By: Fraser S.B. No. 1404
99S0502/1
A BILL TO BE ENTITLED
AN ACT
1-1 relating to workers' compensation insurance coverage under certain
1-2 agreements and to liability of third parties for an injury to an
1-3 employee.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 406.121, Labor Code, is amended to read
1-6 as follows:
1-7 Sec. 406.121. DEFINITIONS. In this subchapter:
1-8 (1) "Building or construction" includes:
1-9 (A) erecting or preparing to erect a structure,
1-10 including a building, bridge, roadway, public utility facility, or
1-11 related appurtenance;
1-12 (B) maintaining, remodeling, extending,
1-13 repairing, or demolishing a structure; or
1-14 (C) otherwise improving real property or an
1-15 appurtenance to real property through similar activities.
1-16 (2) "Contractor" means a person who contracts with a
1-17 general contractor or principal to perform all or part of the work
1-18 or services that the general contractor or principal has undertaken
1-19 to perform.
1-20 (3) "General contractor" means a person who undertakes
1-21 to procure the performance of work or a service, either separately
1-22 or through the use of contractors [subcontractors]. The term
1-23 includes an owner or lessor of real property; a "hiring contractor"
1-24 subject to Subchapter G; and a "principal contractor," "original
2-1 contractor," "prime contractor," or other analogous term. The term
2-2 does not include a motor carrier that provides a transportation
2-3 service through the use of an owner operator.
2-4 (4) [(2)] "Independent contractor" means a person who
2-5 contracts to perform work or provide a service for the benefit of
2-6 another and who ordinarily:
2-7 (A) acts as the employer of any employee of the
2-8 contractor by paying wages, directing activities, and performing
2-9 other similar functions characteristic of an employer-employee
2-10 relationship;
2-11 (B) is free to determine the manner in which the
2-12 work or service is performed, including the hours of labor of or
2-13 method of payment to any employee;
2-14 (C) is required to furnish or to have employees,
2-15 if any, furnish necessary tools, supplies, or materials to perform
2-16 the work or service; and
2-17 (D) possesses the skills required for the
2-18 specific work or service.
2-19 (5) [(3)] "Motor carrier" means a person who operates
2-20 a motor vehicle over a public highway in this state to provide a
2-21 transportation service or who contracts to provide that service.
2-22 (6) [(4)] "Owner operator" means a person who provides
2-23 transportation services under contract for a motor carrier. An
2-24 owner operator is an independent contractor.
2-25 (7) "Principal" means a person who:
2-26 (A) undertakes work for himself or contracts to
3-1 perform work for another; and
3-2 (B) enters into an agreement with a contractor
3-3 for execution by or under the contractor of all or any part of the
3-4 work.
3-5 (8) [(5) "Subcontractor" means a person who contracts
3-6 with a general contractor to perform all or part of the work or
3-7 services that the general contractor has undertaken to perform.]
3-8 [(6)] "Transportation service" means providing a motor
3-9 vehicle, with a driver under contract, to transport passengers or
3-10 property.
3-11 (9) "Worker" means an individual who performs work for
3-12 a general contractor or principal but is not a direct employee of
3-13 the general contractor or principal.
3-14 SECTION 2. Section 406.123, Labor Code, is amended to read
3-15 as follows:
3-16 Sec. 406.123. ELECTION TO PROVIDE COVERAGE; ADMINISTRATIVE
3-17 VIOLATION. (a) A contractor and a general contractor or principal
3-18 [and a subcontractor] may enter into a written agreement under
3-19 which the general contractor or principal provides workers'
3-20 compensation insurance coverage to the contractor [subcontractor]
3-21 and the employees of the contractor [subcontractor].
3-22 (b) A general contractor or principal engaged in building or
3-23 construction may provide workers' compensation insurance coverage
3-24 in the manner authorized under Section 406.003 or by entering into
3-25 a written agreement with another person under which the other
3-26 person provides the coverage.
