March 23, 2017
Petition for Review from the Court of Appeals for the
Fourteenth District of Texas
Justice Guzman did not participate in the decision.
case we consider whether several members of the Harris County
Appraisal Review Board are, or were, employed by the Harris
County Appraisal District under provisions of the Texas
Unemployment Compensation Act such that when their terms of
service ended or their workload was reduced, they became
eligible for unemployment compensation benefits. The Texas
Workforce Commission determined that they were. The district
court disagreed and set the Commission's decisions aside.
The court of appeals reversed.
affirm the judgment of the court of appeals.
Harris County Appraisal District (HCAD) is statutorily tasked
with appraising property in Harris County for purposes of
calculating ad valorem property taxes. Tex. Tax Code §
6.01(b). Taxpayers may contest HCAD's valuation decisions
before the Harris County Appraisal Review Board, which is an
administrative entity with statutory authority to modify
property appraisal valuations. Id. § 41.01(a).
Applicants for Board positions submit their applications
through HCAD, and members of the Board are appointed to
two-year terms by the local administrative law judge.
Id. § 6.41(d-1), (e). The Board members are
paid by the hour for the time they work, and the amount they
work is determined by how many valuation decisions are
contested. Id. § 6.42(c). Members may serve a
maximum of three consecutive terms. Id. §
members of the Board served the maximum of three terms and
then filed for unemployment compensation with the Texas
Workforce Commission (TWC), alleging that they were last
employed by HCAD. Several other members who were still
serving on the Board, but whose hours had been reduced to the
point that they were working only sporadically, also filed
for benefits and indicated that HCAD was their employer. A
total of fifteen persons (collectively, claimants) filed claims.
The TWC determined that each of the claims was valid and the
claimants were entitled to compensation.
appealed to the TWC appeal tribunal, claiming that there was
not and never had been an employment relationship between the
claimants and HCAD under the Texas Unemployment Compensation
Act's (TUCA) definition of employment. The appeal
tribunal upheld the TWC's determinations.
then filed suits in the district court challenging the
administrative determinations. The court consolidated the
suits, and the parties filed competing motions for summary
judgment. The TWC urged that HCAD was the claimants' last
employer under section 201.041 of the Texas Labor Code and it
correctly decided the claimants qualified for unemployment
compensation. HCAD urged two grounds in its motion. First, it
argued that the claimants fell within an exception in TUCA
for members of the judiciary. Second, it argued that the
Texas Tax Code does not permit appraisal districts to
exercise control or direction over appraisal review boards,
thus the claimants were not its employees.
district court denied the TWC's motion, granted
HCAD's, and set aside the TWC's decisions awarding
compensation. The TWC appealed.
court of appeals reversed and reinstated the TWC's
determinations. 488 S.W.3d 843, 846 (Tex. App.-Houston [14th
Dist.] 2016). The court first determined that because HCAD
paid the claimants for their services, a presumption of
employment arose under the Labor Code. Id. at 849
(citing Tex. Lab. Code § 201.041). It then determined
that Board members were not subject to the members of the
judiciary exemption in the Labor Code because the context of
that statute indicates that the exemption should only reach
members of the judiciary proper-i.e., judges-and not persons
such as the claimants who engage in quasi-judicial functions.
Id. at 850-51.
court also considered HCAD's argument that the Tax Code
both prohibits it from exercising any control over the Board
and prevents HCAD employees from serving on the Board.
Id. at 853-55. The court held that the Tax Code
provisions were relevant, but not conclusive, and that the
employment analysis is a factual one entailing a
twenty-factor test derived from the common law and adopted by
the TWC. Id. at 853. The crux of this common law
test is whether the claimants are subject to the control and
direction of HCAD. Id. at 855. The court concluded
that substantial evidence supported the TWC's
determinations under the proper deferential standard of
review as to several of the factors. Id. at 854.
Court, HCAD reprises the arguments it made in the court of
appeals. It first argues that the court of appeals erred by
concluding that the claimants do not meet the Labor
Code's definition of "members of the
judiciary." See Tex. Lab. Code §
201.063(a). HCAD asserts that because Board members perform
judicial functions, they substantively function as members of
the judiciary. Additionally, HCAD argues that public policy
supports this finding because Board members are expected to
be neutral judges of property values. HCAD also argues that
the court of appeals misinterpreted the relevant Tax Code
provisions because the Legislature clearly forbids Board
members from being employees of HCAD. Additionally, HCAD
asserts that the TWC arbitrarily and unreasonably disregarded
its own regulations in deciding that HCAD has a right to
control Board members. Last, HCAD argues that the court of
appeals misapplied the twenty-factor test for employment set
out by the TWC's regulation because neither evidence nor
a presumption reasonably supports the TWC's
determinations that Board members are employees of HCAD.
response, the TWC argues that the court of appeals was
correct in affirming the TWC's determinations because
substantial evidence supports the TWC's decisions. It
maintains that Board members do not qualify as members of the
judiciary and thus are not excepted from entitlement to
unemployment compensation. Furthermore, the TWC argues the
Tax Code provisions HCAD cites do not override, or even
contradict, TUCA's own definition of
Standard of Review
court reviews the TWC's decision regarding unemployment
benefits by trial de novo to determine whether substantial
evidence supports the TWC's ruling. Tex. Lab. Code §
212.202(a); Collingsworth Gen. Hosp. v. Hunnicutt,
988 S.W.2d 706, 708 (Tex. 1998). Trial de novo of a TWC
ruling "requires the court to determine whether there is
substantial evidence to support the ruling of the agency, but
the reviewing court must look to the evidence presented in
trial and not the record created by the agency."
