Texas
AUG 2 6 2015 0-
CAUSE NO. D-1-GN-09-001957 At__}_///{ ~(I
Veiva L. Price, District Clerk
TOCHRIL, INC., IN THE DISTRICT COURT
Plaintiff,
v. 53rct JUDICIAL DISTRICT
TEXAS WORKFORCE
COMMISSION,
TRAVIS COUNTY, TEXAS
Defendants.
ORDER GRANTING TEXAS WORKFORCE COMMISSION'S
MOTION FOR SUMMARY JUDGMENT
On August 20, 2015, the Court considered the Texas Workforce Commission's
(TWC) Motion for Summary Judgment. After considering the summary judgment
evidence, arguments presented, the pleadings, the response, the reply, the affidavits, the
objections and other evidence on file, the Court GRANTS the TWC's motion for summary
judgment.
IT IS THEREFORE, ORDERED, ADJUDGED AND DECREED that the
TWC's Motion for Summary Judgment is GRANTED; that Plaintifftakes nothing on any
claim against the TWC; and that Plaintiff's case is dismissed, in its entirety, with prejudice.
All costs shall be borne by the party incurring same. This is a final judgment disposing of
all claims and all parties. All other relief not herein granted is denie
SIGNED this day, A., z~ , vn ...:;;.-~;;:,1``=---J'-+-_ ____,r---
2_o_Is_.
111111111111111111111111111111111111111111111111111 \Ill
004186315
1518
§ 815.134. Employment Status: Employee or Independent..., 40 TX ADC § 815.134
KeyCite Yellow Flag - Negative Treatment
Proposed Regulation
Texas Administrative Code
Title 40. Social Services and Assistance
Part 20. Texas Workforce Commission
Chapter 815. Unemployment Insurance
Subchapter C. Tax Provisions
40 TAC § 815.134
Tex. Admin. Code tit. 40, § 815.134
§ 815.134. Employment Status: Employee or Independent Contractor
Currentness
Subject to specific inclusions and exceptions to employment enumerated in Chapter 201 of the Act, the Commission shall use
the guidelines referenced in § 821.5 of this title as the official guidelines for use in determining employment status.
Credits
Source: The provisions of this § 815.134 adopted to be effective February 19, 2007, 32 TexReg 628.
Current through 40 Tex.Reg. No. 9012, dated December 11, 2015, as effective on or before December 18, 2015
40 TAC § 815.134, 40 TX ADC § 815.134
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 821.5. Employment Status: Employee or Independent Contractor, 40 TX ADC § 821.5
KeyCite Yellow Flag - Negative Treatment
Proposed Regulation
Texas Administrative Code
Title 40. Social Services and Assistance
Part 20. Texas Workforce Commission
Chapter 821. Texas Payday Rules
Subchapter A. General Provisions
40 TAC § 821.5
Tex. Admin. Code tit. 40, § 821.5
§ 821.5. Employment Status: Employee or Independent Contractor
Currentness
The Commission adopts the following form, Form C-8, as its official guideline for use in determining employment status.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 821.5. Employment Status: Employee or Independent Contractor, 40 TX ADC § 821.5
Credits
Source: The provisions of this § 821.5 adopted to be effective June 1, 1998, 23 TexReg 5732; amended to be effective March
13, 2007, 32 TexReg 1328.
Current through 40 Tex.Reg. No. 9012, dated December 11, 2015, as effective on or before December 18, 2015
40 TAC § 821.5, 40 TX ADC § 821.5
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Rule 166a. Summary Judgment, TX R RCP Rule 166a
Vernon's Texas Rules Annotated
Texas Rules of Civil Procedure
Part II. Rules of Practice in District and County Courts
Section 8. Pre-Trial Procedure (Refs & Annos)
TX Rules of Civil Procedure, Rule 166a
Rule 166a. Summary Judgment
Currentness
(a) For Claimant. A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory judgment
may, at any time after the adverse party has appeared or answered, move with or without supporting affidavits for a summary
judgment in his favor upon all or any part thereof. A summary judgment, interlocutory in character, may be rendered on the
issue of liability alone although there is a genuine issue as to amount of damages.
(b) For Defending Party. A party against whom a claim, counterclaim, or cross-claim is asserted or a declaratory judgment
is sought may, at any time, move with or without supporting affidavits for a summary judgment in his favor as to all or any
part thereof.
(c) Motion and Proceedings Thereon. The motion for summary judgment shall state the specific grounds therefor. Except
on leave of court, with notice to opposing counsel, the motion and any supporting affidavits shall be filed and served at least
twenty-one days before the time specified for hearing. Except on leave of court, the adverse party, not later than seven days
prior to the day of hearing may file and serve opposing affidavits or other written response. No oral testimony shall be received
at the hearing. The judgment sought shall be rendered forthwith if (i) the deposition transcripts, interrogatory answers, and other
discovery responses referenced or set forth in the motion or response, and (ii) the pleadings, admissions, affidavits, stipulations
of the parties, and authenticated or certified public records, if any, on file at the time of the hearing, or filed thereafter and
before judgment with permission of the court, show that, except as to the amount of damages, there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law on the issues expressly set out in the motion or in an
answer or any other response. Issues not expressly presented to the trial court by written motion, answer or other response shall
not be considered on appeal as grounds for reversal. A summary judgment may be based on uncontroverted testimonial evidence
of an interested witness, or of an expert witness as to subject matter concerning which the trier of fact must be guided solely by
the opinion testimony of experts, if the evidence is clear, positive and direct, otherwise credible and free from contradictions
and inconsistencies, and could have been readily controverted.
