WASTE MANAGEMENT OF TEXAS, INC. AND RIGOBERTO ZELAYA, PETITIONERS, v. ROBERT STEVENSON, RESPONDENT
No. 19-0282
IN THE SUPREME COURT OF TEXAS
April 30, 2021
Argued October 28, 2020
Argued October 28, 2020
JUSTICE BLACKLOCK delivered the opinion of the Court, in which CHIEF JUSTICE HECHT, JUSTICE GUZMAN, JUSTICE LEHRMANN, JUSTICE DEVINE, JUSTICE BUSBY, JUSTICE BLAND, and JUSTICE HUDDLE joined.
JUSTICE BOYD filed a concurring opinion.
An employee of a temporary staffing agency was injured while on assignment to a client of the agency. He recovered workers compensation benefits through the staffing agency and then sued the client for whom he performed the work. The Court must decide whether the injured worker can proceed with a tort claim against the client defendant, who argues that the plaintiff qualifies as its employee under the Workers’ Compensation Act. If the plaintiff is the defendant‘s employee, then the Act‘s exclusive-remedy provision bars the plaintiff‘s claims. Because we conclude that the plaintiff qualifies as the defendant‘s employee under the Workers’ Compensation Act, we reverse the court of appeals’ judgment and render judgment for the defendant.
Robert Stevenson was hired by Taylor Smith Consulting, LLC, a temporary labor supplier. Taylor Smith assigned Stevenson to work on a temporary basis for Waste Management of Texas, Inc. (“Waste Management” or “Waste Management Texas“). Waste Management operates garbage trucks, and Stevenson worked on one of those trucks.
The assignment of Stevenson to Waste Management Texas was subject to the “Master Agreement,” a contract between Taylor Smith and Waste Management National Services, Inc. Although Waste Management Texas is not a party to the Master Agreement, Taylor Smith has assigned hundreds of workers to Waste Management Texas under the Master Agreement. The parties agree that Waste Management Texas and Waste Management National Services are affiliated corporations, though the briefing and record never precisely explain the legal relationship between the two.
In May 2014, Stevenson was working on a Waste Management garbage truck. The truck was on one of its usual garbage-collection routes. Rigoberto Zelaya, a Waste Management employee, drove the truck. Zelaya accidentally backed the truck over Stevenson‘s leg and foot, seriously injuring Stevenson.
Both Waste Management and Taylor Smith carried workers compensation insurance for their employees. Stevenson applied for benefits under Taylor Smith‘s workers compensation policy. He also sued Waste Management and Zelaya, alleging common-law negligence. The
The court of appeals reversed and remanded, holding that a genuine fact issue existed on whether Stevenson was Waste Management‘s employee. Stevenson v. Waste Mgmt. of Tex., Inc., 572 S.W.3d 707, 715 (Tex. App.—Houston [14th Dist.] 2019).
II. Analysis
A. Employer-Employee Status Under the Workers’ Compensation Act
“Recovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage . . . against the employer or an agent or employee of the employer for the death of or a work-related injury sustained by the employee.”
The Workers’ Compensation Act defines “employee” as “each person in the service of another under a contract of hire, whether express or implied, or oral or written.”
Several previous decisions of this Court under similar facts help to answer those questions. All involved plaintiff workers provided by employment agencies to the client defendant. In
In Garza v. Excel Logistics, Inc., 161 S.W.3d 473 (Tex. 2005), the plaintiff Garza was hired by an employment agency and assigned to work at Exel‘s premises. Garza was injured on the job while following the instructions of an Exel employee. Id. at 477. He sued both the employment agency and its client, Exel. We stated that “in determining if a general employee of a temporary employment agency is also an employee of a client company for purposes of the Act, we consider traditional indicia, such as the exercise of actual control over the details of the work that gave rise to the injury.” Id. at 477. We held that Exel was Garza‘s employer because the “undisputed evidence establishes that at the time Garza was injured, he was working on Exel‘s premises, in the furtherance of Exel‘s day-to-day business, and the details of his work that caused his injury were specifically directed by Exel.” Id.
