Crew employee or sub: 2 control tests before pricing

In Texas, a crew worker is an employee if your company can direct both the final results and the details of the work.

Key takeaways

Write down the facts about the worker before reading the label, and tie each answer to a document or observation someone else could check.
The first test asks whether the purchaser has the right to direct both the final results and the details of when, where, and how the work is done.
Control need not actually be exercised, so a contract that gives your company the right to direct the work can establish employment even if nobody uses it.
If an employment relationship exists, the label on the paperwork does not matter, so a worker called a subcontractor can still be an employee.
Price the worker to match the classification the evidence supports, and rerun both tests when the arrangement changes.

Every crew has at least one person who is hard to price. They work beside your employees, take direction from the same foreman, and show up when the crew does, but they arrive on an invoice or under a subcontract agreement. Whether that person carries labor burden in your crew rate or sits in the subcontract line is a classification question. Estimators often answer it by habit, and habit gets expensive when a payroll audit, a claim, or a dispute goes the other way.

This post gives you two control tests you can run on a single worker before you price them. Both come from the Texas Workforce Commission's explanation of the common law test, which turns largely on who controls the work. Texas is the example here. If you bid in another state, read that state's own guidance, because the wording and details can differ. The goal is not to become a classification lawyer. The goal is to make the decision on facts you can write down, so the estimate, the agreement, and the payroll records tell the same story.

1. Write down the facts before you read the label

Start with what the worker actually does on your job, not with what the paperwork calls them. Pull the bid package, the subcontract or invoice, the crew sheet, and the daily log for the last few weeks. Then write one short answer for each of these questions:

Who hired the worker, and who can end the arrangement?
Who sets the start time, the hours, and the order of tasks?
Who supplies the tools, equipment, and materials?
How is the worker paid: by the hour, by the day, or by a fixed amount for a defined scope?
Does the worker take work from other companies at the same time?
Who inspects the work, and who decides whether it is accepted?

Do not fill in these answers from memory. If the foreman says the sub "does their own thing," check the daily logs, the schedule, and the text messages that show who moved the worker from one area to another. Each answer should point to a document or an observation that someone else could check. If you can't name the source, mark the answer as unverified and treat it as a gap to close before you price.

The reason this matters is the money. A labor line carries the worker's wages plus the burden your company adds on top of them. A subcontract line carries the sub's price, which covers their own costs and margin. Put the same person in the wrong line and your estimate describes a job that does not exist, even if the total looks reasonable on paper.

2. Run the first test: who directs the results and the details

The Texas Workforce Commission states the common law test this way: " Under the common law test, a worker is an employee if the purchaser of that worker's service has the right to direct or control the worker, both as to the final results and as to the details of when, where, and how the work is done. "

That sentence gives you two questions, and you should score them separately.

The first is control over the final results. Does your company decide what the finished work must look like, and can it reject work that does not meet that standard? A sub who receives a defined scope and an acceptance standard, then decides how to meet it, looks more like a contractor. A worker who is told what to produce on each shift, and who must hand the output to a supervisor for direction, looks more like labor. A fixed scope by itself does not settle the question, but it is a point on the sub side of the sheet.

The second is control over the details of when, where, and how the work is done. Ask whether your company sets the hours and the arrival time, decides where in the site the worker works, chooses the order of tasks, and dictates the method. If your superintendent assigns each morning's tasks and moves people between areas based on what the schedule needs, detail control is present. That points toward employment, even if the contract says the sub is free to work when they like.

Pay attention to the word "both" in the agency's wording. The test looks at the purchaser's right to direct the worker on results and on details. Control over results alone does not decide the question, and neither does control over details alone. You need both sides of the sheet filled in, because they can point in different directions. A worker with a clear scope and firm deadlines, but no say in the method, is a mixed case. A worker with no scope who is directed hour by hour is a much clearer case for labor.

3. Run the second test: the right to control counts even if no one uses it

The second test closes a gap that estimators often miss. The same agency explains: " Control need not actually be exercised; rather, if the service recipient has the right to control, employment may be shown. "

This means you cannot clear a worker just because the foreman rarely gives them direction. If the subcontract, company policy, or site rules give your company the right to set hours, direct methods, reassign the worker, or require daily instructions, that right can establish employment even on a day when nobody uses it. The question is what your agreements and practices allow, not only what happened last Tuesday.

Start by reading the subcontract line by line for this purpose. Look for clauses that let your company reassign the worker to another task or area, require attendance at a daily meeting, set a work schedule, approve the method, or dictate the sequence of work. Then compare the contract with actual site practice. Three patterns are worth noting:

The contract says the sub controls the schedule, and the superintendent in fact runs it. The paper and the practice disagree. Record the conflict and treat it as a risk, not as a settled point in the sub's favor.
The contract gives your company the right to direct methods, but nobody has ever used that right. The second test still points toward employment, even though the day-to-day picture looks loose.
The contract is silent on control, but site practice shows a supervisor directing the worker. Silence in the paperwork does not end the analysis, because the practice can show that the right to control exists.

Not every site rule points the same way. A sign-in sheet or a site safety orientation is a different thing from a rule that lets your supervisor assign the worker's daily tasks. Read each rule by what it lets your company do, and mark the ones that give your company direction over the work. Those are the rules that matter for this test.

Then put the result on the sheet beside the first test. A worker who passes the first test on the sub side but fails the second on the employee side is still a mixed case, and you should treat it as one until you have more facts.