(d) Appendices, References and Other Use of Discovery Not Otherwise on File. Discovery products not on file with the
clerk may be used as summary judgment evidence if copies of the material, appendices containing the evidence, or a notice
containing specific references to the discovery or specific references to other instruments, are filed and served on all parties
together with a statement of intent to use the specified discovery as summary judgment proofs: (i) at least twenty-one days
before the hearing if such proofs are to be used to support the summary judgment; or (ii) at least seven days before the hearing
if such proofs are to be used to oppose the summary judgment.
(e) Case not Fully Adjudicated on Motion. If summary judgment is not rendered upon the whole case or for all the relief
asked and a trial is necessary, the judge may at the hearing examine the pleadings and the evidence on file, interrogate counsel,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Rule 166a. Summary Judgment, TX R RCP Rule 166a
ascertain what material fact issues exist and make an order specifying the facts that are established as a matter of law, and
directing such further proceedings in the action as are just.
(f) Form of Affidavits; Further Testimony. Supporting and opposing affidavits shall be made on personal knowledge, shall
set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the
matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto
or served therewith. The court may permit affidavits to be supplemented or opposed by depositions or by further affidavits.
Defects in the form of affidavits or attachments will not be grounds for reversal unless specifically pointed out by objection by
an opposing party with opportunity, but refusal, to amend.
(g) When Affidavits Are Unavailable. Should it appear from the affidavits of a party opposing the motion that he cannot for
reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment
or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make
such other order as is just.
(h) Affidavits Made in Bad Faith. Should it appear to the satisfaction of the court at any time that any of the affidavits
presented pursuant to this rule are presented in bad faith or solely for the purpose of delay, the court shall forthwith order the
party employing them to pay to the other party the amount of the reasonable expenses which the filing of the affidavits caused
him to incur, including reasonable attorney's fees, and any offending party or attorney may be adjudged guilty of contempt.
(i) No-Evidence Motion. After adequate time for discovery, a party without presenting summary judgment evidence may move
for summary judgment on the ground that there is no evidence of one or more essential elements of a claim or defense on which
an adverse party would have the burden of proof at trial. The motion must state the elements as to which there is no evidence. The
court must grant the motion unless the respondent produces summary judgment evidence raising a genuine issue of material fact.
Credits
Oct. 12, 1949, eff. March 1, 1950. Amended by orders of Oct. 1, 1951, eff. March 1, 1952; July 20, 1966, eff. Jan. 1, 1967; July
21, 1970, eff. Jan. 1, 1971; July 11, 1977, eff. Jan. 1, 1978; June 10, 1980, eff. Jan. 1, 1981; Dec. 5, 1983, eff. April 1, 1984;
July 15, 1987, eff. Jan. 1, 1988; April 24, 1990, eff. Sept. 1, 1990; Aug. 15, 1997, eff. Sept. 1, 1997.
Notes of Decisions (8188)
Vernon's Ann. Texas Rules Civ. Proc., Rule 166a, TX R RCP Rule 166a
Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through
September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration
are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current
with rules verified through June 1, 2015.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Rule 1006. Summaries to Prove Content, TX R EVID Rule 1006
Vernon's Texas Rules Annotated
Texas Rules of Evidence (Refs & Annos)
Article X. Contents of Writings, Recordings, and Photographs (Refs & Annos)
TX Rules of Evidence, Rule 1006
Rule 1006. Summaries to Prove Content
Currentness
The proponent may use a summary, chart, or calculation to prove the content of voluminous writings, recordings, or photographs
that cannot be conveniently examined in court. The proponent must make the originals or duplicates available for examination
or copying, or both, by other parties at a reasonable time and place. And the court may order the proponent to produce them
in court.
Credits
Eff. March 1, 1998. Amended by orders of Supreme Court March 10, 2015 and Court of Criminal Appeals March 12, 2015,
eff. April 1, 2015.
Notes of Decisions (16)
Rules of Evid., Rule 1006, TX R EVID Rule 1006
Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through
September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration
are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current
with rules verified through June 1, 2015.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 639.3 Definitions., 20 C.F.R. § 639.3
Code of Federal Regulations
Title 20. Employees' Benefits
Chapter V. Employment and Training Administration, Department of Labor
Part 639. Worker Adjustment and Retraining Notification (Refs & Annos)
20 C.F.R. § 639.3
§ 639.3 Definitions.
Currentness
(a) Employer.
(1) The term “employer” means any business enterprise that employs—
(i) 100 or more employees, excluding part-time employees; or
(ii) 100 or more employees, including part-time employees, who in the aggregate work at least 4,000 hours per week,
exclusive of hours of overtime.
Workers on temporary layoff or on leave who have a reasonable expectation of recall are counted as employees. An
employee has a “reasonable expectation of recall” when he/she understands, through notification or through industry
practice, that his/her employment with the employer has been temporarily interrupted and that he/she will be recalled to
the same or to a similar job. The term “employer” includes non-profit organizations of the requisite size. Regular Federal,
State, local and federally recognized Indian tribal governments are not covered. However, the term “employer” includes
public and quasi-public entities which engage in business (i.e., take part in a commercial or industrial enterprise, supply a
service or good on a mercantile basis, or provide independent management of public assets, raising revenue and making
desired investments), and which are separately organized from the regular government, which have their own governing
bodies and which have independent authority to manage their personnel and assets.