Finally, in City of Bellaire v. Johnson, 400 S.W.3d 922 (Tex. 2013) (per curiam), we revisited the issue under facts nearly identical to those before us today. Magnum Staffing employed plaintiff Johnson and provided him to the City of Bellaire as a garbage collector.
In each of these dual-employment cases, the fact that the defendant did not directly employ the worker provided by the staffing agency did not factor prominently in the analysis. Nor did the result turn on the contractual relationship between the staffing agency and its client. Instead, we determined whether the defendant qualified as the worker‘s employer under the Act by examining
The approach reflected in our prior dual-employment cases is consistent with the statutory definition of “employee” provided by the Workers’ Compensation Act. An “employee” is “each person in the service of another under a contract of hire, whether express or implied, or oral or written.”
Applying the same approach to the facts of this case, there is no doubt Waste Management controlled Stevenson‘s work, both as a general matter and in the specific circumstances of his accident. The summary judgment evidence shows the following. Stevenson was injured while on assignment to Waste Management. He was working on a garbage truck owned by Waste Management and on a garbage hauling route operated by Waste Management. In his deposition, Stevenson agreed that Waste Management route managers had “the ability to tell you what to do and how to do your job.” He also agreed that the garbage truck driver, a Waste Management employee, was “the captain of the ship” and “the guy in charge.” He agreed that the driver had the authority to tell him that he was doing his job incorrectly and that “[y]ou need to do it this way.” The driver was “in charge of the work that was done.” The driver would decide where the
The driver, Zelaya, testified that, on the day of the accident, “I was controlling [Stevenson] with respect to how to do the job.” He testified that in the morning he would instruct the helpers as to “what we‘re going to do and how we‘re going to do it.” He gave instructions to the helpers at the beginning of the route. Zelaya had “the right to control how the helpers did their work on the day of the accident.”
Waste Management‘s operations manager testified that Stevenson, while assigned to Waste Management, was a Waste Management employee and was under the control of Zelaya, the driver. Zelaya was the “captain” of the truck and was in “full control” of the helpers. He was continuously in control of the crew beginning in the morning. Waste Management provided helpers with instructions and training. Waste Management had the authority to assign tasks and to tell the helper to stop unauthorized conduct.
The owner of Taylor Smith testified that Taylor Smith did not control Stevenson‘s work and that Stevenson was not an independent contractor but instead worked for Waste Management. He stated that once Taylor Smith sent workers to Waste Management, Waste Management supervised the workers, controlled their work, and told them what to do. “Once we put the person on the assignment at the site we—we don‘t manage them at that point. We don‘t tell them what to do. We don‘t give them directives.” Once workers are assigned, they are “managed and fired and all those things by the client.” Waste Management had “the right to control the details of the work for helpers who are out on a route.” Once assigned to Waste Management the worker is
All these facts regarding the daily relationship between Waste Management and Stevenson at the workplace indicate that Stevenson was Waste Management‘s employee under the Act. In response, Stevenson points to evidence that Waste Management did not directly, physically control his every movement. For example, Zelaya testified that, as the driver, he could not control Stevenson because “he‘s on the side of the street,” and that Stevenson “is a grown-up man” who knew “what he was doing.” Zelaya further testified that Stevenson knew “what to do” and “how to do it.” But employer status does not depend on whether the employer physically controls every action of the employee. Every employee is to some extent self-directed in the physical carrying out of his daily work. This limited sphere of personal autonomy does not mean that the worker has no employer under the Workers’ Compensation Act.
