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.