1-1 By: Tallas (Senate Sponsor - Brown) H.B. No. 520 1-2 (In the Senate - Received from the House April 22, 1993; 1-3 April 26, 1993, read first time and referred to Committee on 1-4 Economic Development; May 21, 1993, reported favorably by the 1-5 following vote: Yeas 9, Nays 0; May 21, 1993, sent to printer.) 1-6 COMMITTEE VOTE 1-7 Yea Nay PNV Absent 1-8 Parker x 1-9 Lucio x 1-10 Ellis x 1-11 Haley x 1-12 Harris of Dallas x 1-13 Harris of Tarrant x 1-14 Leedom x 1-15 Madla x 1-16 Rosson x 1-17 Shapiro x 1-18 Wentworth x 1-19 A BILL TO BE ENTITLED 1-20 AN ACT 1-21 relating to the exclusion from coverage under the Texas 1-22 Unemployment Compensation Act of services performed by certain 1-23 landmen. 1-24 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-25 SECTION 1. Section 19(g)(5), Texas Unemployment Compensation 1-26 Act (Article 5221b-17, Vernon's Texas Civil Statutes), is amended 1-27 to read as follows: 1-28 (5) The term "employment" shall not include: 1-29 (A) Service with respect to which unemployment 1-30 compensation is payable under an Unemployment Compensation System 1-31 established by an Act of Congress; provided that the Commission is 1-32 hereby authorized to enter into agreements with the proper agencies 1-33 under such Act of Congress, which agreements shall become effective 1-34 ten (10) days after publication thereof in the manner provided in 1-35 subsection 11(b) of this Act for general rules, to provide 1-36 reciprocal treatment to individuals who have, after acquiring 1-37 potential rights to benefits under this Act, acquired rights to 1-38 unemployment compensation under such Act of Congress, or who have, 1-39 after acquiring potential rights to unemployment compensation under 1-40 such Act of Congress, acquired rights to benefits under this Act; 1-41 (B) Service performed by an individual as a 1-42 product demonstrator if: 1-43 (i) the service is performed under a 1-44 written contract between the individual and a person whose 1-45 principal business is obtaining the services of demonstrators for 1-46 third parties for product demonstration purposes; and 1-47 (ii) both in contract and in fact the 1-48 individual: 1-49 (I) is not treated as an employee 1-50 with respect to those services for federal unemployment tax 1-51 purposes; 1-52 (II) is compensated for each 1-53 demonstration, or the compensation is based on factors that relate 1-54 to the work performed; 1-55 (III) determines the method of 1-56 performing the service; 1-57 (IV) provides the vehicles used to 1-58 perform the service; 1-59 (V) is responsible for the 1-60 completion of a specific job and is liable for any failure to 1-61 complete the job; 1-62 (VI) is free to accept or reject 1-63 jobs from a product demonstrator business, and the principal 1-64 business has no control over where the individual works; 1-65 (VII) pays all expenses, and the 1-66 opportunity for profit or loss rests solely with the individual; 1-67 and 1-68 (VIII) is responsible for operating 2-1 costs, including fuel, repairs, supplies, and motor vehicle 2-2 insurance; 2-3 (C) Domestic service in a private home, local 2-4 college club, or local chapter of a college fraternity or sorority; 2-5 (D) Service performed by an individual in the 2-6 employ of his son, daughter, or spouse, and service performed by a 2-7 child under the age of twenty-one (21) years in the employ of his 2-8 father or mother; 2-9 (E) Service performed in the employ of a church, 2-10 convention or association of churches, or an organization which is 2-11 operated primarily for religious purposes and which is operated, 2-12 supervised, controlled, or principally supported by a church or 2-13 convention or association of churches; 2-14 (F) Services performed in the employ of a 2-15 political subdivision or any instrumentality thereof which is 2-16 wholly owned by one (1) or more political subdivisions: 2-17 (i) as an elected official; 2-18 (ii) as a member of a legislative body; 2-19 (iii) as a member of the judiciary; 2-20 (iv) as an employee serving on a temporary 2-21 basis in case of fire, storm, snow, earthquake, flood, or similar 2-22 emergency; or 2-23 (v) in a position which, under or pursuant 2-24 to law, is designated as a major nontenured policy-making or 2-25 advisory position, or a policy-making or advisory position the 2-26 performance of the duties of which ordinarily does not require more 2-27 than eight (8) hours per week; 2-28 (G) Service performed in the employ of a foreign 2-29 government (including services as a consular or other officer or 2-30 employee, or a nondiplomatic representative); 2-31 (H) Service performed in the employ of an 2-32 instrumentality wholly owned by a foreign government (i) if the 2-33 service is of a character similar to that performed in foreign 2-34 countries by the employees of the United States Government or of an 2-35 instrumentality thereof; and (ii) if the Commission finds that the 2-36 United States Secretary of State has certified to the United States 2-37 Secretary of the Treasury that the foreign government, with respect 2-38 to whose