79R1683 PB-D
By: Shapleigh S.B. No. 1478
A BILL TO BE ENTITLED
AN ACT
relating to classification as an independent contractor for
purposes of certain labor and insurance laws.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 1, Labor Code, is amended by adding Chapter
2 to read as follows:
CHAPTER 2. CLASSIFICATION AS INDEPENDENT CONTRACTOR
Sec. 2.001. CLASSIFICATION AS INDEPENDENT CONTRACTOR. (a)
Except as otherwise specifically provided by this code, for
purposes of this code, an individual who performs work or services
for an employer must meet all of the requirements of this section to
be classified as an independent contractor rather than as an
employee.
(b) An individual is an independent contractor if the
individual:
(1) maintains a business separate from that of the
employer with separate office facilities, equipment, materials,
and other related facilities;
(2) holds or applies for a federal employer
identification number;
(3) operates under a contract, under the terms of
which the individual:
(A) performs specific services or works for
specific amounts of money; and
(B) controls the means of performing the services
or work;
(4) incurs the main expenses related to the services
or work;
(5) is responsible for the satisfactory performance of
the services or completion of the work and is liable for any failure
to perform the services or complete the work;
(6) receives compensation for the performance of the
services or completion of the work only on a commission, per job, or
competitive bid basis;
(7) realizes a profit or incurs a loss under the
contract;
(8) has continuing or recurring business liabilities
or obligations; and
(9) succeeds or fails depending on the relationship of
business receipts to expenditures.
(c) An individual is not an independent contractor if any
other person:
(1) maintains substantial control over the manner in
which the individual performs duties assigned to the individual by
the person; and
(2) retains a significant financial stake in the
earnings of the individual.
Sec. 2.002. WAIVER PROHIBITED. Classification as an
independent contractor under this code is based solely on the
description of that status as established under Section 2.001. The
classification of a specific individual as an independent
contractor may not be waived, changed, impaired, or diminished by a
contract, stipulation, or other agreement entered into between the
individual and another legal entity for whom the individual
performs services or work.
SECTION 2. Section 91.001(10), Labor Code, is amended to
read as follows:
(10) "Independent contractor" means a person
classified as an independent contractor under Section 2.001 [who
contracts to perform work or provide a service for the benefit of
another and who:
[(A) is paid by the job, not by the hour or some
other time-measured basis;
[(B) is free to hire as many helpers as the person
desires and to determine what each helper will be paid; and
[(C) is free to work for other contractors, or to
send helpers to work for other contractors, while under contract to
the hiring employer].
SECTION 3. Section 406.121(2), Labor Code, is amended to
read as follows:
(2) "Independent contractor" means a person
classified as an independent contractor under Section 2.001 [who
contracts to perform work or provide a service for the benefit of
another and who ordinarily:
[(A) acts as the employer of any employee of the
contractor by paying wages, directing activities, and performing
other similar functions characteristic of an employer-employee
relationship;
[(B) is free to determine the manner in which the
work or service is performed, including the hours of labor of or
method of payment to any employee;
[(C) is required to furnish or to have employees,
if any, furnish necessary tools, supplies, or materials to perform
the work or service; and
[(D) possesses the skills required for the
specific work or service].
SECTION 4. Section 406.141(2), Labor Code, is amended to
read as follows:
(2) "Independent contractor" means a person
classified as an independent contractor under Section 2.001 [who
contracts to perform work or provide a service for the benefit of
another and who:
[(A) is paid by the job and not by the hour or
some other time-measured basis;
[(B) is free to hire as many helpers as desired
and may determine the pay of each helper; and
[(C) is free to, while under contract to the
hiring contractor, work for other contractors or is free to send
helpers to work for other contractors].
SECTION 5. Subchapter A, Chapter 1501, Insurance Code, as
effective April 1, 2005, is amended by adding Section 1501.012 to
read as follows:
Sec. 1501.012. DETERMINATION OF INDEPENDENT CONTRACTOR
STATUS. (a) For purposes of this chapter, an independent
contractor is an individual who is classified as an independent
contractor under Section 2.001, Labor Code.
(b) A small employer or large employer may not, in order to
limit eligibility for enrollment under a small or large employer
health benefit plan, classify an individual as an independent
contractor rather than as an employee if the individual does not
meet the requirements for classification as an independent
contractor established under Section 2.001, Labor Code.
SECTION 6. Section 1501.012, Insurance Code, as added by
this Act, applies only to an insurance policy, certificate, or
contract or an evidence of coverage delivered, issued for delivery,
or renewed on or after January 1, 2006. A policy, certificate, or
contract or evidence of coverage delivered, issued for delivery, or
renewed before January 1, 2006, is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 7. This Act takes effect September 1, 2005.