(2) Under existing legal rules, independent contractors and subsidiaries which are wholly or partially owned by a parent
company are treated as separate employers or as a part of the parent or contracting company depending upon the degree
of their independence from the parent. Some of the factors to be considered in making this determination are (i) common
ownership, (ii) common directors and/or officers, (iii) de facto exercise of control, (iv) unity of personnel policies
emanating from a common source, and (v) the dependency of operations.
(3) Workers, other than part-time workers, who are exempt from notice under section 4 of WARN are nonetheless counted
as employees for purposes of determining coverage as an employer.
(4) An employer may have one or more sites of employment under common ownership or control. An example would be
a major auto maker which has dozens of automobile plants throughout the country. Each plant would be considered a site
of employment, but there is only one “employer”, the auto maker.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 639.3 Definitions., 20 C.F.R. § 639.3
(b) Plant closing. The term “plant closing” means the permanent or temporary shutdown of a “single site of employment”,
or one or more “facilities or operating units” within a single site of employment, if the shutdown results in an “employment
loss” during any 30–day period at the single site of employment for 50 or more employees, excluding any part-time employees.
An employment action that results in the effective cessation of production or the work performed by a unit, even if a few
employees remain, is a shutdown. A “temporary shutdown” triggers the notice requirement only if there are a sufficient number
of terminations, layoffs exceeding 6 months, or reductions in hours of work as specified under the definition of “employment
loss.”
(c) Mass layoff.
(1) The term “mass layoff” means a reduction in force which first, is not the result of a plant closing, and second, results
in an employment loss at the single site of employment during any 30–day period for:
(i) At least 33 percent of the active employees, excluding part-time employees, and
(ii) At least 50 employees, excluding part-time employees.
Where 500 or more employees (excluding part-time employees) are affected, the 33% requirement does not apply, and
notice is required if the other criteria are met. Plant closings involve employment loss which results from the shutdown
of one or more distinct units within a single site or the entire site. A mass layoff involves employment loss, regardless of
whether one or more units are shut down at the site.
(2) Workers, other than part-time workers, who are exempt from notice under section 4 of WARN are nonetheless counted
as employees for purposes of determining coverage as a plant closing or mass layoff. For example, if an employer closes a
temporary project on which 10 permanent and 40 temporary workers are employed, a covered plant closing has occurred
although only 10 workers are entitled to notice.
(d) Representative. The term “representative” means an exclusive representative of employees within the meaning of section
9(a) or 8(f) of the National Labor Relations Act or section 2 of the Railway Labor Act.
(e) Affected employees. The term “affected employees” means employees who may reasonably be expected to experience an
employment loss as a consequence of a proposed plant closing or mass layoff by their employer. This includes individually
identifiable employees who will likely lose their jobs because of bumping rights or other factors, to the extent that such
individual workers reasonably can be identified at the time notice is required to be given. The term “affected employees”
includes managerial and supervisory employees, but does not include business partners. Consultant or contract employees who
have a separate employment relationship with another employer and are paid by that other employer, or who are self-employed,
are not “affected employees” of the business to which they are assigned. In addition, for purposes of determining whether
coverage thresholds are met, either incumbent workers in jobs being eliminated or, if known 60 days in advance, the actual
employees who suffer an employment loss may be counted.
(f) Employment loss.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
§ 639.3 Definitions., 20 C.F.R. § 639.3
(1) The term “employment loss” means (i) an employment termination, other than a discharge for cause, voluntary
departure, or retirement, (ii) a layoff exceeding 6 months, or (iii) a reduction in hours of work of individual employees of
more than 50% during each month of any 6–month period.
(2) Where a termination or a layoff (see paragraphs (f)(1)(i) and (ii) of this section) is involved, an employment loss does
not occur when an employee is reassigned or transferred to employer-sponsored programs, such as retraining or job search
activities, as long as the reassignment does not constitute a constructive discharge or other involuntary termination.
(3) An employee is not considered to have experienced an employment loss if the closing or layoff is the result of the
relocation or consolidation of part or all of the employer's business and, prior to the closing or layoff—
(i) The employer offers to transfer the employee to a different site of employment within a reasonable commuting distance
with no more than a 6–month break in employment, or
(ii) The employer offers to transfer the employee to any other site of employment regardless of distance with no more
than a 6–month break in employment, and the employee accepts within 30 days of the offer or of the closing or layoff,
whichever is later.
(4) A “relocation or consolidation” of part or all of an employer's business, for purposes of paragraph § 639.3(h)(4), means
that some definable business, whether customer orders, product lines, or operations, is transferred to a different site of
employment and that transfer results in a plant closing or mass layoff.
(g) Unit of local government. The term “unit of local government” means any general purpose political subdivision of a State,
which has the power to levy taxes and spend funds and which also has general corporate and police powers. When a covered
employment site is located in more than one unit of local government, the employer must give notice to the unit to which it
determines it directly paid the highest taxes for the year preceding the year for which the determination is made. All local taxes
directly paid to the local government should be aggregated for this purpose.
