This website will be unavailable from Friday, April 26, 2024 at 6:00 p.m. through Monday, April 29, 2024 at 7:00 a.m. due to data center maintenance.

                                                                                


By:  Bailey                                                       H.B. No. 3191



A BILL TO BE ENTITLED

AN ACT

relating to the reporting and misclassification of employees and 
independent contractors; providing administrative penalties.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter B, Chapter 213, Labor Code, is 
amended by adding sections 213.015 and 213.016 to read as follows:
	Sec. 213.015.  MISCLASSIFICATION OF EMPLOYEE.  
Misclassification of employee means an attempt by an employer to 
avoid tax liability or reporting requirements for any person in its 
employment, as that term if defined by Section 201.041, Labor Code, 
by denoting or treating such person as an "independent contractor," 
"contract labor," or any other term or category implying the 
absence of an employment relationship.
	Sec. 213.016.  PENALTY FOR MISCLASSIFICATION OF EMPLOYEE.  
(a) an employer shall pay a penalty for failing to report wages for 
any employee by reason of attempting to treat such employee as an 
independent contractor or otherwise misclassifying the employee's 
employment status.
	(b)  the penalty shall be over and above any tax or interest 
due on the employee's wages.  The penalty shall be:
		(1)  an amount equal to the tax due on the employee's 
taxable wages; or
		(2)  an amount equal to three times the tax due on the 
employee's taxable wages if it is shown that the employer's failure 
to report wages is due to bad faith.
	(c)  bad faith shall require that at least one of the 
following conditions exist:
		(1)  after receiving a ruling from the Texas Workforce 
Commission or the Internal Revenue Service that an individual 
worker or similarly situated workers are employees, the employer 
fails to report the individual's wages to the Commission and pay 
appropriate taxes; or
		(2)  the employer exercises a high degree of direction 
and control over the details of the individual's work, which is 
fully within the normal course of the employer's business.
	(d)  any penalty assessed under this section shall apply to 
each employee misclassified or not reported.
	SECTION 2.  Section 234.101, Family Code, is amended by 
adding Subsection (3) to read as follows:
		(3)  "Independent Contractor" means any individual who 
is not an employee but receives compensation or executes a contract 
for services performed for the employer.
	SECTION 3.  Section 234.102 and Section 234.104, Family 
Code, are amended 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 newly hired or rehired independent contractor 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.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect September 1, 2005.