88R2990 RDS-F
By: Turner H.B. No. 1054
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 an administrative penalty.
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" has the meaning
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" has the meaning assigned by Section
61.001.
Sec. 301.202. APPLICABILITY. (a) An individual may not be
considered an employee based solely on the fact that the person for
whom the individual is providing construction services 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) 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;
(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.
(c) This subchapter does not apply to services performed by
an individual in the employ of:
(1) a state, a political subdivision of a state, or an
Indian tribe or an instrumentality of a state, political
subdivision of a state, or Indian tribe that is wholly owned by one
or more states, political subdivisions, or Indian tribes, provided
that the services are excluded from employment as defined in the
Federal Unemployment Tax Act (26 U.S.C. Section 3301 et seq.)
solely because of Section 3306(c)(7) of that Act; or
(2) a religious, charitable, educational, or other
organization, provided that the services are excluded from
employment as defined in the Federal Unemployment Tax Act (26
U.S.C. Section 3301 et seq.) solely because of Section 3306(c)(8)
of that Act.
Sec. 301.203. EMPLOYEE STATUS. A contractor shall properly
classify each individual providing construction services as either
an employee or an independent contractor in accordance with
commission rules.
Sec. 301.204. 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. 301.205. ADMINISTRATIVE PENALTY. (a) The commission
may impose an administrative penalty on a contractor who violates
Section 301.203. 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. 301.206. 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. 301.207. 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, 2023.