instrumentality exemption is claimed, grants an equivalent 2-39 exemption with respect to similar services performed in the foreign 2-40 country by employees of the United States Government and of 2-41 instrumentalities thereof; 2-42 (I) Service performed as a student nurse in the 2-43 employ of a hospital or a nurses' training school by an individual 2-44 who is enrolled and is regularly attending classes in a nurses' 2-45 training school chartered or approved pursuant to State law; and 2-46 service performed as an intern in the employ of a hospital by an 2-47 individual who has completed a four-year course in a medical school 2-48 chartered or approved pursuant to State law; 2-49 (J) Service performed by an individual for a 2-50 person as an insurance agent or an insurance solicitor, if all such 2-51 service performed by such individual for such person is performed 2-52 for remuneration solely by way of commission; 2-53 (K) Service performed by an individual under the 2-54 age of eighteen (18) years in the delivery or distribution of 2-55 newspapers or shopping news, not including delivery or distribution 2-56 to any point for subsequent delivery or distribution; 2-57 (L) Service covered by an arrangement between 2-58 the Commission and the agency charged with the administration of 2-59 any other state or federal unemployment compensation law pursuant 2-60 to which all services performed by an individual for an employing 2-61 unit during the period covered by such employing unit's duly 2-62 approved election are deemed to be performed entirely within such 2-63 agency's state or under such federal law; 2-64 (M) Service performed in the employ of the 2-65 United States Government or an instrumentality of the United States 2-66 exempt under the Constitution of the United States from the 2-67 contributions imposed by this Act, except that to the extent that 2-68 the Congress of the United States shall permit states to require 2-69 any instrumentalities of the United States to make payments into an 2-70 unemployment fund under a state unemployment compensation law, all 3-1 of the provisions of this Act shall be applicable to such 3-2 instrumentalities, and to services performed for such 3-3 instrumentalities, in the same manner, to the same extent, and on 3-4 the same terms as to all other employers, employing units, 3-5 individuals, and services; provided, that if this State shall not 3-6 be certified for any year by the Social Security Board or successor 3-7 under Section 1603(c) of the Internal Revenue Code of 1954, the 3-8 payments required by such instrumentalities with respect to such 3-9 year shall be refunded by the Commission from the fund in the same 3-10 manner and within the same period as is provided in subsection 3-11 14(j) of this Act with respect to contributions erroneously 3-12 collected; 3-13 (N) Service performed by a duly ordained, 3-14 commissioned, or licensed minister of a church in the exercise of 3-15 his ministry or by a member of a religious order in the exercise of 3-16 duties required by such order; 3-17 (P) Service performed in the employ of a 3-18 facility conducted for the purpose of carrying out a program of 3-19 rehabilitation for individuals whose earning capacity is impaired 3-20 by age or physical or mental deficiency or injury, or providing 3-21 remunerative work for individuals who because of their impaired 3-22 physical or mental capacity cannot be readily absorbed in the 3-23 competitive labor market by an individual receiving such 3-24 rehabilitative or remunerative work; 3-25 (Q) Service performed as part of an unemployment 3-26 work-relief or work-training program assisted or financed in whole 3-27 or in part by any federal agency or an agency of a state or 3-28 political subdivision thereof, by an individual receiving such work 3-29 relief or work training; 3-30 (R) Service performed by an inmate of a 3-31 custodial or penal institution which is owned or operated by the 3-32 State or a political subdivision thereof; 3-33 (S) Service performed in the employ of a school, 3-34 college, or university, if such service is performed by a student 3-35 who is enrolled and is regularly attending classes at such school, 3-36 college, or university; 3-37 (T) Service performed by an individual who is 3-38 enrolled at a nonprofit or public educational institution which 3-39 normally maintains a regular faculty and curriculum and normally 3-40 has a regularly organized body of students in attendance at the 3-41 place where its educational activities are carried on as a student 3-42 in a full-time program, taken for credit at such institution, which 3-43 combines academic instruction with work experience, if such service 3-44 is an integral part of such program, and such institution has so 3-45 certified to the employing unit, except that this subparagraph 3-46 shall not apply to service performed in a program established for 3-47 or on behalf of an employer or group of employers, service 3-48 performed in an apprenticeship training program, or service 3-49 performed by a teaching assistant; 3-50 (U) Service performed in the employ of a 3-51 hospital, if such service is performed by a patient of such 3-52 hospital; 3-53 (V) Service performed on a fishing vessel 3-54 normally having a crew of fewer than ten (10) if the crew member's 3-55 reimbursement for services performed is a share of the catch and 3-56 the services are determined not to be employment under the Federal 3-57 Unemployment Tax Act; and 3-58 (W) Service performed by an individual as a 3-59 direct seller if: 3-60 (i) the individual is engaged in the 3-61 business of in-person sales of consumer products to any buyer on a 3-62 buy-sell basis, a deposit-commission basis, or any similar basis 3-63 for resale in the home, or in a place other than in, or affiliated 3-64 with, a permanent retail establishment, or the individual is 3-65 engaged in the business of selling consumer products in the home or 3-66 in a place other than in, or affiliated with, a permanent retail 3-67 establishment; 3-68 (ii) substantially all the remuneration, 3-69 whether or not paid in cash, for the performance of the services is 3-70 directly related to sales or other output, including the 4-1 performance of services, rather than to the number of hours worked; 4-2 and 4-3 (iii) the services performed by the 4-4 individual are performed under a written contract between the 4-5 individual and the person for whom the services are performed, and 4-6 the contract provides that the individual is not treated as an 4-7 employee with respect to those services for federal tax purposes; 4-8 (X) Service performed by a full-time student in 4-9 the employ of an organized camp if the conditions in (i) below are 4-10 met. 4-11 (i) This paragraph applies if: 4-12 (I) such camp: 4-13 (a) did not operate for more 4-14 than seven (7) months in the calendar year and did not operate for 4-15 more than seven (7) months in the preceding calendar year, or 4-16 (b) had average gross receipts 4-17 for any six (6) months in the preceding calendar year which were 4-18 not more than 33 1/3 percent of its average gross receipts for the 4-19 other six (6) months in the preceding calendar year; and 4-20 (II) such full-time student 4-21 performed services in the employ of such camp for less than 4-22 thirteen (13) calendar weeks in such calendar year. 4-23 (ii) For purposes of this paragraph, an 4-24 individual shall be treated as a full-time student for any period: 4-25 (I) during which the individual is 4-26 enrolled as a full-time student at an educational institution, or 4-27 (II) which is between academic years 4-28 or terms if: 4-29 (a) the individual was 4-30 enrolled as a full-time student at an educational institution for 4-31 the immediately preceding academic year or term, and 4-32 (b) there is a reasonable 4-33 assurance that the individual will be so enrolled for the 4-34 immediately succeeding academic year or term after the period 4-35 described in Subparagraph (a); 4-36 (Y) Service performed by an individual as a real 4-37 estate broker or salesman if: 4-38 (i) the individual is engaged in 4-39 performing acts or transactions comprehended by the definition of 4-40 "real estate broker" in The Real Estate License Act (Article 6573a, 4-41 Vernon's Texas Civil Statutes); 4-42 (ii) the individual is licensed as a real 4-43 estate broker or salesman by the Texas Real Estate Commission; 4-44 (iii) substantially all the remuneration, 4-45 whether or not paid in cash, for the performance of the services is 4-46 directly related to sales or other output, including the 4-47 performance of services, rather than to the number of hours worked; 4-48 and 4-49 (iv) the services performed by the 4-50 individual are performed under a written contract between the 4-51 individual and the person for whom the services are performed, and 4-52 the contract provides that the individual is not treated as an 4-53 employee with respect to those services for federal tax purposes; 4-54 (Z) Service performed by an individual as an 4-55 instructor of persons licensed or seeking licensure as real estate 4-56 brokers or salesmen if: 4-57 (i) the individual is instructing an 4-58 educational program or course approved by the Texas Real Estate 4-59 Commission; and 4-60 (ii) the services performed by the 4-61 individual are performed under a written contract between the 4-62 individual and the person for whom the services are performed, and 4-63 the contract provides that the individual is not treated as an 4-64 employee with respect to those services for federal tax purposes; 4-65 and 4-66 (AA) Service performed for a private for-profit 4-67 delivery or courier service by an individual for compensation if: 4-68 (i) the individual: 4-69 (I) is free to accept or reject jobs 4-70 from a private for-profit delivery or courier service, and the 5-1 private for-profit delivery or courier service has no control over 5-2 when the individual works; 5-3 (II) is compensated for each 5-4 delivery, or the compensation is based on factors that relate to 5-5 the work performed, including receipt of a percentage of any rate 5-6 schedule or of a lawfully published