83R8065 MAW-F
By: J. Davis of Harris H.B. No. 1925
A BILL TO BE ENTITLED
AN ACT
relating to the classification of certain construction workers and
the eligibility of those workers for unemployment benefits;
providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 201, Labor Code, is
amended by adding Section 201.079 to read as follows:
Sec. 201.079. SERVICE BY INDEPENDENT CONTRACTOR IN
CONSTRUCTION. (a) In this section, "construction" and
"independent contractor" have the meanings assigned by Section
301.201.
(b) In this subtitle, "employment" does not include
construction performed by an individual as an independent
contractor.
SECTION 2. Chapter 301, Labor Code, is amended by adding
Subchapter L to read as follows:
SUBCHAPTER L. CLASSIFICATION OF INDIVIDUAL EMPLOYED IN
CONSTRUCTION
Sec. 301.201. DEFINITIONS. In this subchapter:
(1) "Construction" means work related to the erection,
improvement, alteration, repair, renovation, maintenance, or
remodeling of a building, structure, appurtenance, road, highway,
bridge, dam, levee, canal, jetty, or other improvement to or on real
property, including moving, demolishing, dredging, shoring,
scaffolding, drilling, blasting, and excavating real property.
(2) "Contractor" means a person who contracts to
perform construction.
(3) "Employee" means an individual who performs
services for another under an express or implied contract of hire.
(4) "Independent contractor" means an individual who
is an independent contractor as provided by Section 301.202.
Sec. 301.202. INDEPENDENT CONTRACTOR. For purposes of this
subchapter, an individual is an independent contractor if the
individual satisfies at least five of the following conditions:
(1) the individual performs a service under a written
contract with the person for whom the service is performed that
states that the relationship of the individual to the person for
whom the service is performed is that of an independent contractor
and not an employee;
(2) the individual represents that the individual is
an independent contractor and not an employee;
(3) the individual is required to submit to the person
for whom a service is performed an Internal Revenue Service Form W-9
or a similar form providing the same information;
(4) the individual operates a business entity in which
the individual shares in the profits or losses of the entity;
(5) the individual is not prohibited from hiring
employees and acting as the employer of any employee of the
individual by paying wages, directing activities, and performing
other similar functions characteristic of an employer-employee
relationship;
(6) the individual has substantially invested in, and
is required to furnish, necessary tools, supplies, or materials to
perform a service;
(7) the individual obtains and pays for any
occupational license required by this state to perform a service;
(8) the individual is free to perform services for any
other person; or
(9) the individual submits to the person for whom a
service is performed evidence of any insurance coverage required by
law to perform a construction service.
Sec. 301.203. APPLICABILITY; REBUTTABLE PRESUMPTION. (a)
An individual may not be considered an employee based solely on the
fact that the person for whom the individual is providing a service
requires that any employee hired by the individual must:
(1) submit to a criminal background check or
preemployment drug screening; or
(2) possess a certain license or certification
relating to the work the employee will perform.
(b) It is a rebuttable presumption that an individual
providing construction services is an employee if the individual is
not an independent contractor as provided by Section 301.202.
(c) A person for whom an individual is providing
construction services is not required to report to the commission
under Subtitle A that the individual is an employee of the person if
the person:
(1) shows that the individual is an independent
contractor as provided by Section 301.202;
(2) provides to the individual an Internal Revenue
Service Form 1099, or a similar form issued by, or that meets the
compliance guidelines of, the Internal Revenue Service, on which
the person reports the amount paid to the individual in accordance
with Internal Revenue Service requirements; and
(3) files the form described by Subdivision (2) with
the Internal Revenue Service in accordance with Internal Revenue
Service requirements.
Sec. 301.204. EMPLOYEE STATUS. A contractor shall properly
classify each person providing construction services as either an
employee or an independent contractor.
Sec. 301.205. INFORMATION REGARDING COMPLAINTS. The
commission shall provide on its Internet website information
regarding the procedure for the public to report violations of this
subchapter.
Sec. 301.206. ADMINISTRATIVE PENALTY. (a) The commission
may impose an administrative penalty on a contractor who violates
Section 301.204. The amount of the penalty may not exceed:
(1) $100 for each individual who is not properly
classified; and
(2) $1,000 for each individual who is not properly
classified for each subsequent violation that occurs after the
imposition of a penalty for a prior violation.
(b) Any penalty issued under this section applies to a
successor business entity that:
(1) has one or more owners who jointly control at least
50 percent of the:
(A) original employer; and
(B) successor business entity; and
(2) is engaged in the same or similar business
activity.
(c) An administrative penalty imposed under this section
shall be imposed in the same manner as the commission imposes an
administrative penalty under other law.
Sec. 301.207. NOTIFICATION TO GOVERNMENTAL ENTITY. If the
commission determines that a contractor has violated this
subchapter, the commission shall provide notice of the violation to
each governmental entity that the commission reasonably believes
has received construction services provided by the contractor. The
notice must identify the contractor and, for each violation,
specify the type of service provided and the location at which the
service was provided, if known to the commission. In this section,
"governmental entity" has the meaning assigned by Section 406.096.
Sec. 301.208. ANNUAL REPORT. The commission shall issue an
annual report regarding compliance with and enforcement of this
subchapter. The report must include:
(1) the number of complaints received from the public;
(2) the number of investigated complaints and any
resulting findings; and
(3) the amount of unemployment taxes, interest,
administrative penalties, and fines actually collected as a result
of:
(A) violations of this subchapter; or
(B) the exclusion of construction performed by an
individual from the application of Subtitle A, unless the services
are excluded by application of Section 201.079.
SECTION 3. The change in law made by this Act applies only
to a claim for unemployment compensation benefits that is filed
with the Texas Workforce Commission on or after the effective date
of this Act. A claim filed before the effective date of this Act is
governed by the law in effect on the date the claim was filed, and
the former law is continued in effect for that purpose.
SECTION 4. This Act takes effect September 1, 2013.