11-05-2025
Three insurance adjusters sued Texas Windstorm Insurance Association (“TWIA”) and its outsourcing company (One Call Claims) for misclassifying them as independent contractors. One Call Claims assigned the adjusters to work on TWIA’s insurance claims following Hurricane Harvey. One Call’s contract with the adjusters classified them as independent contractors and indicated that TWIA would determine their hours with no potential for overtime. The adjusters determined their start and end times as well as lunch breaks.
The three adjusters asserted they should have been classified as employees because One Call set their pay, and TWIA restricted their chance to earn more through outside employment. In addition, TWIA set their work schedules, directed their daily tasks, reviewed their timesheets, and could dock their pay for unreported absences and tardies. The two companies countered that the plaintiffs maintained sufficient control over how they handled their work and could work with other companies, provided it did not interfere with TWIA’s work.
The Eleventh Circuit Court of Appeals concluded that a jury could reasonably determine that the workers were employees. Using a six-factor framework, the court said the appropriate test was the “economic reality” of the relationship, examining the extent to which the workers were economically dependent on the company. The six factors considered are the employer’s degree of control over the workers, the employee’s opportunity for profit based on skills, the employee’s investment in equipment or materials, whether the service required a special skill, the degree of permanence and duration of the relationship, and the extent to which the services provided were integral to the business. The circuit court found that each element, save special skills, leaned in favor of an employee classification. Both companies exerted significant control, resulting in the plaintiffs having limited independence to manage their profits or invest in their work. The relationship was indefinite, and the services were essential, both of which were signs to the court that these workers should have been classified as employees.
Employers should take stock of the six-factor framework and consider whether it could be a useful tool to make appropriate determinations for employment classifications within their own organizations.