BILL ANALYSIS



H.B. 427
By: Bosse
March 7, 1995
Committee Report (Unamended)


BACKGROUND

Securities representatives have traditionally been viewed as
independent contractors.  These representatives receive their
compensation from such transactions in the form of a commission. 
The stock brokerage firms do not currently withhold  Federal taxes
or pay social security taxes on the commissions. There have been
instances in other states, however, in which the Internal Revenue
Service has attempted to impose harsh penalties and require
withholding.  It is felt that excluding these securities
representatives from coverage under the Texas Unemployment
Compensation Act will strengthen their status as independent
contractors.

PURPOSE

The purpose of this bill is to exclude from coverage under the
Texas Unemployment Compensation Act services provided by securities
representatives who are compensated for their service exclusively
on a commission basis.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, department,
institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1:  Amends Subchapter E, Chapter 201, Labor Code, by adding
Section 201.0725 which removes securities dealers from coverage
under the Texas Unemployment Compensation Act if:
     (1) the individual is engaged in performing an act or
     transaction subject to the definitions under Section 4 of the
     Securities Act;

     (2) the individual is registered by the securities
     commissioner under the Securities Act;

     (3) almost all the remuneration for services are directly
     related to the performance of services rather than the number
     of hours worked; and

     (4) the services are performed under a written contract
     between the individual and the person for whom the services
     are performed, and the contract states that the individual is
     not an employee with respect to those services for federal tax
     purposes.

SECTION 2:  Effective date September 1, 1995.

SECTION 3:  Emergency clause.

SUMMARY OF COMMITTEE ACTION

H.B. 427 was considered by the committee in a public hearing on
March 6, 1995.  Testifying on the bill was Mike Sheridan,
representing the Texas Employment Commission.  Testifying against
the bill was Walter Hinojosa, representing the Texas AFL-CIO.  H.B.
427 was reported favorably without amendment, with the
recommendation that it do pass and be printed, by a record vote of
8 ayes, 0 nays, 0 pnv, 1 absent.