Employee or independent contractor?

Classifying a worker as an employee or an independent contractor presents a number of challenges. Districts have a vested interest in ensuring that workers are appropriately classified since failure to do so may be costly in terms of unpaid taxes, back pay and benefits, and penalties. The information below is provided as a guide to help districts avoid these costly mistakes.
Determining Independent Contractor Status
The determination of whether a worker is an independent contractor depends on the facts in each situation and must be analyzed on a case-by-case basis. To complicate the analysis, several Federal and State agencies have weighed in on the subject with their own guidance for classifying workers as employees or independent contractors. Although the definitions published by agencies are different, they all encompass the points identified by the U.S. Supreme Court that are described below.
The Court acknowledges that there is no single rule or test to determine if a worker is an employee or independent contractor. However, the Court has considered the following factors to be significant in making the decision:

  • The extent to which the services rendered are an integral part of the employer’s business
  • The permanency of the relationship
  • The amount of the alleged contractor’s investment in facilities and equipment
  • The nature and degree of control by the organization
  • The alleged contractor’s opportunities for profit and loss
  • The amount of open market competition with others required for the success of the claimed independent contractor
Agency Cooperation
The Internal Revenue Service (IRS) and the Department of Labor (DOL) criteria for determining employment status and the potential for penalties imposed by these agencies are the most well-known. These agencies work together as part of the initiative to identify misclassified workers. The DOL also has a memorandum of understanding with the Texas Workforce Commission (TWC) to address employee misclassification. Other agencies, including Immigration and Customs Enforcement (ICE), Texas Department of Insurance (TDI), and the Teacher Retirement System (TRS), may become involved when a worker is misclassified.
Agency factors for classifying employees
The IRS common law factors for determining worker status as addressed in Publication 15-A include the following:
  • Behavioral—If the employer has the right to control when and where the work is done, the worker is probably an employee. The instructions given, including what tools or equipment to use, or what order or sequence to follow, are behavior control factors.
  • Financial—The opportunity for the worker to either make a profit or suffer a loss is an important factor in determining classification. Independent contractors generally have a significant investment in the equipment used to do a job, advertise their services, maintain a visible location, and are available to work for other employers.
  • Relationship—If the worker is hired with the expectation that the relationship will continue indefinitely, the worker is more than likely an employee. If the worker provides services that are key to the success of the business and his or her work is presented as that of the employer, the worker is more than likely an employee.
Factors such as having a signed agreement or the worker having an incorporated business are not sufficient in determining employee vs. independent contractor status.
On July 15, 2015, the DOL issued an Administrator’s Interpretation (AI-2015-1) applying the “economic realities” test to determine if a worker is an independent contractor. Under the Fair Labor Standards Act (FLSA), workers who are economically dependent on the employer are considered to be employees.
The Administrator’s Interpretation provides the following factors as guidance for determining if a worker is truly economically independent or dependent on the employer.
  • Is the work an integral part of the employer’s business?
    • If the work is part of the service the employer is in business to provide, the worker is more than likely an employee. For example, speech-language pathologists and accompanists for the choir do work that is an integral part of the services provided by a school district.
  • Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?
    • The worker’s managerial decisions related to their independent business such as bidding on work, renting space, hiring staff, and paying for advertising impacts the individual worker’s profit or loss beyond the current job, a factor that would support an independent contractor classification.
  • How does the worker’s relative investment compare to the employer’s investment?
    • A worker must make some amount of monetary investment and risk possible financial loss to be an independent contractor. Investment over and above the tools necessary to perform the specific job is an indication of an independent business.
  • Does the work performed require special skill or initiative?
    • The worker’s skill should be distinctly unique from the type of work performed by the employer and the worker should compete on the open market with others for business. The worker’s skill should prove the initiative and ability to exercise independent business judgement.
  • Is the relationship between the worker and the employer permanent or indefinite?
    • An ongoing work relationship with the district that continues from year-to-year suggests that the worker is an employee.
  • What is the nature and degree of the employer’s control?
    • This includes consideration of who sets pay amounts, who determines how the work is performed, and whether the worker is free to hire helpers. The DOL cautions that control should not play any greater role in determining status than any other factor.
More information about differentiating between employees and independent contractors is available in the DOL Wage and Hour Division Fact Sheet 13 and the Employment Section of the HR Library (see Independent Contractors).

