Texas 2021 - 87th Regular

Texas House Bill HB3656 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	~~87R20656~~ RDS-F
	1	+	87R11426 RDS-F
2	2		By: Turner of Tarrant H.B. No. 3656
3		-	Substitute the following for H.B. No. 3656:
4		-	By: Turner of Tarrant C.S.H.B. No. 3656
5	3
6	4
7	5		A BILL TO BE ENTITLED
8	6		AN ACT
9	7		relating to the classification of certain construction workers and
10	8		the eligibility of those workers for unemployment benefits;
11	9		providing penalties.
12	10		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	11		SECTION 1. Subchapter E, Chapter 201, Labor Code, is
14	12		amended by adding Section 201.079 to read as follows:
15	13		Sec. 201.079. SERVICE BY INDEPENDENT CONTRACTOR IN
16		-	CONSTRUCTION. (a) In this section, "construction" has the meaning
17		-	assigned by Section 301.201.
	14	+	CONSTRUCTION. (a) In this section, "construction" and
	15	+	"independent contractor" have the meanings assigned by Section
	16	+	301.201.
18	17		(b) In this subtitle, "employment" does not include
19	18		construction performed by an individual as an independent
20	19		contractor.
21	20		SECTION 2. Chapter 301, Labor Code, is amended by adding
22	21		Subchapter L to read as follows:
23	22		SUBCHAPTER L. CLASSIFICATION OF INDIVIDUAL EMPLOYED IN
24	23		CONSTRUCTION
25	24		Sec. 301.201. DEFINITIONS. In this subchapter:
26	25		(1) "Construction" means work related to the erection,
27	26		improvement, alteration, repair, renovation, maintenance, or
28	27		remodeling of a building, structure, appurtenance, road, highway,
29	28		bridge, dam, levee, canal, jetty, or other improvement to or on real
30	29		property, including moving, demolishing, dredging, shoring,
31	30		scaffolding, drilling, blasting, and excavating real property.
32	31		(2) "Contractor" means a person who contracts to
33	32		perform construction.
34		-	(3) "Employee" has the meaning assigned by Section
35		-	61.001.
36		-	Sec. 301.202. APPLICABILITY. (a) An individual may not be
37		-	considered an employee based solely on the fact that the person for
38		-	whom the individual is providing construction services requires
39		-	that any employee hired by the individual must:
	33	+	(3) "Employee" means an individual who performs
	34	+	services for another under an express or implied contract of hire.
	35	+	(4) "Independent contractor" means an individual who
	36	+	is an independent contractor as provided by Section 301.202.
	37	+	Sec. 301.202. INDEPENDENT CONTRACTOR. For purposes of this
	38	+	subchapter, an individual is an independent contractor if the
	39	+	individual satisfies at least five of the following conditions:
	40	+	(1) the individual performs a service under a written
	41	+	contract with the person for whom the service is performed that
	42	+	states that the relationship of the individual to the person for
	43	+	whom the service is performed is that of an independent contractor
	44	+	and not an employee;
	45	+	(2) the individual represents that the individual is
	46	+	an independent contractor and not an employee;
	47	+	(3) the individual is required to submit to the person
	48	+	for whom a service is performed an Internal Revenue Service Form W-9
	49	+	or a similar form providing the same information;
	50	+	(4) the individual operates a business entity in which
	51	+	the individual shares in the profits or losses of the entity;
	52	+	(5) the individual is not prohibited from hiring
	53	+	employees and acting as the employer of any employee of the
	54	+	individual by paying wages, directing activities, and performing
	55	+	other similar functions characteristic of an employer-employee
	56	+	relationship;
	57	+	(6) the individual has substantially invested in, and
	58	+	is required to furnish, necessary tools, supplies, or materials to
	59	+	perform a service;
	60	+	(7) the individual obtains and pays for any
	61	+	occupational license required by this state to perform a service;
	62	+	(8) the individual is free to perform services for any
	63	+	other person; or
	64	+	(9) the individual submits to the person for whom a
	65	+	service is performed evidence of any insurance coverage required by
	66	+	law to perform a construction service.
	67	+	Sec. 301.203. APPLICABILITY; REBUTTABLE PRESUMPTION. (a)
	68	+	An individual may not be considered an employee based solely on the
	69	+	fact that the person for whom the individual is providing a service
	70	+	requires that any employee hired by the individual must:
40	71		(1) submit to a criminal background check or
41	72		preemployment drug screening; or
42	73		(2) possess a certain license or certification
43	74		relating to the work the employee will perform.
44		-	(b) A person for whom an individual is providing
	75	+	(b) It is a rebuttable presumption that an individual
	76	+	providing construction services is an employee if the individual is
	77	+	not an independent contractor as provided by Section 301.202.
