GEC C.S.H.B. 3138 75(R) BILL ANALYSIS BUSINESS & INDUSTRY C.S.H.B. 3138 By: Brimer 4-1-97 Committee Report (Substituted) BACKGROUND Currently, Workers' Compensation Insurance Coverage, codified in Chapter 406 of the Labor Code, does not provide the conditions under which certain oil and gas workers or service providers are independent contractors. In the oil and gas production business, it is common for an operator of an oil and natural gas well to hire an individual to perform certain services as well. The hired individual is usually an independent contractor who is in business as a sole proprietor and does not have any employees. Under Sections 406.121-126, Labor Code, the operator is generally required to provide, at the operator's expense, workers' compensation insurance coverage for the hired individual. The operator does not pay employment taxes or withhold FICA or federal income taxes for that individual since that individual is not the operator's employee. This bill would sets forth the conditions under which such an individual is an independent contractor in regard to the operator for purposes of workers' compensation insurance coverage. PURPOSE As proposed, HB 3138, sets forth the condition under which a person who performs work or provides a service for an oil and gas well operator is an independent contractor for purposes of workers' compensation insurance coverage. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 406.122, Labor Code, by adding Subsection (d), to set forth the conditions under which a person who performs work or provides a service for an oil or gas well operator is an independent contractor for purposes of workers' compensation insurance coverage. SECTION 2. Effective Date SECTION 3. Emergency Clause COMPARISON OF ORIGINAL TO SUBSTITUTE The committee substitute for H.B. 3138 leaves the current definition of "independent contractor" and adds a new subsection (h) to 406.123. The new section states that an oil and gas well operator that hires a contract pumper who is an independent contractor with no employees, is not required to provide workers' compensation insurance for the pumper. The bill does not prohibit an oil and gas well operator and an independent contractor from entering into an agreement for the provision of, and payment for, workers' compensation coverage.