Getting the most out of your HR Services membership

At TASB HR Services, we are always looking for new ways to assist our members in using the extensive services we provide. If you’re a member, we encourage you to check out the resources below. You may notice some you haven’t seen before and could find useful.
Here’s a quick overview to help you make the most of your membership.

  • HR Resources (in myTASB)—Use our extensive, members-only resources. Contact us if you or other staff need myTASB access.
    • The HR Library is an online encyclopedia of information that includes discussion of HR-related topics and model forms and letters. This is updated frequently as HR laws and procedures are created or changed.
    • The Model Employee Handbook is a user-friendly resource for the development of a district-wide employee handbook. Resource materials are correlated to TASB Policy Manual codes and can be easily customized to match local policies. The Model Employee Handbook is updated each spring to ensure your local handbook is up-to-date.
    • Model Job Descriptions is a collection of resources including more than 140 titles common to school districts that are designed to be edited and revised to accurately reflect local job assignments, qualifications, and working conditions.
  • DataCentral—Get online access to salary survey data that allows you to create custom comparison reports. Be sure your district participates in our annual salary surveys. DataCentral also includes surveys on various HR topics. Data for HR surveys are available to any district that completes each survey.
  • HR Support—Call or e-mail our expert HR Services consultants with your HR-related questions. Keep our contact information close by—800.580.7782 or hrservices@tasb.org.
  • HR Exchange—Take advantage of your free newsletter subscription to the top publication in the state focusing on HR in public schools. Read original articles and HR content that pertains to school districts like yours. We publish the HR Exchange twice per month, helping school administrators stay on top of HR trends and the rules and regulations that affect their daily work. If you haven’t already, subscribe here.
  • HR Training—Participate in free live and recorded webinars without having to leave the office. HR Services also is a provider of continuing professional education credits for regional and in-district training.
  • Twitter—To make sure we are providing relevant information in a timely manner, we started a Twitter account a little more than a year ago. Join the 600+ other followers for live updates on the latest developments in HR.
We look forward to providing support for your human resource needs. Contact us at 800.580.7782 or hrservices@tasb.org if you have any questions.


Driving employee engagement

School employees who are engaged are attracted to and inspired by their work. Their commitment and productivity levels are high, and they have a vested interest in the future of their school. These kinds of employees are the backbone of a school, but driving engagement up requires a substantial amount of effort and care from districts.
Employee engagement can set good schools apart from great ones. There are a variety of factors influencing the level of engagement in employees, from length of time doing the same job to size of the school.
But perhaps the most impactful cause is workplace culture, or the character and personality of your district. Culture is what makes each district unique, and comprises its values, beliefs, behaviors, and attitudes. Articulating your district’s culture is paramount in establishing employee engagement.

Length of employment

A recent survey from Quantum Workplace stated that during the first year of employment, engagement is high. More than 77 percent of employees who have been with a company for less than one year are engaged. However, employee engagement plummets 15–20 percent after five years. This means something is happening between years two and five that disengages a substantial portion of a company’s employees.
In education, these numbers are even more disappointing. A Gallup report in 2014 found that nearly 7 out of every 10 teachers are not emotionally connected to or are dissatisfied with their workplaces. Teachers were the least likely of any profession surveyed on workforce engagement to respond positively regarding whether they feel their opinions at work matter and whether their supervisor creates an open and trusting environment.
Mirroring the corporate trend, teachers are most engaged (35 percent) during their first year of employment, but their level of interest and enjoyment in their profession drops significantly between three and five years (28 percent) of teaching experience.

