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.