The foregoing evidence conclusively established that Waste Management controlled the “progress, details, and methods of operations of the work.” Limestone Prods., 71 S.W.3d at 312. Waste Management “set [Stevenson‘s] work schedule, gave him his assignments, and supervised his work.” City of Bellaire, 400 S.W.3d at 923. Moreover, at the time of the accident, Waste Management exercised “actual control over the details of the work that gave rise to the injury.” Garza, 161 S.W.3d at 477. There is no evidence that Taylor Smith or Stevenson exercised any control over the details of Stevenson‘s work, either as a general matter or at the time of his injury. Just as in City of Bellaire, the evidence “establish[es] as a matter of law that [Waste Management]
B. The Effect of the Master Agreement
There remains the question of the Master Agreement. Without it, this case is indistinguishable from City of Bellaire, 400 S.W.3d 922. With it, Stevenson contends that Waste Management has contracted away its exclusive-remedy protections—or at least created a fact issue as to Stevenson‘s employment status, as the court of appeals concluded. For the following reasons, we disagree.
The Agreement was between Taylor Smith and Waste Management National Services, an affiliate of Waste Management Texas. It states:
[Taylor Smith] Responsibilities: [Taylor Smith] is in the business of supplying trained and qualified temporary labor (“Personnel“) to perform work as requested by [Waste Management National Services]. [Taylor Smith] is solely responsible for performing all hiring, firing, discipline, training and other responsibilities necessary to discharge its legal obligations as the employer of the Personnel suppled to [Waste Management National Services]. [Taylor Smith] and Personnel shall be independent contractors in respect of [Waste Management National Services] and shall not be employees of [Waste Management National Services]. Furthermore, [Taylor Smith] and Personnel understand that they have no authority to make or imply any commitments which are binding upon [Waste Management National Services]. [Taylor Smith] is solely responsible for all payments whatsoever required to be made to or in respect of its Personnel, including, without limitation, all wages, salaries and benefits (including health insurance and/or medical payments), all federal, state and local payroll taxes, and all Workers’ Compensation insurance coverage and payments. Upon demand, [Taylor Smith] shall provide [Waste Management National Services] with proof that such payments have been made. For any lawful reason (including, without limitation, an adverse result on drug and background screening) and without disclosing such reason to [Taylor Smith], [Waste Management National Services] may request that [Taylor Smith] terminate Personnel‘s engagement at [Waste Management National Services] immediately. [Waste Management National
Services] shall reimburse [Taylor Smith] for services performed and expenses incurred in accordance herewith up to the date of such termination notice.
(Emphasis added).
Stevenson argues that because Waste Management agreed by contract that workers supplied by Taylor Smith would be independent contractors, Waste Management cannot now contend that Stevenson is a Waste Management employee. This argument has rhetorical power, to be sure. There is a “have your cake and eat it too” flavor to Waste Management‘s position. It wants Stevenson to be its employee in this case, but if Stevenson had injured a third party while on the job, Waste Management would likely try to use the Master Agreement to defeat vicarious liability by arguing that Stevenson was an independent contractor. Stevenson is undoubtedly correct that Waste Management is not entitled to unilaterally switch his status between employee and independent contractor whenever one label or the other suits Waste Management. But that is not what is happening here. Instead, in the dual-employment context, this Court has previously observed that determining employment status for workers compensation purposes is not always the same thing as determining employment status for vicarious liability:
In this case, we are construing only the Labor Code, specifically the Workers’ Compensation Act; we are not applying general common-law principles regarding vicarious liability for injuries to third parties. We reiterate what we said in Wingfoot: “The common-law principles that define when there will be vicarious liability are designed to assign liability for injury to third parties to the party who was directing the details of the negligent actor‘s conduct when that negligence occurred.” The Workers’ Compensation Act was not.
Garza, 161 S.W.3d at 481 (quoting Wingfoot, 111 S.W.3d at 146).4
Stevenson asks us to rely on Newspapers, Inc. v. Love, 380 S.W.2d 582 (Tex. 1964), which holds that a contract stating a person is an independent contractor is given effect unless (1) it was a subterfuge, (2) it was modified by later agreement, or (3) the exercise of control was “so pronounced” and “so persistent” as to raise an inference that the parties acquiesced in the principal‘s right to control the details of the work. Id. at 590-92. The court of appeals relied on Love. Stevenson, 572 S.W.3d at 711. Love, however, acknowledges that contractual independent-contractor labels are not controlling if “[t]he assumption of an exercise of control [is] so persistent and the acquiescence therein so pronounced as to raise an inference that at the time of the act or omission giving rise to liability, the parties by implied consent and acquiescence had agreed that the principal might have the right to control the details of the work.” 380 S.W.2d at 592. The facts of Waste Management‘s daily control over Stevenson‘s garbage-collection work are indeed “so pronounced” and “so persistent” as to satisfy the standard articulated in Love for looking beyond contractual labels.