Increasing engagement

It's clear that employee engagement is something districts should monitor closely and work to improve. Ensuring your district’s teachers remain motivated and engaged doesn’t have to dip into the budget. One way to increase engagement without decreasing funds is to follow the 10 C’s of employee engagement from the Ivey Business Journal:
Connect—Show that you value employees. Employees who feel valued, are more likely to go above and beyond for the school and better yet for the students 
Career—Provide challenging and meaningful work for career advancements including implementing stretch goals—allow individuals to enrich the work that they do through extending their duties and responsibilities to build their capacity.
Clarify—Communicate a clear vision and goal—What is your vision? How can goals help fulfill that vision? How can each employee contribute to the success of meeting these goals?
Convey—Set out expectations for each employee and provide feedback on their functioning in the organization. This may entail personal goal setting for meeting the vision, which may be incorporated in their annual appraisal like T-TESS or T-PESS.
Congratulate—Praise and recognize staff for strong performance and do so often.
Contribute—Employee input matters. Allow staff to get involved in decision-making by permitting them to voice their own ideas.
Control—Provide freedom for control over the pace and flow of an employee’s job, but show regard for their needs.
Collaborate—Allow staff to work in teams to develop and foster trust and cooperation as they seek to attain goals. Incorporate feedback loops so everyone is heard.
Credibility—Sharing successes and accomplishments builds pride among the staff in the work that they are doing.
Confidence—Create an environment that allows employees to take risks. Failure should be seen as an opportunity to learn.

Following these guidelines will establish levels of trust and commitment between your district and your staff. Teacher attrition can’t be solved with just one idea, but making sure your employees are engaged in their work is only going to help your cause. 

HR Extras

EEO-5 due November 30

The EEO-5 survey is a compliance survey required by federal law and regulation. The survey is biennial, conducted in even-numbered years. It is a joint requirement of the U.S. Equal Employment Opportunity Commission (EEOC) and the Office for Civil Rights of the Department of Education. The survey collects data about gender and race/ethnicity by job groupings. The data is used for the agencies’ equal employment opportunity programs, self-assessment by employers, and research.
Selected school districts with 100 or more employees are required to file the EEO 5 survey. The School Reporting Committee, representing the federal agencies, determines which districts must file the report. Selected districts that are required to file the report in 2016 will receive a reporting form in the mail.
Every public school district, even if it not selected, is required to make or keep all records necessary for completing and filing the report EEO-5.
Data for the EEO-5 survey is due on November 30, 2016, and must include employment statistics that cover the payroll period closest to October 1, 2016. The completed survey may be sent to the address on the form or can be filed electronically. More information, including detailed instructions is available on the EEOC Website

2016 Accountability Rankings Revealed by TEA

The Texas Education Agency (TEA) recently released its 2016 accountability rankings. Statewide 94 percent of school districts and charters received a Met Standard rating, while 6 percent (66 districts) were rated Improvement Required for 2016. Two districts have been rated Improvement Required/Academically Unacceptable for five straight years.

Of the 8,600 campuses measured, 400 campuses earned all possible distinction designations (number of distinctions varies by campus grade level and type). The complete accountability ratings and reports are available on the TEA website.

Inside HR Services

HR Services membership invoices are due

As of Oct. 1, TASB HR Services started a new membership year. Invoices were sent to our program contacts in August. If you haven’t renewed your HR Services membership, be sure to do so to avoid losing access to critical resources for members, including DataCentral, the HR Library, our Model Job Descriptions, and our Model Employee Handbook.

Tracy Morris promoted to associate consultant

Tracy Morris, one of our HR data analysts, was recently promoted to associate consultant. She'll continue to assist districts with analytical support for consulting services as well as compensation planning and development.

HR Academy just weeks away

Our annual HR Academy is set to begin October 31 at Austin Mariott North. Co-sponsored by TASB and the Texas Association of School Personnel Administrators (TASPA), the HR Academy provides new administrators with the information and resources they need to meet the challenges of a career in HR.

Experienced school HR administrators, HR consultants, and a school law attorney are the seminar facilitators and presenters. Topic sessions cover the primary HR functions and critical issues every new administrator encounters. Opportunities to participate in hands-on learning activities and the best ways to use HR resources are the focal point of this seminar. A resource notebook is included in the registration fee.

Register early and save $65
$385 for registrations received by October 13, 2016. After October 31, registration is $450.

Salary survey deadline approaches, superintendent salary data in DataCentral soon

Friday, Oct. 7 is the deadline for districts to submit the District Personnel Survey, which includes teachers and other school employees. We encourage administrators to complete and submit the survey by e-mail to salary.survey@tasb.org.
Superintendent salary results data for 2016–17 will be available for members in DataCentral on Oct. 17.
The Extra-Duty Stipend Survey will launch Oct. 25. Results will be available in DataCentral to member districts in January.