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A BILL TO BE ENTITLED
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AN ACT
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relating to the classification of certain construction workers and |
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the eligibility of those workers for unemployment benefits; |
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providing penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter E, Chapter 201, Labor Code, is |
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amended by adding Section 201.079 to read as follows: |
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Sec. 201.079. SERVICE BY INDEPENDENT CONTRACTOR IN |
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CONSTRUCTION. (a) In this section, "construction" and |
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"independent contractor" have the meanings assigned by Section |
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301.201. |
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(b) In this subtitle, "employment" does not include |
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construction performed by an individual as an independent |
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contractor. |
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SECTION 2. Chapter 301, Labor Code, is amended by adding |
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Subchapter L to read as follows: |
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SUBCHAPTER L. CLASSIFICATION OF INDIVIDUAL EMPLOYED IN |
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CONSTRUCTION |
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Sec. 301.201. DEFINITIONS. In this subchapter: |
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(1) "Construction" means work related to the erection, |
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improvement, alteration, repair, renovation, maintenance, or |
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remodeling of a building, structure, appurtenance, road, highway, |
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bridge, dam, levee, canal, jetty, or other improvement to or on real |
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property, including moving, demolishing, dredging, shoring, |
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scaffolding, drilling, blasting, and excavating real property. |
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(2) "Contractor" means a person who contracts to |
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perform construction. |
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(3) "Employee" means an individual who performs |
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services for another under an express or implied contract of hire. |
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(4) "Independent contractor" means an individual who |
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is an independent contractor as provided by Section 301.202. |
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Sec. 301.202. INDEPENDENT CONTRACTOR. For purposes of this |
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subchapter, an individual is an independent contractor if the |
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individual satisfies at least five of the following conditions: |
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(1) the individual performs a service under a written |
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contract with the person for whom the service is performed that |
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states that the relationship of the individual to the person for |
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whom the service is performed is that of an independent contractor |
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and not an employee; |
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(2) the individual represents that the individual is |
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an independent contractor and not an employee; |
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(3) the individual is required to submit to the person |
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for whom a service is performed an Internal Revenue Service Form W-9 |
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or a similar form providing the same information; |
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(4) the individual operates a business entity in which |
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the individual shares in the profits or losses of the entity; |
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(5) the individual is not prohibited from hiring |
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employees and acting as the employer of any employee of the |
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individual by paying wages, directing activities, and performing |
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other similar functions characteristic of an employer-employee |
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relationship; |
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(6) the individual has substantially invested in, and |
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is required to furnish, necessary tools, supplies, or materials to |
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perform a service; |
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(7) the individual obtains and pays for any |
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occupational license required by this state to perform a service; |
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(8) the individual is free to perform services for any |
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other person; or |
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(9) the individual submits to the person for whom a |
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service is performed evidence of any insurance coverage required by |
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law to perform a construction service. |
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Sec. 301.203. APPLICABILITY; REBUTTABLE PRESUMPTION. (a) |
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An individual may not be considered an employee based solely on the |
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fact that the person for whom the individual is providing a service |
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requires that any employee hired by the individual must: |
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(1) submit to a criminal background check or |
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preemployment drug screening; or |
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(2) possess a certain license or certification |
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relating to the work the employee will perform. |
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(b) It is a rebuttable presumption that an individual |
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providing construction services is an employee if the individual is |
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not an independent contractor as provided by Section 301.202. |
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(c) A person for whom an individual is providing |
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construction services is not required to report to the commission |
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under Subtitle A that the individual is an employee of the person if |
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the person: |
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(1) shows that the individual is an independent |
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contractor as provided by Section 301.202; |
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(2) provides to the individual an Internal Revenue |
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Service Form 1099, or a similar form issued by, or that meets the |
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compliance guidelines of, the Internal Revenue Service, on which |
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the person reports the amount paid to the individual in accordance |
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with Internal Revenue Service requirements; and |
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(3) files the form described by Subdivision (2) with |
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the Internal Revenue Service in accordance with Internal Revenue |
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Service requirements. |
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Sec. 301.204. EMPLOYEE STATUS. A contractor shall properly |
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classify each person providing construction services as either an |
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employee or an independent contractor. |
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Sec. 301.205. INFORMATION REGARDING COMPLAINTS. The |
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commission shall provide on its Internet website information |
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regarding the procedure for the public to report violations of this |
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subchapter. |
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Sec. 301.206. ADMINISTRATIVE PENALTY. (a) The commission |
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may impose an administrative penalty on a contractor who violates |
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Section 301.204. The amount of the penalty may not exceed: |
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(1) $100 for each individual who is not properly |
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classified; and |
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(2) $1,000 for each individual who is not properly |
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classified for each subsequent violation that occurs after the |
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imposition of a penalty for a prior violation. |
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(b) Any penalty issued under this section applies to a |
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successor business entity that: |
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(1) has one or more owners who jointly control at least |
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50 percent of the: |
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(A) original employer; and |
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(B) successor business entity; and |
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(2) is engaged in the same or similar business |
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activity. |
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(c) An administrative penalty imposed under this section |
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shall be imposed in the same manner as the commission imposes an |
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administrative penalty under other law. |
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Sec. 301.207. NOTIFICATION TO GOVERNMENTAL ENTITY. If the |
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commission determines that a contractor has violated this |
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subchapter, the commission shall provide notice of the violation to |
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each governmental entity that the commission reasonably believes |
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has received construction services provided by the contractor. The |
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notice must identify the contractor and, for each violation, |
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specify the type of service provided and the location at which the |
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service was provided, if known to the commission. In this section, |
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"governmental entity" has the meaning assigned by Section 406.096. |
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Sec. 301.208. ANNUAL REPORT. The commission shall issue an |
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annual report regarding compliance with and enforcement of this |
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subchapter. The report must include: |
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(1) the number of complaints received from the public; |
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(2) the number of investigated complaints and any |
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resulting findings; and |
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(3) the amount of unemployment taxes, interest, |
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administrative penalties, and fines actually collected as a result |
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of: |
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(A) violations of this subchapter; or |
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(B) the exclusion of construction performed by an |
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individual from the application of Subtitle A, unless the services |
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are excluded by application of Section 201.079. |
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SECTION 3. The change in law made by this Act applies only |
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to a claim for unemployment compensation benefits that is filed |
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with the Texas Workforce Commission on or after the effective date |
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of this Act. A claim filed before the effective date of this Act is |
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governed by the law in effect on the date the claim was filed, and |
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the former law is continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2021. |