4-1 (c) If a general contractor has workers' compensation
4-2 insurance to protect the general contractor's employees and if, in
4-3 the course and scope of the general contractor's business, the
4-4 general contractor enters into a contract with a subcontractor who
4-5 does not have employees, the general contractor shall be treated as
4-6 the employer of the subcontractor for the purposes of this subtitle
4-7 and may enter into an agreement for the deduction of premiums paid
4-8 in accordance with Subsection (e) [(d)].
4-9 (d) [(c)] A motor carrier and an owner operator may enter
4-10 into a written agreement under which the motor carrier provides
4-11 workers' compensation insurance coverage to the owner operator and
4-12 the employees of the owner operator.
4-13 (e) [(d)] If a general contractor or a motor carrier elects
4-14 to provide coverage under Subsection (a) or (d) [(c)], then,
4-15 notwithstanding Section 415.006, the actual premiums, based on
4-16 payroll, that are paid or incurred by the general contractor or
4-17 motor carrier for the coverage may be deducted from the contract
4-18 price or other amount owed to the subcontractor or owner operator
4-19 by the general contractor or motor carrier.
4-20 (f) [(e)] An agreement under this section makes the general
4-21 contractor the employer of the subcontractor and the
4-22 subcontractor's employees only for purposes of the workers'
4-23 compensation laws of this state.
4-24 (g) [(f)] A general contractor shall file a copy of an
4-25 agreement entered into under this section with the general
4-26 contractor's workers' compensation insurance carrier not later than
5-1 the 10th day after the date on which the contract is executed. If
5-2 the general contractor is a certified self-insurer, the copy must
5-3 be filed with the division of self-insurance regulation.
5-4 (h) [(g)] A general contractor who enters into an agreement
5-5 with a subcontractor under this section commits a violation if the
5-6 contractor fails to file a copy of the agreement as required by
5-7 Subsection (g) [(f)]. A violation under this subsection is a Class
5-8 B administrative violation.
5-9 (i) [(h)] Notwithstanding Subsection (c) [(b)], a person who
5-10 performs work or provides a service for an oil or gas well operator
5-11 and who is an independent contractor that has no employees shall be
5-12 treated in the same manner as an independent contractor with
5-13 employees and is not entitled to coverage under the general
5-14 contractor's workers' compensation insurance policy unless the
5-15 independent contractor and the general contractor enter into an
5-16 agreement under this section.
5-17 (j) If a general contractor or principal has elected to
5-18 provide workers' compensation insurance under Subsection (b), the
5-19 general contractor's or principal's insurance carrier is liable for
5-20 workers' compensation benefits if the worker sustains a compensable
5-21 injury in the course and scope of the work performed by the worker
5-22 for the general contractor or principal. If the general contractor
5-23 or principal has elected to provide coverage by entering into a
5-24 written agreement that another person will provide the coverage
5-25 under Subsection (a), the general contractor's or principal's
5-26 insurance carrier is liable for benefits only to the extent the
6-1 other person or the other person's insurance carrier fails to pay
6-2 benefits to which the worker is entitled under this subtitle.
6-3 SECTION 3. Section 408.001, Labor Code, is amended to read
6-4 as follows:
6-5 Sec. 408.001. EXCLUSIVE REMEDY; EXEMPLARY DAMAGES.
6-6 (a) Recovery of workers' compensation benefits is the exclusive
6-7 remedy of an employee covered by workers' compensation insurance
6-8 coverage or a legal beneficiary against the employer or an agent or
6-9 employee of the employer for the death of or a work-related injury
6-10 sustained by the employee.
6-11 (b) Recovery of workers' compensation benefits is the
6-12 exclusive remedy of a worker covered by workers' compensation
6-13 insurance coverage under Section 406.123(b) or the worker's legal
6-14 beneficiary against the general contractor or principal and the
6-15 general contractor's or principal's parent company, subsidiary,
6-16 partner, joint venturer, agent, servant, or employee if the general
6-17 contractor or principal has provided workers' compensation
6-18 insurance coverage under Section 406.123(b).