Mercer v. Ross, 701 S.W.2d 830, 831 (Tex. 1986). The
TWC's unemployment compensation decisions enjoy a
presumption of validity, and the party seeking to set aside
such a decision has the burden of showing that the decision
is not supported by substantial evidence-that is, it is not
supported by more than a scintilla of evidence. City of
Dallas v. Stewart, 361 S.W.3d 562, 566 (Tex. 2012). A
trial court may not set aside a TWC decision merely because
it would have reached a different conclusion; rather, the
court may do so only "if it finds that the [TWC's]
decision was made without regard to the law or the facts and
therefore was unreasonable, arbitrary, or capricious."
Collingsworth Gen. Hosp., 988 S.W.2d at 708. This
methodology was purposefully designed by the Legislature so
that agency decisions are afforded "significant
deference, " and a court is not allowed "to
substitute its judgment for that of the agency." See
Stewart, 361 S.W.3d at 566 (quoting R.R. Comm'n
v. Torch Operating Co., 912 S.W.2d 790, 792 (Tex.
1995)). On appeal from summary judgment affirming the
TWC's decision, we conduct a de novo review of the
summary judgment evidence to determine whether, as a matter
of law, substantial evidence supports the TWC's decision.
See Mercer, 701 S.W.2d at 831.
statutory construction matters, our review is de novo,
although "an agency's interpretation of a statute it
is charged with enforcing is entitled to 'serious
consideration.'" R.R. Comm'n v. Tex.
Citizens for a Safe Future & Clean Water, 336 S.W.3d
619, 624 (Tex. 2011). Under this serious consideration
inquiry, we generally uphold an agency's interpretation
of a statute, "so long as the construction is reasonable
and does not conflict with the statute's plain
language." Id. at 625.
The Unemployment Compensation Act
grants certain benefits to individuals who become either
totally or partially unemployed. Tex. Lab. Code §§
207.002-.003. Benefits are determined based on wages a
claimant received as an employee. Id. Therefore, the
key focus under TUCA is whether a claimant can establish that
he or she was in an employment relationship with an employer.
TUCA defines "employment" as
a service . . . performed by an individual for wages or under
an express or implied contract of hire, unless it is shown to
the satisfaction of the commission that the individual's
performance of the service has been and will continue to be
free from control or direction under the contract and in
Id. § 201.041. A presumption of employment
arises upon a showing that an individual is paid for
performing services. See id. This presumption is
rebutted only if the alleged employer carries its burden of
showing that the individual's service is "free from
control or direction under the contract and in fact."
has adopted a regulation setting out guiding principles to
assist with the employment determination. 40 Tex. Admin. Code
§ 821.5. The regulation incorporates 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." Id.
Control does not have to "actually be exercised; rather,
if the service recipient has the right to control,
employment may be shown." Id. The regulation
then sets out twenty factors as guidance for determining
whether a worker qualifies as an employee for purposes of
unemployment benefits. Id. Not all of the twenty
factors will necessarily apply in every inquiry. Id.
The weight assigned to a specific factor will vary depending
on the facts of each case. Id.
argues that the TWC arbitrarily and unreasonably disregarded
its own regulation and asserts that the TWC's
position-that HCAD need not control the decisions themselves,
but only the means by which decisions were issued-ignores the
regulation's plain language. HCAD further argues that
Board members are part of an independent decision-making
body, and HCAD has no right or ability to control their
decisions. Thus, at the outset, we must determine the meaning
of "control" in the context of TUCA, and whether
the TWC arbitrarily and unreasonably ignored its own
agency does not follow the clear, unambiguous language of its
own regulation in making a decision, the agency's action
is arbitrary and capricious and will be reversed. Tex.
Indus. Energy Consumers v. CenterPoint Energy Hous. Elec.,
LLC, 324 S.W.3d 95, 104 (Tex. 2010). Under the TWC's
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. Control need not actually be
exercised; rather, if the service recipient has the
right to control, employment may be shown.
40 Tex. Admin. Code § 821.5.
section 201.041 of the Labor Code and the TWC's
regulation require that a worker's performance be
controlled, or subject to control, in order for a worker to
qualify as an employee. See id.; Tex. Lab. Code
§ 201.041. While HCAD does not, and cannot, control the
content or result of any decision the Board makes,
controlling the outcome of a worker's decisions is not
the test. See Tex. Tax Code § 42.02 (providing
that if an appraisal district disagrees with a decision by
the appraisal review board, its recourse is to appeal the
decision to the district court). Rather, the test the TWC
adopted looks at twenty different factors to determine
whether, on balance, the purchaser of the 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." 40 Tex. Admin. Code
this Court has expressly recognized that control of the
content of a worker's decision is not a necessary element
in establishing employment status. In Murk v.
Scheele, we determined whether a physician was an
employee of a hospital for purposes of the Texas Tort Claims
Act. 120 S.W.3d 865, 866 (Tex. 2003). Although the definition
of "employee" in the Tort Claims Act does not track
the language of TUCA exactly, the wording of the control
element is very similar. Under the Tort Claims Act,
"'Employee' means a person, . . . who is in the
paid service of a governmental unit, but does not include . .
. a person who performs tasks the details of which the
governmental unit does not have the legal right to
control." See id. (emphasis added)
(quoting Tex. Civ. Prac. & Rem. Code § 101.001(2)).
After determining that the physician was in the paid service
of the governmental unit, we concluded that he was an