(h) Part-time employee. The term “part-time” employee means an employee who is employed for an average of fewer than 20
hours per week or who has been employed for fewer than 6 of the 12 months preceding the date on which notice is required,
including workers who work full-time. This term may include workers who would traditionally be understood as “seasonal”
employees. The period to be used for calculating whether a worker has worked “an average of fewer than 20 hours per week”
is the shorter of the actual time the worker has been employed or the most recent 90 days.
(i) Single site of employment.
(1) A single site of employment can refer to either a single location or a group of contiguous locations. Groups of structures
which form a campus or industrial park, or separate facilities across the street from one another, may be considered a
single site of employment.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
§ 639.3 Definitions., 20 C.F.R. § 639.3
(2) There may be several single sites of employment within a single building, such as an office building, if separate
employers conduct activities within such a building. For example, an office building housing 50 different businesses will
contain 50 single sites of employment. The offices of each employer will be its single site of employment.
(3) Separate buildings or areas which are not directly connected or in immediate proximity may be considered a single
site of employment if they are in reasonable geographic proximity, used for the same purpose, and share the same staff
and equipment. An example is an employer who manages a number of warehouses in an area but who regularly shifts or
rotates the same employees from one building to another.
(4) Non-contiguous sites in the same geographic area which do not share the same staff or operational purpose should not
be considered a single site. For example, assembly plants which are located on opposite sides of a town and which are
managed by a single employer are separate sites if they employ different workers.
(5) Contiguous buildings owned by the same employer which have separate management, produce different products, and
have separate workforces are considered separate single sites of employment.
(6) For workers whose primary duties require travel from point to point, who are outstationed, or whose primary duties
involve work outside any of the employer's regular employment sites (e.g., railroad workers, bus drivers, salespersons),
the single site of employment to which they are assigned as their home base, from which their work is assigned, or to
which they report will be the single site in which they are covered for WARN purposes.
(7) Foreign sites of employment are not covered under WARN. U.S. workers at such sites are counted to determine whether
an employer is covered as an employer under § 639.3(a).
(8) The term “single site of employment” may also apply to truly unusual organizational situations where the above criteria
do not reasonably apply. The application of this definition with the intent to evade the purpose of the Act to provide notice
is not acceptable.
(j) Facility or operating unit. The term “facility” refers to a building or buildings. The term “operating unit” refers to an
organizationally or operationally distinct product, operation, or specific work function within or across facilities at the single
site.
(k) State dislocated worker unit. The term “State dislocated worker unit” means a unit designated or created in each State by
the Governor under title III of the Job Training Partnership Act, as amended by EDWAA.
(l) State. For the purpose of WARN, the term “State” includes the 50 States, the District of Columbia, the Commonwealth of
Puerto Rico, and the U.S. Virgin Islands.
SOURCE: 54 FR 16064, April 20, 1989, unless otherwise noted.
AUTHORITY: 29 U.S.C. 2107(a).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
§ 639.3 Definitions., 20 C.F.R. § 639.3
Notes of Decisions (226)
Current through December 24, 2015; 80 FR 80290.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
20 Common Law Factors
Rev. Rul. 87-41, 1987-1 CB 296
ISSUE predecessor or affiliated corporation of the
Client) at any time preceding the time at which
In the situations described below, are the
the Individual begins performing services for the
individuals employees under the common law
Client. Also, the Individual has not been an
rules for purposes of the Federal Insurance
employee of or performed services for or on
Contributions Act (FICA), the Federal
behalf of the Firm at any time preceding the time
Unemployment Tax Act (FUTA), and the
at which the Individual begins performing
Collection of Income Tax at Source on Wages
services for the Client. The Individual's contract
(chapters 21, 23, and 24 respectively, subtitle C,
with the Firm states that the Individual is an
Internal Revenue Code)? These situations
independent contractor with respect to services
illustrate the application of section 530(d) of the
performed on behalf of the Firm for the Client.
Revenue Act of 1978, 1978-3 (Vol. 1) C.B. 119
(the 1978 Act), which was added by section The Individual and the other programmers
1706(a) of the Tax Reform Act of 1986, 1986- 3 perform the services under the Firm's contract
(Vol. 1) C.B. 698 (the 1986 Act) (generally with the Client. During the time the Individual is
effective for services performed and performing services for the Client, even though
remuneration paid after December 31, 1986). the Individual retains the right to perform
services for other persons, substantially all of the
FACTS
Individual's working time is devoted to
In each factual situation, an individual worker performing services for the Client. A significant
(Individual), pursuant to an arrangement portion of the services are performed on the
between one person (Firm) and another person Client's premises. The Individual reports to the
(Client), provides services for the Client as an Firm by accounting for time worked and
engineer, designer, drafter, computer describing the progress of the work. The Firm
programmer, systems analyst, or other similarly pays the Individual and regularly charges the
skilled worker engaged in a similar line of work. Client for the services performed by the
Situation 1 Individual. The Firm generally does not pay
individuals who perform services for the Client
The Firm is engaged in the business of providing unless the Firm provided such individuals to the
temporary technical services to its clients. The Client.
