Like in most other states, under Texas Law, the difference between an independent contractor an employee generally boils down to the right to control the work done by the person.
The Texas Supreme Court established a test whether the employer has the right to control the progress, details, and methods of operations of the work. The court asks whether the employer has the right to control the progress, details, and methods of operations of the work by inquiring about:
1. the independent nature of the worker’s business;
2. The worker’s obligation to furnish necessary tools, supplies, and materials to perform the job;
3. The worker’s right to control the progress of the work except for the final results;
4. The time for which the worker is employed; and
5. The method of payment, whether by unit of time or by the job.
Federal courts interpreting Texas law consistently find the federal statutory definition of who is an “employee” trumps the traditional common law “right” to control” doctrine.
The federal government Legislatively created a surety obligation under the MCS-90 and related statutes. One of these federal regulations define who constituted an ” employee” in interstate trucking for purposes of liability.
Federal trucking regulation define an “employee” as follows:
“Employee means any individual, other than an employer, who is employed b an employer and who in the course of his or her employment directly affects commercial motor vehicle safety. Such term includes a driver of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle), a mechanic, and freight handler.”
Most trucking liability policies contain an Employee Exclusion, which operates to eliminate coverage for claims made by injured employees against their employers. Although the exact language may vary somewhat, most liability policies contain an exclusion for coverage that generally reads as follows:
“This policy excludes coverage for:
Bodily injury to:
An employee of the insured arising out of and in the course of employment by the insured; “
The Fifth Circuit of Appeal recognized long ago the primary purpose of an employee exclusion clause in a public liability policy is “to draw a sharp line between employees and members of the general public.”
Even though most trucking liability insurance policies exclude coverage for claims by employees, injured truckers still attempt to make claims against the trucking carrier by arguing they work as independent contractors, not as employees.
The Fifth Circuit stated:
“In sum, we conclude that the district court properly relied on § 390.5 to determine that Paillet [the driver in the sleeper portion] was an employee of PWS for Purposes of the policy’s employee exclusions. Because Paillet is an employee under § 390.5 regardless of whether he would have been considered an employee or an independent contractor at common law, the policy’s employee exclusions apply to preclude coverage in this case.”
Consumer County Mut. v. PW & Sons, Trucking, Inc., 307 F.3d 362 (5th Cir. 2002).
In the case of Ooida Risk Retention Group, Inc. v. Williams, 579 F.3d 469 (5th Cir. 2009), the Fifth Circuit reinforced the decision of PW & Sons, holding that the claims of a “statutory employee” against the trucking company insured were barred by the fellow employee exclusion.
In Ooida Risk, a single vehicle accident occurred. At the time of the accident, Derrick Shamonyne Williams drove a tractor-trailer rig owned by Slim Shady Express. Tony Moses operated Slim Shady express, federally regulated interstate motor carrier, as a sole proprietorship. At the time of the accident, Williams was driving the rig and Moses traveled in the sleeper berth of the tractor. The rig went over an embankment killing Moses.
The Fifth Circuit in Ooida Risk, like the court PW & Sons, considered the definition of “statutory employee” under 49 C.F.R. § 390.5. As the Ooida Risk court noted:
“The complaint sets out the facts that establish that Williams was, at a minimum, an independent contractor. Intervenors alleged that “Moses occasionally asked Defendant to help him on long-haul jobs, and he paid Defendant for his help…”
This description fits squarely within that of an independent contractor. Indeed, the facts as alleged by Intervenors are scarcely distinguishable from those in Consumers County, in which the driver of the vehicle was employed on a load-by-load basis by the insured trucking company. See Consumers County, 307 F.3f at 363-64.
As an independent contractor, Williams qualifies as a statutory ‘employee” under § 390.5. Id. At 267, see also Perry v Harco Nat’l Ins. Co., 129 F.3d 1072, 1074, 1074-75 (9th Cir. 1997) (holding MCS-90 Endorsement inapplicable with respect to driver who was independent contractor for insured trucking company).”
Thus, Federal courts applying Texas law have now firmly established that with respect to claims of interstate truck drivers against their trucking companies, the common law distinction between who is an ‘independent contractor” and who is an “employee” becomes a distinction without difference in the application of the Employee Exclusion.
In a recent case from Louisiana, a trucker was injured when a tire blew out and he was thrown from the cab. The trucking insurance carrier, Zurich American, contested coverage based on the application of the “employee exclusion” and the definition of ‘employee’ under 49. C.F.R. §390.5. The court granted summary judgment in favor of Zurich American and found that coverage did not exist. Barbash v. Love’s Travel Stops & Country Stores, No. 10-4160, 2011 WL 4381730 (E.D. La. September 20, 2011).
Are you more confused now than you were before?
It appears courts from Texas and other jurisdictions no longer cling to the old distinction between “employee” and “independent contractor” to determine coverage issues. Instead, the emerging rule seems to have firmly established that injured truckers seeking relief against their trucking companies will find the Employee Exclusion precludes coverage for such Claims.