79R10992 KSD-F


By:  Bailey                                                       H.B. No. 3191

Substitute the following for H.B. No. 3191:                                   

By:  Deshotel                                                 C.S.H.B. No. 3191


A BILL TO BE ENTITLED
AN ACT
relating to the employment relationship, including certain requirements relating to reporting independent contractors; providing a penalty. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subchapter B, Chapter 213, Labor Code, is amended by adding Section 213.026 to read as follows: Sec. 213.026. PENALTY FOR MISCLASSIFICATION OF EMPLOYEE. (a) An employer who, in an attempt to avoid tax liability or reporting requirements under this subtitle, classifies an employee as an independent contractor, contract laborer, or by any other term implying the absence of an employment relationship shall pay to the commission a penalty in addition to any tax or interest due on the employee's wages under this subtitle. (b) An employer shall pay a separate penalty under this section for each employee misclassified by the employer. (c) Except as provided by Subsection (d), the amount of a penalty under this section is an amount equal to the tax due on the employee's taxable wages under this subtitle. (d) The amount of the penalty under this section is an amount equal to three times the tax due on the employee's taxable wages under this subtitle if it is shown that: (1) the employer failed to report the misclassified employee's wages to the commission and pay the tax due on the misclassified employee's taxable wages after receiving a final decision from the commission or the Internal Revenue Service that the misclassified employee, or a similarly-situated employee, is an employee of the employer; or (2) the employer exercises a high degree of direction and control over the details of the misclassified employee's work in the normal course of the employer's business. SECTION 2. Section 234.101, Family Code, is amended by adding Subdivision (3) to read as follows: (3) "Independent contractor" means a person who is not an employee of an employer but receives compensation or executes a contract to perform work or provide services for the benefit of the employer. SECTION 3. Sections 234.102 and 234.104, Family Code, are amended to read as follows: Sec. 234.102. OPERATION OF NEW HIRE DIRECTORY. In cooperation with the Texas Workforce Commission, the Title IV-D agency shall develop and operate a state directory to which employers in the state shall report each newly hired or rehired employee and each independent contractor of the employer in accordance with the requirements of 42 U.S.C. Section 653a. Sec. 234.104. PROCEDURES. The Title IV-D agency by rule shall establish procedures for reporting employee and independent contractor information and for operating a state directory of new hires meeting the requirements of federal law. SECTION 4. Section 213.026, Labor Code, as added by this Act, applies only to conduct that occurs on or after the effective date of this Act. Conduct that occurs before the effective date of this Act is governed by the law in effect on the date the conduct occurred, and the former law is continued in effect for that purpose. SECTION 5. This Act takes effect September 1, 2005.