Firm maintains a roster of workers who are
available to provide technical services to The work of the Individual and other
prospective clients. The Firm does not train the programmers is regularly reviewed by the Firm.
workers but determines the services that the The review is based primarily on reports by the
workers are qualified to perform based on Client about the performance of these workers.
information submitted by the workers. Under the contract between the Individual and
the Firm, the Firm may terminate its relationship
The Firm has entered into a contract with the with the Individual if the review shows that he
Client. The contract states that the Firm is to or she is failing to perform the services
provide the Client with workers to perform contracted for by the Client. Also, the Firm will
computer programming services meeting replace the Individual with another worker if the
specified qualifications for a particular project. Individual's services are unacceptable to the
The Individual, a computer programmer, enters Client. In such a case, however, the Individual
into a contract with the Firm to perform services will nevertheless receive his or her hourly pay
as a computer programmer for the Client's for the work completed.
project, which is expected to last less than one
year. The Individual is one of several Finally, under the contract between the
programmers provided by the Firm to the Client. Individual and the Firm, the Individual is
The Individual has not been an employee of or prohibited from performing services directly for
performed services for the Client (or any the Client and, under the contract between the
Firm and the Client, the Client is prohibited payment made by the Client to the Individual
from receiving services from the Individual for a reduces the amount of the fee that the Client is
period of three months following the termination otherwise required to pay the Firm. The
of services by the Individual for the Client on Individual is performing services that can be
behalf of the Firm. accomplished without the Individual's receiving
direction or control as to hours, place of work,
Situation 2
sequence, or details of work.
The Firm is a technical services firm that
Situation 3
supplies clients with technical personnel. The
Client requires the services of a systems analyst The Firm, a company engaged in furnishing
to complete a project and contacts the Firm to client firms with technical personnel, is
obtain such an analyst. The Firm maintains a contacted by the Client, who is in need of the
roster of analysts and refers such an analyst, the services of a drafter for a particular project,
Individual, to the Client. The Individual is not which is expected to last less than one year. The
restricted by the Client or the Firm from Firm recruits the Individual to perform the
providing services to the general public while drafting services for the Client. The Individual
performing services for the Client and in fact performs substantially all of the services for the
does perform substantial services for other Client at the office of the Client, using materials
persons during the period the Individual is and equipment of the Client. The services are
working for the Client. Neither the Firm nor the performed under the supervision of employees
Client has priority on the services of the of the Client. The Individual reports to the Client
Individual. The Individual does not report, on a regular basis. The Individual is paid by the
directly or indirectly, to the Firm after the Firm based on the number of hours the
beginning of the assignment to the Client Individual has worked for the Client, as reported
concerning (1) hours worked by the Individual, to the Firm by the Client or as reported by the
(2) progress on the job, or (3) expenses incurred Individual and confirmed by the Client. The
by the Individual in performing services for the Firm has no obligation to pay the Individual if
Client. No reports (including reports of time the Firm does not receive payment for the
worked or progress on the job) made by the Individual's services from the Client. For
Individual to the Client are provided by the recruiting the Individual for the Client, the Firm
Client to the Firm. receives a flat fee that is fixed prior to the
Individual's commencement of services for the
If the Individual ceases providing services for
Client and is unrelated to the number of hours
the Client prior to completion of the project or if
and quality of work performed by the Individual.
the Individual's work product is otherwise
However, the Firm does receive a reasonable fee
unsatisfactory, the Client may seek damages
for performing the payroll function. The Firm
from the Individual. However, in such
may not direct the work of the Individual and
circumstances, the Client may not seek damages
has no responsibility for the work performed by
from the Firm, and the Firm is not required to
the Individual. The Firm may not terminate the
replace the Individual. The Firm may not
services of the Individual. The Client may
terminate the services of the Individual while he
terminate the services of the Individual without
or she is performing services for the Client and
liability to either the Individual or the Firm. The
may not otherwise affect the relationship
Individual is permitted to work for another firm
between the Client and the Individual. Neither
while performing services for the Client, but
the Individual nor the Client is prohibited for
does in fact work for the Client on a
any period after termination of the Individual's
substantially full-time basis.
services on this job from contracting directly
with the other. For referring the Individual to the LAW AND ANALYSIS
Client, the Firm receives a flat fee that is fixed
This ruling provides guidance concerning the
prior to the Individual's commencement of
factors that are used to determine whether an
services for the Client and is unrelated to the
employment relationship exists between the
number of hours and quality of work performed
Individual and the Firm for federal employment
by the Individual. The Individual is not paid by
tax purposes and applies those factors to the
the Firm either directly or indirectly. No
given factual situations to determine whether the
Individual is an employee of the Firm for such other than that of employer and employee is
purposes. The ruling does not reach any immaterial. Thus, if such a relationship exists, it
conclusions concerning whether an employment is of no consequence that the employee is
relationship for federal employment tax designated as a partner, coadventurer, agent,
purposes exists between the Individual and the independent contractor, or the like.
Client in any of the factual situations.