	78	+	(c) A person for whom an individual is providing
45	79		construction services is not required to report to the commission
46	80		under Subtitle A that the individual is an employee of the person if
47	81		the person:
48	82		(1) shows that the individual is an independent
49		-	contractor;
	83	+	contractor as provided by Section 301.202;
50	84		(2) provides to the individual an Internal Revenue
51	85		Service Form 1099, or a similar form issued by, or that meets the
52	86		compliance guidelines of, the Internal Revenue Service, on which
53	87		the person reports the amount paid to the individual in accordance
54	88		with Internal Revenue Service requirements; and
55	89		(3) files the form described by Subdivision (2) with
56	90		the Internal Revenue Service in accordance with Internal Revenue
57	91		Service requirements.
58		-	(c) This subchapter does not apply to services performed by
59		-	an individual in the employ of:
60		-	(1) a state, a political subdivision of a state, or an
61		-	Indian tribe or an instrumentality of a state, political
62		-	subdivision of a state, or Indian tribe that is wholly owned by one
63		-	or more states, political subdivisions, or Indian tribes, provided
64		-	that the services are excluded from employment as defined in the
65		-	Federal Unemployment Tax Act (26 U.S.C. Section 3301 et seq.)
66		-	solely because of Section 3306(c)(7) of that Act; or
67		-	(2) a religious, charitable, educational, or other
68		-	organization, provided that the services are excluded from
69		-	employment as defined in the Federal Unemployment Tax Act (26
70		-	U.S.C. Section 3301 et seq.) solely because of Section 3306(c)(8)
71		-	of that Act.
72		-	Sec. 301.203. EMPLOYEE STATUS. A contractor shall properly
73		-	classify each individual providing construction services as either
74		-	an employee or an independent contractor in accordance with
75		-	commission rules.
76		-	Sec. 301.204. INFORMATION REGARDING COMPLAINTS. The
	92	+	Sec. 301.204. EMPLOYEE STATUS. A contractor shall properly
	93	+	classify each person providing construction services as either an
	94	+	employee or an independent contractor.
	95	+	Sec. 301.205. INFORMATION REGARDING COMPLAINTS. The
77	96		commission shall provide on its Internet website information
78	97		regarding the procedure for the public to report violations of this
79	98		subchapter.
80		-	Sec. 301.~~205~~. ADMINISTRATIVE PENALTY. (a) The commission
	99	+	Sec. 301.206. ADMINISTRATIVE PENALTY. (a) The commission
81	100		may impose an administrative penalty on a contractor who violates
82		-	Section 301.~~203~~. The amount of the penalty may not exceed:
	101	+	Section 301.204. The amount of the penalty may not exceed:
83	102		(1) $100 for each individual who is not properly
84	103		classified; and
85	104		(2) $1,000 for each individual who is not properly
86	105		classified for each subsequent violation that occurs after the
87	106		imposition of a penalty for a prior violation.
88	107		(b) Any penalty issued under this section applies to a
89	108		successor business entity that:
90	109		(1) has one or more owners who jointly control at least
91	110		50 percent of the:
92	111		(A) original employer; and
93	112		(B) successor business entity; and
94	113		(2) is engaged in the same or similar business
95	114		activity.
96	115		(c) An administrative penalty imposed under this section
97	116		shall be imposed in the same manner as the commission imposes an
98	117		administrative penalty under other law.
99		-	Sec. 301.~~206~~. NOTIFICATION TO GOVERNMENTAL ENTITY. If the
	118	+	Sec. 301.207. NOTIFICATION TO GOVERNMENTAL ENTITY. If the
100	119		commission determines that a contractor has violated this
101	120		subchapter, the commission shall provide notice of the violation to
102	121		each governmental entity that the commission reasonably believes
103	122		has received construction services provided by the contractor. The
104	123		notice must identify the contractor and, for each violation,
105	124		specify the type of service provided and the location at which the
106	125		service was provided, if known to the commission. In this section,
107	126		"governmental entity" has the meaning assigned by Section 406.096.
108		-	Sec. 301.~~207~~. ANNUAL REPORT. The commission shall issue an
	127	+	Sec. 301.208. ANNUAL REPORT. The commission shall issue an
109	128		annual report regarding compliance with and enforcement of this
110	129		subchapter. The report must include:
111	130		(1) the number of complaints received from the public;
112	131		(2) the number of investigated complaints and any
113	132		resulting findings; and
114	133		(3) the amount of unemployment taxes, interest,
115	134		administrative penalties, and fines actually collected as a result
116	135		of:
117	136		(A) violations of this subchapter; or
118	137		(B) the exclusion of construction performed by an
119	138		individual from the application of Subtitle A, unless the services
120	139		are excluded by application of Section 201.079.
121	140		SECTION 3. The change in law made by this Act applies only
122	141		to a claim for unemployment compensation benefits that is filed
123	142		with the Texas Workforce Commission on or after the effective date
124	143		of this Act. A claim filed before the effective date of this Act is
125	144		governed by the law in effect on the date the claim was filed, and
126	145		the former law is continued in effect for that purpose.
127	146		SECTION 4. This Act takes effect September 1, 2021.