Similarly in Wingfoot, we grounded our employment analysis in the text of the Act and noted the potential distinction between applying the Act‘s definitions and determining employment under the common law. Wingfoot, 111 S.W.3d at 146 (distinguishing between “common-law principles” and “whether a general employer remains an ‘employer’ for workers’ compensation purposes“). We also acknowledged that the dual-employment context, involving staffing agencies who provide workers to client companies who direct them on the job, adds complexity to the application of traditional legal standards governing employment status. Id. at 145-46.
Here, there can be no doubt that Stevenson was “in the service of” Waste Management when this accident occurred. See
We addressed the effect of a contract on employer status under the Workers’ Compensation Act in Exxon Corp. v. Perez, 842 S.W.2d 629 (Tex. 1992) (per curiam), a borrowed-servant case. We stated: “A contract between two employers providing that one shall have the right of control . . . is a factor to be considered, but it is not controlling.” Id. at 630. Thus, even a contract speaking directly to the controlling factor—the right of control—did not dictate whether the plaintiff was the defendant‘s borrowed servant covered by the defendant‘s workers compensation policy. Instead, “[b]ecause the record . . . is replete with evidence of Exxon‘s right of control over Perez, the court of appeals erred by concluding that the contract between the parties was conclusive.” Id. at 630 (footnote omitted). Under Perez, a contract between two companies purporting to dictate the nature of a worker‘s employment relationship with the companies is merely “a factor to be considered” if the right of control is “a controverted issue.” Id.
As explained above, control is not in any real sense controverted here. Waste Management exclusively controlled Stevenson‘s work, both in general and when the accident occurred. And even if the Master Agreement‘s independent-contractor label were “considered” as a “factor,” its bare existence does not create a genuine fact issue as to whether Waste Management actually had the right to control Stevenson. There is simply no evidence—whether in the contract or in the
The concurrence takes issue with our treatment of the Master Agreement. Yet the disagreement may not be as deep as it appears. The concurrence champions the freedom of contract, a position with which we agree entirely. However, the concurrence acknowledges—as it must under Perez—that a contractual label is not conclusive when determining workers compensation coverage in these circumstances. The concurrence would hold that the contractual label creates a fact issue regardless of the facts on the ground, while we conclude that no fact issue is raised when the only evidence cutting against Waste Management‘s right to control Stevenson on his garbage-collection route is a bare contractual label. The dispute is no deeper than that.
Despite the Master Agreement‘s “independent-contractor” label, the Workers’ Compensation Act and our prior cases in the dual-employment context counsel that we examine the parties’ behavior at the jobsite, perhaps more so than would the concurrence. All agree, however, that the touchstone is Waste Management‘s “right to control” Stevenson. In the end, the only question is whether a genuine fact issue arises as to Waste Management‘s right to control its garbage-collection workers merely because its contract with a staffing agency labels them independent contractors. We conclude no such fact issue exists on this record. Nothing in the parties’ behavior indicates Waste Management did not have the right to control the workers on its garbage-collection routes, and nothing in the Master Agreement indicates the parties intended their use of the independent-contractor label to withdraw from Waste Management the right to control its garbage-collection workers.