As an aid to determining whether an individual
Analysis of the preceding three fact situations is an employee under the common law rules,
requires an examination of the common law twenty factors or elements have been identified
rules for determining whether the Individual is as indicating whether sufficient control is
an employee with respect to either the Firm or present to establish an employer- employee
the Client, a determination of whether the Firm relationship. The twenty factors have been
or the Client qualifies for employment tax relief developed based on an examination of cases and
under section 530(a) of the 1978 Act, and a rulings considering whether an individual is an
determination of whether any such relief is employee. The degree of importance of each
denied the Firm under section 530(d) of the factor varies depending on the occupation and
1978 Act (added by section 1706 of the 1986 the factual context in which the services are
Act). performed. The twenty factors are designed only
as guides for determining whether an individual
An individual is an employee for federal
is an employee; special scrutiny is required in
employment tax purposes if the individual has
applying the twenty factors to assure that
the status of an employee under the usual
formalistic aspects of an arrangement designed
common law rules applicable in determining the
to achieve a particular status do not obscure the
employer-employee relationship. Guides for
substance of the arrangement (that is, whether
determining that status are found in the
the person or persons for whom the services are
following three substantially similar sections of
performed exercise sufficient control over the
the Employment Tax Regulations: sections
individual for the individual to be classified as
31.3121(d)-1(c); 31.3306(i)- 1; and 31.3401(c)-
an employee). The twenty factors are described
1.
below:
These sections provide that generally the
1. Instructions. A worker who is required to
relationship of employer and employee exists
comply with other persons' instructions about
when the person or persons for whom the
when, where, and how he or she is to work is
services are performed have the right to control
ordinarily an employee. This control factor is
and direct the individual who performs the
present if the person or persons for whom the
services, not only as to the result to be
services are performed have the right to require
accomplished by the work but also as to the
compliance with instructions. See, for example,
details and means by which that result is
Rev. Rul. 68-598, 1968-2 C.B. 464, and Rev.
accomplished. That is, an employee is subject to
Rul. 66- 381, 1966-2 C.B. 449.
the will and control of the employer not only as
to what shall be done but as to how it shall be 2. Training. Training a worker by requiring an
done. In this connection, it is not necessary that experienced employee to work with the worker,
the employer actually direct or control the by corresponding with the worker, by requiring
manner in which the services are performed; it is the worker to attend meetings, or by using other
sufficient if the employer has the right to do so. methods, indicates that the person or persons for
whom the services are performed want the
Conversely, these sections provide, in part, that
services performed in a particular method or
individuals (such as physicians, lawyers,
manner. See Rev. Rul. 70-630, 1970-2 C.B. 229.
dentists, contractors, and subcontractors) who
follow an independent trade, business, or 3. Integration. Integration of the worker's
profession, in which they offer their services to services into the business operations generally
the public, generally are not employees. shows that the worker is subject to direction and
control. When the success or continuation of a
Finally, if the relationship of employer and
business depends to an appreciable degree upon
employee exists, the designation or description
the performance of certain services, the workers
of the relationship by the parties as anything
who perform those services must necessarily be
subject to a certain amount of control by the off the premises of the person or persons
owner of the business. See United States v. Silk, receiving the services, such as at the office of
331 U.S. 704 (1947), 1947-2 C.B. 167. the worker, indicates some freedom from
control. However, this fact by itself does not
4. Services Rendered Personally. If the services
mean that the worker is not an employee. The
must be rendered personally, presumably the
importance of this factor depends on the nature
person or persons for whom the services are
of the service involved and the extent to which
performed are interested in the methods used to
an employer generally would require that
accomplish the work as well as in the results.
employees perform such services on the
See Rev. Rul. 55-695, 1955-2 C.B. 410.
employer's premises. Control over the place of
5. Hiring, Supervising, and Paying Assistants. If work is indicated when the person or persons for
the person or persons for whom the services are whom the services are performed have the right
performed hire, supervise, and pay assistants, to compel the worker to travel a designated
that factor generally shows control over the route, to canvass a territory within a certain
workers on the job. However, if one worker time, or to work at specific places as required.
hires, supervises, and pays the other assistants See Rev. Rul. 56-694.
pursuant to a contract under which the worker
10. Order or Sequence Set. If a worker must
agrees to provide materials and labor and under
perform services in the order or sequence set by
which the worker is responsible only for the
the person or persons for whom the services are
attainment of a result, this factor indicates an
performed, that factor shows that the worker is
independent contractor status. Compare Rev.
not free to follow the worker's own pattern of
Rul. 63-115, 1963-1 C.B. 178, with Rev. Rul.
work but must follow the established routines
55-593, 1955-2 C.B. 610.
and schedules of the person or persons for whom
6. Continuing Relationship. A continuing the services are performed. Often, because of the
relationship between the worker and the person nature of an occupation, the person or persons
or persons for whom the services are performed for whom the services are performed do not set
indicates that an employer-employee the order of the services or set the order
relationship exists. A continuing relationship infrequently. It is sufficient to show control,
may exist where work is performed at frequently however, if such person or persons retain the
recurring although irregular intervals. See right to do so. See Rev. Rul. 56-694.
United States v. Silk.
11. Oral or Written Reports. A requirement that
7. Set Hours of Work. The establishment of set the worker submit regular or written reports to
hours of work by the person or persons for the person or persons for whom the services are
whom the services are performed is a factor performed indicates a degree of control. See
indicating control. See Rev. Rul. 73-591, 1973-2 Rev. Rul. 70-309, 1970-1 C.B. 199, and Rev.
C.B. 337. Rul. 68- 248, 1968-1 C.B. 431.
