It seems that this is known as a "working interview". Asking a candidate to do actual work without paying for it is illegal under Texas law.
However asking a person to take an extensive, even a multi-day, skills test is not. Asking a prospective web developer to submit a portfolio of prior work, or to design a web site for a fictional company, say for the Acme Company that supplies the Coyote, is legal.
Had the applicant created a web site for the actual employer without being paid, the applicant would own the copyright, and the prospective employer would be in violation of Texas minimum wage law, and would have committed copyright infringement if they used the design, without securing permission. Statutory damages for wilful copyright infringement can be as high as $150,000, and as low as $750. A federal suit must be filed to collect such damages.
However, if no actual work was done, I doubt that the applicant has a valid claim. One would need to consult a lawyer to see if some other basis for a claim would apply. Many lawyers will offer an initial consultation for free or a nominal charge.
Here are some Texas sources on the issues with "working interviews".
The page "Are “Working Interviews” Legal?" from the Gay Reed law firm says:
- If you bring someone in for a working interview you must pay them for their time in compliance with state and federal law and make appropriate withholding.
- Some believe that since they are only going to be there for a few days, you don’t have to do new-hire paperwork. Just skip the I-9, background check, application, and W-2. Wrong again. If you hire anyone – for 1 day or 1,000, you have to do new hire paperwork.
Depending on how long you would like to conduct your interview, we can create a day contract or a week contract for the prospective employee. This will limit your exposure under unemployment compensation laws, and you can even reduce the amount you pay. Where you might pay a good hygienist $20 per hour or more as a full time wage, you can pay them minimum wage during a working interview.
The page "What Is a “Working Interview” and How Does It Work? from CEDR HR Solutions says:
A “working interview” is the act of assessing a job candidate’s skills and ability to fit with your existing team by bringing them in to perform work for your business temporarily before you officially bring them on board. Traditionally, working interviews take place after a successful verbal interview. ... However, using working interviews does not exempt you from your obligations as an employer, and performing working interviews without understanding their legal implications can actually get you in a lot of trouble.
If your “interviewee” is performing work for your business that would usually be performed by one of your employees, in a legal sense, that person must be treated as an employee of your business.
By testing your applicants’ abilities and knowledge without having them perform actual work for your business, you can get an idea of their skill level without putting your practice at risk. “Skills tests” are especially helpful when it comes to evaluating candidates for clinical positions. ...
Instead of performing an unpaid working interview or trying to call someone an independent contractor when they do not fit those requirements, hire them and use a “Getting Acquainted” period to judge whether a new hire will be a long-term fit for your practice (90 days is often a good span of time for this).
The Texas Workforce Commission (TWC) has a page on "Interviews" which says:
- When interviewing applicants, apply the same standard that is applied to job applications - ask only about things that are directly related to the job requirements for the position under consideration.
- Watch out for tape-recording - the applicant might be tape-recording the interview without an employer's knowledge, and a video- or tape-recording of an interview would be discoverable in a discrimination claim or lawsuit.
- Tell the managers who conduct interviews to be extremely careful about note-taking during interviews - anything like that can be discovered in a claim or lawsuit - many discrimination cases have been lost due to careless and/or embarrassing comments written by interviewers.
- Test for whether something should be written down: would you feel comfortable explaining it in front of a judge and jury?
- "Working interviews" are not the same as pre-hire interviews at which an interviewee might demonstrate how he or she would carry out a sample task - an "interview" during which the worker performs actual work and receives what most companies would call "on the job" training or orientation to the company is work time - a company must pay at least minimum wage for such training time, satisfy all of the usual new-hire paperwork requirements (W-4, I-9, new hire report, and so on), and report the wages to TWC and IRS.
The TWC can be reached at: 512-463-2222
The TWC page on the minimum wage says that Texas uses the federal minimum wage of $7.25/hr. It lists several exceptions, none of which seem to apply to the situation described in the question, or rather the situation that would have occurred had the applicant accepted an "unpaid trial" or "working interview".
The actual Texas law is Chapter 62 of the Labor Code The exact section is 62.051.