6-19 (c) Subsection (b) does not affect a direct employer's
6-20 status and immunity under this section as an employer against whom
6-21 the recovery of workers' compensation benefits is the injured
6-22 employee's exclusive remedy.
6-23 (d) This section does not prohibit the recovery of exemplary
6-24 damages by the surviving spouse or heirs of the body of a deceased
6-25 employee whose death was caused by an intentional act or omission
6-26 of the employer or by the employer's gross negligence.
7-1 (e) [(c)] In this section, "gross negligence" has the
7-2 meaning assigned by Section 41.001, Civil Practice and Remedies
7-3 Code.
7-4 SECTION 4. Section 417.001, Labor Code, is amended to read
7-5 as follows:
7-6 Sec. 417.001. THIRD-PARTY LIABILITY. (a) Except as
7-7 provided in Subsection (b), an [An] employee or legal beneficiary
7-8 may seek damages from a third party who is or becomes liable to pay
7-9 damages for an injury or death that is compensable under this
7-10 subtitle and may also pursue a claim for workers' compensation
7-11 benefits under this subtitle.
7-12 (b) A worker or a worker's legal beneficiary may not seek
7-13 damages from the general contractor or principal if the general
7-14 contractor or principal provided workers' compensation insurance
7-15 coverage under Section 406.123(b).
7-16 (c) If a benefit is claimed by an injured employee or a
7-17 legal beneficiary of the employee, the insurance carrier is
7-18 subrogated to the rights of the injured employee and may enforce
7-19 the liability of the third party in the name of the injured
7-20 employee or the legal beneficiary. If the recovery is for an
7-21 amount greater than that paid or assumed by the insurance carrier
7-22 to the employee or the legal beneficiary, the insurance carrier
7-23 shall:
7-24 (1) reimburse itself and pay the costs from the amount
7-25 recovered; and
7-26 (2) pay the remainder of the amount recovered to the
8-1 injured employee or the legal beneficiary.
8-2 (d) [(c)] If a claimant receives benefits from the
8-3 subsequent injury fund, the commission is:
8-4 (1) considered to be the insurance carrier under this
8-5 section for purposes of those benefits;
8-6 (2) subrogated to the rights of the claimant; and
8-7 (3) entitled to reimbursement in the same manner as
8-8 the insurance carrier.
8-9 (e) [(d)] The commission shall remit money recovered under
8-10 this section to the comptroller for deposit to the credit of the
8-11 subsequent injury fund.
8-12 SECTION 5. Section 417.004, Labor Code, is amended to read
8-13 as follows:
8-14 Sec. 417.004. EMPLOYER LIABILITY TO THIRD PARTY. In an
8-15 action for damages brought by an injured employee, a worker as
8-16 defined in Section 406.121, a legal beneficiary, or an insurance
8-17 carrier against a third party liable to pay damages for the injury
8-18 or death under this chapter that results in a judgment against the
8-19 third party or a settlement by the third party, a person protected
8-20 from liability under Section 408.001 [the employer] is not liable
8-21 to the third party for reimbursement or damages based on the
8-22 judgment or settlement unless the person [employer] executed,
8-23 before the injury or death occurred, a written agreement with the
8-24 third party to assume the liability.
8-25 SECTION 6. The changes in law made by this Act do not apply
8-26 to municipalities.
9-1 SECTION 7. This Act takes effect September 1, 1999, and
9-2 applies to a cause of action that accrues on or after that date. A
9-3 cause of action that accrued before the effective date of this Act
9-4 is governed by the law in effect before that date, and the former
9-5 law is continued in effect for that purpose.
9-6 SECTION 8. The importance of this legislation and the
9-7 crowded condition of the calendars in both houses create an
9-8 emergency and an imperative public necessity that the
9-9 constitutional rule requiring bills to be read on three several
9-10 days in each house be suspended, and this rule is hereby suspended.