8. Full Time Required. If the worker must 12. Payment by Hour, Week, Month. Payment by
devote substantially full time to the business of the hour, week, or month generally points to an
the person or persons for whom the services are employer-employee relationship, provided that
performed, such person or persons have control this method of payment is not just a convenient
over the amount of time the worker spends way of paying a lump sum agreed upon as the
working and impliedly restrict the worker from cost of a job. Payment made by the job or on a
doing other gainful work. An independent straight commission generally indicates that the
contractor, on the other hand, is free to work worker is an independent contractor. See Rev.
when and for whom he or she chooses. See Rev. Rul. 74-389, 1974-2 C.B. 330.
Rul. 56- 694, 1956-2 C.B. 694.
13. Payment of Business and/or Traveling
9. Doing Work on Employer's Premises. If the Expenses. If the person or persons for whom the
work is performed on the premises of the person services are performed ordinarily pay the
or persons for whom the services are performed, worker's business and/or traveling expenses, the
that factor suggests control over the worker, worker is ordinarily an employee. An employer,
especially if the work could be done elsewhere. to be able to control expenses, generally retains
Rev. Rul. 56-660, 1956-2 C.B. 693. Work done the right to regulate and direct the worker's
business activities. See Rev. Rul. 55-144, 1955- 18. Making Service Available to General Public.
1 C.B. 483. The fact that a worker makes his or her services
available to the general public on a regular and
14. Furnishing of Tools and Materials. The fact
consistent basis indicates an independent
that the person or persons for whom the services
contractor relationship. See Rev. Rul. 56-660.
are performed furnish significant tools,
materials, and other equipment tends to show the 19. Right to Discharge. The right to discharge a
existence of an employer- employee worker is a factor indicating that the worker is
relationship. See Rev. Rul. 71-524, 1971-2 C.B. an employee and the person possessing the right
346. is an employer. An employer exercises control
through the threat of dismissal, which causes the
15. Significant Investment. If the worker invests
worker to obey the employer's instructions. An
in facilities that are used by the worker in
independent contractor, on the other hand,
performing services and are not typically
cannot be fired so long as the independent
maintained by employees (such as the
contractor produces a result that meets the
maintenance of an office rented at fair value
contract specifications. Rev. Rul. 75-41, 1975-1
from an unrelated party), that factor tends to
C.B. 323.
indicate that the worker is an independent
contractor. On the other hand, lack of investment 20. Right to Terminate. If the worker has the
in facilities indicates dependence on the person right to end his or her relationship with the
or persons for whom the services are performed person for whom the services are performed at
for such facilities and, accordingly, the existence any time he or she wishes without incurring
of an employer-employee relationship. See Rev. liability, that factor indicates an employer-
Rul. 71-524. Special scrutiny is required with employee relationship. See Rev. Rul. 70-309.
respect to certain types of facilities, such as
Rev. Rul. 75-41 considers the employment tax
home offices.
status of individuals performing services for a
16. Realization of Profit or Loss. A worker who physician's professional service corporation. The
can realize a profit or suffer a loss as a result of corporation is in the business of providing a
the worker's services (in addition to the profit or variety of services to professional people and
loss ordinarily realized by employees) is firms (subscribers), including the services of
generally an independent contractor, but the secretaries, nurses, dental hygienists, and other
worker who cannot is an employee. See Rev. similarly trained personnel. The individuals who
Rul. 70-309. For example, if the worker is are to perform the services are recruited by the
subject to a real risk of economic loss due to corporation, paid by the corporation, assigned to
significant investments or a bona fide liability jobs, and provided with employee benefits by
for expenses, such as salary payments to the corporation. Individuals who enter into
unrelated employees, that factor indicates that contracts with the corporation agree they will
the worker is an independent contractor. The not contract directly with any subscriber to
risk that a worker will not receive payment for which they are assigned for at least three months
his or her services, however, is common to both after cessation of their contracts with the
independent contractors and employees and thus corporation. The corporation assigns the
does not constitute a sufficient economic risk to individual to the subscriber to work on the
support treatment as an independent contractor. subscriber's premises with the subscriber's
equipment. Subscribers have the right to require
17. Working for More Than One Firm at a Time.
that an individual furnished by the corporation
If a worker performs more than de minimis
cease providing services to them, and they have
services for a multiple of unrelated persons or
the further right to have such individual replaced
firms at the same time, that factor generally
by the corporation within a reasonable period of
indicates that the worker is an independent
time, but the subscribers have no right to affect
contractor. See Rev. Rul. 70-572, 1970-2 C.B.
the contract between the individual and the
221. However, a worker who performs services
corporation. The corporation retains the right to
for more than one person may be an employee of
discharge the individuals at any time. Rev. Rul.
each of the persons, especially where such
75-41 concludes that the individuals are
persons are part of the same service
arrangement.