This approach, which considers the factual, on-the-ground realities of whether the client company directed the activities of the staffing agency‘s employee—without deferring automatically to the terms of a written contract between the companies purporting to dictate employment status—flows from the language of the Workers’ Compensation Act. The Act provides “express definitions of ‘employer’ and ‘employee’ that should be given effect when applicable, even if that results in an employee‘s having more than one employer for purposes of workers’ compensation.” Wingfoot, 111 S.W.3d at 145. The Act‘s definitions encompass workers
We are mindful, as well, that workers compensation coverage is a two-way street. It “benefit[s] both employees and employers.” Port Elevator—Brownsville, L.L.C. v. Casados, 358 S.W.3d 238, 241 (Tex. 2012). Employers who cover their employees benefit from the exclusive-remedy protection asserted by Waste Management in this case. On the other hand, workers who qualify as employees receive compensation for injuries “without regard to fault or negligence.”
We historically have “construe[d] the TWCA liberally in favor of coverage as a means of affording employees the protections the Legislature created.” Casados, 358 S.W.3d at 241. “If there be any reasonable doubt which may arise in a particular case as to the right of the injured employee to compensation [under the Act], it should be resolved in favor of such right.” Navarette v. Temple Indep. Sch. Dist., 706 S.W.2d 308, 310 (Tex. 1986).6 Declining to automatically defer to contractual agreements between two potential employers ensures these rights cannot be denied to workers by contracts over which they have no control. Although this longstanding preference for finding workers compensation coverage developed to ensure employees receive compensation, it applies with equal force when, as here, the effect of finding coverage is to protect the employer from lawsuits.
While in this case Stevenson does not want the Act to apply to him, many other temporary workers may want the certainty and prompt payment of benefits the Act provides without the need for litigation. If Stevenson were correct that a contract between his direct employer and its client can dictate whether he is entitled to workers compensation through the client, he might benefit in that he could proceed with his lawsuit against Waste Management. Other workers in similar circumstances could be harmed, however, by a rule that allowed two companies to execute a contract—over which the worker has no influence—dictating whether the worker is covered by either company‘s workers compensation coverage. Stevenson had the benefit of seeking workers compensation benefits from Taylor Smith and then taking his chances in a lawsuit against Waste Management. But in other cases, if the temporary agency does not have coverage or is insolvent and the agency and client have agreed that assigned workers are independent contractors, giving6
A related reason the Master Agreement does not dictate the outcome is that Stevenson was not a party to it.7 The Agreement states that both Taylor Smith and its personnel shall be independent contractors, but there is no indication that Stevenson ever saw the Master Agreement or agreed to be bound by it. If two employers could bargain away their employees’ rights in this way without an examination of how the employment operated in practice, workers provided by staffing agencies could be cut out of the Act‘s protections altogether, even if the client company provided coverage for its other workers.
We agree with the concurrence, of course, that “Texas strongly favors parties’ freedom of contract,” under which parties may “bargain for mutually agreeable terms and allocate risks as they see fit.” Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905, 912 (Tex. 2007). “Texas courts regularly . . . reject legal claims that are artfully pleaded to skirt unambiguous contract language, especially when that language is the result of arm‘s length negotiations between sophisticated business entities.” Energy Transfer Partners, L.P. v. Enter. Prods. Partners, L.P., 593 S.W.3d 732, 738 (Tex. 2020). But “[c]ontracts bind parties, not nonparties.” NRG Power Mktg., LLC v. Me. Pub. Utils. Comm‘n, 558 U.S. 165, 175 n.4 (2010). In this dual-employment context, there are three concerned parties, not just the two who executed the Master Agreement. Determining a worker‘s employment status in this context is not always as simple as consulting a contract between his two potential employers.
III. Conclusion
There is no genuine issue of material fact as to whether Waste Management had “the right to control the progress, details, and methods of operations of [Stevenson‘s] work.” Limestone Prods., 71 S.W.3d at 312. Even if the Master Agreement is a “factor to be considered,” it does not create a fact issue sufficient to avoid summary judgment given the conclusive nature of the countervailing facts. Summary judgment for Waste Management was appropriate, and the court of appeals erred by concluding otherwise. We reverse the court of appeals’ judgment and render a take-nothing judgment against Stevenson.
OPINION DELIVERED: April 30, 2021
James D. Blacklock
Justice