tariff; 5-7 (III) pays all expenses, and the 5-8 opportunity for profit or loss rests solely with the individual; 5-9 (IV) is responsible for operating 5-10 costs, including fuel, repairs, supplies, and motor vehicle 5-11 insurance; 5-12 (V) determines the method of 5-13 performing the service, including selection of routes and order of 5-14 deliveries; 5-15 (VI) is responsible for the 5-16 completion of a specific job and is liable for any failure to 5-17 complete the job; 5-18 (VII) enters into a contract that 5-19 specifies the relationship of the individual to the private 5-20 for-profit delivery or courier service to be that of an independent 5-21 contractor and not that of an employee; and 5-22 (VIII) provides the vehicle used to 5-23 perform the service; and 5-24 (ii) the private for-profit delivery or 5-25 courier service operates exclusively within a commercial zone as 5-26 defined and prescribed by the Railroad Commission of Texas under 5-27 Section 1(g), Chapter 314, Acts of the 41st Legislature, Regular 5-28 Session, 1929 (Article 911b, Vernon's Texas Civil Statutes). 5-29 (BB) Service performed by an individual at a 5-30 trade market for a wholesaler or sales representative of a 5-31 wholesaler or manufacturer of consumer goods under a written 5-32 contract, or as a salesman for a wholesaler or wholesalers of 5-33 consumer goods if such wholesaler or sales representative maintains 5-34 a regular or seasonal place of business at a trade market facility 5-35 in a city with a population of more than 750,000. 5-36 (CC) Service performed for a private for-profit 5-37 person or entity by an individual as a landman if: 5-38 (i) the individual is engaged primarily in 5-39 negotiating for the acquisition or divestiture of mineral rights or 5-40 negotiating business agreements that provide for the exploration 5-41 for or development of minerals; 5-42 (ii) substantially all remuneration, paid 5-43 in cash or otherwise, for the performance of the services is 5-44 directly related to the completion by the individual of the 5-45 specific tasks contracted for rather than to the number of hours 5-46 worked by the individual; and 5-47 (iii) the services performed by the 5-48 individual are performed under a written contract between the 5-49 individual and the person for whom the services are performed that 5-50 provides that the individual is to be treated as an independent 5-51 contractor and not as an employee with respect to the services 5-52 provided under the contract. 5-53 SECTION 2. This Act takes effect September 1, 1993, and 5-54 applies only to benefit eligibility based on a claim for 5-55 unemployment compensation benefits that is filed with the Texas 5-56 Employment Commission on or after that date. A claim filed before 5-57 that date is governed by the law in effect on the date the claim 5-58 was filed, and the former law is continued in effect for that 5-59 purpose. 5-60 SECTION 3. The importance of this legislation and the 5-61 crowded condition of the calendars in both houses create an 5-62 emergency and an imperative public necessity that the 5-63 constitutional rule requiring bills to be read on three several 5-64 days in each house be suspended, and this rule is hereby suspended. 5-65 * * * * * 5-66 Austin, 5-67 Texas 5-68 May 21, 1993 5-69 Hon. Bob Bullock 5-70 President of the Senate 6-1 Sir: 6-2 We, your Committee on Economic Development to which was referred 6-3 H.B. No. 520, have had the same under consideration, and I am 6-4 instructed to report it back to the Senate with the recommendation 6-5 that it do pass and be printed. 6-6 Parker, 6-7 Chairman 6-8 * * * * * 6-9 WITNESSES 6-10 FOR AGAINST ON 6-11 ___________________________________________________________________ 6-12 Name: John C. Jennings x 6-13 Representing: TX Employment Commission 6-14 City: Austin 6-15 ------------------------------------------------------------------- 6-16 Name: Amy L. Gilliland x 6-17 Representing: TX Ind. Producers & Royalty 6-18 City: Austin 6-19 ------------------------------------------------------------------- 6-20 Name: Charles B. Milliken x 6-21 Representing: Amer. Assn. of Prof. Landsmen 6-22 City: Fort Worth 6-23 ------------------------------------------------------------------- 6-24 Name: Jack Deeter x 6-25 Representing: Amer. Assn. of Prof. Landmen 6-26 City: Fort Worth 6-27 ------------------------------------------------------------------- 6-28 Name: Robert L. Truair x 6-29 Representing: Amer. Assn. of Prof. Landmen 6-30 City: San Antonio 6-31 ------------------------------------------------------------------- 6-32 Name: Roger Soape x 6-33 Representing: Amer. Assn. of Prof. Landmen 6-34 City: Houston 6-35 ------------------------------------------------------------------- 6-36 Name: Jerry K. Bramwell x 6-37 Representing: Phillips Petroleum Co. 6-38 City: Missouri City, TX 6-39 ------------------------------------------------------------------- 6-40 Name: Alan H. Morgan x 6-41 Representing: Amer. Assn. of Prof. Landmen 6-42 City: Sugarland 6-43 -------------------------------------------------------------------