employees of the corporation for federal The determination of whether any individual
employment tax purposes. who is treated as an employee holds a position
substantially similar to the position held by an
Rev. Rul. 70-309 considers the employment tax
individual whom the taxpayer would otherwise
status of certain individuals who perform
be permitted to treat as other than an employee
services as oil well pumpers for a corporation
for employment tax purposes under section
under contracts that characterize such
530(a) of the 1978 Act requires an examination
individuals as independent contractors. Even
of all the facts and circumstances, including
though the pumpers perform their services away
particularly the activities and functions
from the headquarters of the corporation and are
performed by the individuals. Differences in the
not given day-to-day directions and instructions,
positions held by the respective individuals that
the ruling concludes that the pumpers are
result from the taxpayer's treatment of one
employees of the corporation because the
individual as an employee and the other
pumpers perform their services pursuant to an
individual as other than an employee (for
arrangement that gives the corporation the right
example, that the former individual is a
to exercise whatever control is necessary to
participant in the taxpayer's qualified pension
assure proper performance of the services; the
plan or health plan and the latter individual is
pumpers' services are both necessary and
not a participant in either) are to be disregarded
incident to the business conducted by the
in determining whether the individuals hold
corporation; and the pumpers are not engaged in
substantially similar positions.
an independent enterprise in which they assume
the usual business risks, but rather work in the Section 1706(a) of the 1986 Act added to section
course of the corporation's trade or business. See 530 of the 1978 Act a new subsection (d), which
also Rev. Rul. 70-630, 1970-2 C.B. 229, which provides an exception with respect to the
considers the employment tax status of treatment of certain workers. Section 530(d)
salesclerks furnished by an employee service provides that section 530 shall not apply in the
company to a retail store to perform temporary case of an individual who, pursuant to an
services for the store. arrangement between the taxpayer and another
person, provides services for such other person
Section 530(a) of the 1978 Act, as amended by
as an engineer, designer, drafter, computer
section 269(c) of the Tax Equity and Fiscal
programmer, systems analyst, or other similarly
Responsibility Act of 1982, 1982-2 C.B. 462,
skilled worker engaged in a similar line of work.
536, provides, for purposes of the employment
Section 530(d) of the 1978 Act does not affect
taxes under subtitle C of the Code, that if a
the determination of whether such workers are
taxpayer did not treat an individual as an
employees under the common law rules. Rather,
employee for any period, then the individual
it merely eliminates the employment tax relief
shall be deemed not to be an employee, unless
under section 530(a) of the 1978 Act that would
the taxpayer had no reasonable basis for not
otherwise be available to a taxpayer with respect
treating the individual as an employee. For any
to those workers who are determined to be
period after December 31, 1978, this relief
employees of the taxpayer under the usual
applies only if both of the following consistency
common law rules. Section 530(d) applies to
rules are satisfied: (1) all federal tax returns
remuneration paid and services rendered after
(including information returns) required to be
December 31, 1986.
filed by the taxpayer with respect to the
individual for the period are filed on a basis The Conference Report on the 1986 Act
consistent with the taxpayer's treatment of the discusses the effect of section 530(d) as follows:
individual as not being an employee (“reporting
The Senate amendment applies whether the
consistency rule”), and (2) the taxpayer (and any
services of [technical service workers] are
predecessor) has not treated any individual
provided by the firm to only one client during
holding a substantially similar position as an
the year or to more than one client, and whether
employee for purposes of the employment taxes
or not such individuals have been designated or
for periods beginning after December 31, 1977
treated by the technical services firm as
(“substantive consistency rule”).
independent contractors, sole proprietors,
partners, or employees of a personal service
corporation controlled by such individual. The The analysis would not differ if the facts of
effect of the provision cannot be avoided by Situation 1 were changed to state that the
claims that such technical service personnel are Individual provided the technical services
employees of personal service corporations through a personal service corporation owned by
controlled by such personnel. For example, an the Individual.
engineer retained by a technical services firm to
In Situation 2, the Firm does not retain any right
provide services to a manufacturer cannot avoid
to control the performance of the services by the
the effect of this provision by organizing a
Individual and, thus, no employment
corporation that he or she controls and then
relationship exists between the Individual and
claiming to provide services as an employee of
the Firm.
that corporation.
In Situation 3, the Firm does not control the
. . . [T]he provision does not apply with respect
performance of the services of the Individual,
to individuals who are classified, under the
and the Firm has no right to affect the
generally applicable common law standards, as
relationship between the Client and the
employees of a business that is a client of the
Individual. Consequently, no employment
technical services firm.
relationship exists between the Firm and the
2 H.R. Rep. No. 99-841 (Conf. Rep.), 99th Individual.
Cong., 2d Sess. II-834 to 835 (1986).
HOLDINGS
Under the facts of Situation 1, the legal
Situation 1. The Individual is an employee of the
relationship is between the Firm and the
Firm under the common law rules. Relief under
Individual, and the Firm retains the right of
section 530 of the 1978 Act is not available to
control to insure that the services are performed
the Firm because of the provisions of section
in a satisfactory fashion. The fact that the Client
530(d).
may also exercise some degree of control over
the Individual does not indicate that the Situation 2. The Individual is not an employee of
individual is not an employee. Therefore, in the Firm under the common law rules.
Situation 1, the Individual is an employee of the Situation 3. The Individual is not an employee of
Firm under the common law rules. The facts in the Firm under the common law rules.
Situation 1 involve an arrangement among the
Individual, Firm, and Client, and the services Because of the application of section 530(b) of
provided by the Individual are technical the 1978 Act, no inference should be drawn with
services. Accordingly, the Firm is denied section respect to whether the Individual in Situations 2
530 relief under section 530(d) of the 1978 Act and 3 is an employee of the Client for federal
(as added by section 1706 of the 1986 Act), and employment tax purposes.
no relief is available with respect to any
employment tax liability incurred in Situation 1.