4. Set the label aside, because it does not decide the question

The third quote from the same page makes the point plainly: " If an employment relationship exists, it does not matter that the employee is called something different, such as: agent, contract labor, subcontractor, or independent contractor. "

This is the step where estimators most often get pulled off course. A worker who is called a subcontractor on your bid form, who has a sub agreement in the file, or who is paid on an invoice may still be an employee under the control tests. The title is part of the record, but it does not replace the facts you wrote down in step one and scored in steps two and three. If the facts show direction and control, the label does not change the answer.

The reverse is also true. Calling someone a crew employee on the sheet does not prove the relationship either. Some estimators put every worker who shows up daily into the labor column by default, and then struggle to justify the rate when a worker is genuinely independent. The label should follow the facts. It should not drive them.

Once you have made the decision, keep the paperwork consistent with it. If you decide the worker is a sub, the agreement and invoices should describe what a sub does: a defined scope, an agreed amount, and results the worker controls how to reach. If you decide the worker is labor, the crew rate should carry the labor burden, and the file should not describe the same person as a separate business on the job. A mismatch between the decision and the documents is the kind of problem that becomes visible later.

5. Weigh the full set of factors, not one answer

The first two tests are the core of the sheet, but they are not the whole list. The same agency notes this about the wider analysis: " Depending upon the type of business and the services performed, not all of the twenty common law factors may apply. "

That sentence works in two directions. It means you should not mark every factor just to fill out a form, because some will not fit your trade or the work in front of you. It also means you should not skip a factor simply because it is inconvenient to answer. Pick the factors that matter for the job, and write down why you included or excluded each one. A reviewer who reads your sheet later should be able to see a deliberate choice, not a convenient one.

It helps to group the evidence under a few plain headings rather than work through a long checklist item by item. Four groups usually cover most of the picture for a crew worker:

Schedule and location: who sets hours, the start and stop times, and where the worker reports and works.
Tools and materials: whose equipment, supplies, and consumables the worker uses.
Method and supervision: who decides how the task is done and who checks it along the way.
Payment and relationship: how the worker is paid, whether they work for others, and how long the arrangement is expected to run.

Read the groups together. A worker who uses their own tools, sets their own hours, takes work from other companies, and is paid by completing a fixed scope tends to look like a sub. A worker who uses your equipment, follows your daily schedule, works only on your jobs, and is paid by the hour tends to look like labor. Most real cases fall somewhere between those two descriptions, and that middle ground is where the judgment lives. Write the middle ground down plainly. Say which facts pull toward each side, which ones you weighed more heavily, and why.

Be careful about one shortcut. A single strong factor can feel decisive, such as a sub who brings their own truck. But a sub who brings a truck and then takes a daily assignment from your foreman has a mixed record, and the daily assignment deserves real weight. Look at the whole pattern before you decide.

Illustrative example: a finish carpenter on your job

A finish carpenter works on your job for three weeks. He brings his own nail gun and saw, sets his own start time within a window, and bills for each completed room at a price you agreed in advance. He also works for two other builders during the same weeks. On the sheet, that picture points toward a sub: he controls method and hours, he supplies his tools, he takes other work, and he is paid for a defined result.

Now change a few facts. Your lead carpenter assigns his rooms each morning, he must use the company's lift and follow the company's schedule, and he has been told he cannot take other jobs during your project. The paperwork still says sub. That mismatch is exactly what the label step warns about, and it is why the sheet has to be rerun whenever the arrangement shifts.

6. Price the decision, document it, and set a review trigger

Once the control tests and the factor groups point one way, price the worker to match.

If the worker is labor, carry them in the crew rate with the labor burden lines your company uses for employees on the job. Do not split the difference by putting a worker you have classified as labor into the subcontract line at a lower number, because that makes the bid and the classification disagree. If the worker is a sub, price them in the subcontract line with a defined scope, an agreed amount or unit rate, and the insurance and documentation your company requires of subs. The line item should describe the same work that the sheet describes. For the cost side of the labor choice, see misclassification costs and crew burden. For a side-by-side view of the sub option, see sub quote or own crew costs.

If the facts are close, do not split the difference in the bid itself. Choose the classification the evidence supports most strongly, price it that way, and record the close call on the sheet so the choice is visible. For a worker who has been on your crew for a long time, or who was hired under one arrangement and has drifted into another, ask your accountant or counsel to review the sheet before the job starts. A review is cheap compared with reworking payroll after a dispute.

Document the decision. Date the sheet, list the evidence for each test, record the factor groups, and file the whole package with the bid. Name the file by worker, job, and date so it is easy to find. If someone asks later why this worker was priced as they were, the answer should be in the file, not in someone's memory.

Finally, set a trigger for review. Classification can change when the arrangement changes. Examples to watch for include a sub who begins taking daily instructions from your supervisor, a sub who starts working only for your company, a change in how they are paid, or a change in who supplies the tools. When one of those happens, pull the sheet out, rerun both tests, and decide again. A classification made in March may not match the same worker's situation in July.

If you bid in Texas, check the wording of the common law test on the Texas Workforce Commission's classification page before you rely on this sheet, and confirm that the guidance you are reading is current.

Next step: this week, pull the subcontract and daily log for one worker on your current job, and score both control tests on a dated sheet before you price the next bid.

Frequently asked questions

Does the subcontract label decide the classification?

No. The facts you wrote down decide it, and the title is only part of the record.

Do I need to run both control tests?

Yes. Score the results and the details separately, because a mixed case needs more facts before you price it.

When should I rerun the sheet?

Rerun it whenever the arrangement changes, such as a change in who supplies the tools or how the worker is paid.

General information, not legal or tax advice.