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A BILL TO BE ENTITLED
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AN ACT
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relating to establishing the Workplace Fraud Prevention Act; |
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providing penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle B, Title 4, Labor Code, is amended by |
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adding Chapter 313 to read as follows: |
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CHAPTER 313. WORKPLACE FRAUD PREVENTION ACT |
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Sec. 313.001. SHORT TITLE. This chapter may be cited as the |
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Workplace Fraud Prevention Act. |
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Sec. 313.002. DEFINITIONS. In this chapter: |
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(1) "Construction" means work related to the erection, |
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improvement, alteration, repair, renovation, maintenance, or |
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remodeling of a building, structure, appurtenance, road, highway, |
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bridge, dam, levee, canal, jetty, or other improvement to or on real |
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property, including moving, demolishing, dredging, shoring, |
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scaffolding, drilling, blasting, and excavating real property. |
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(2) "Contractor" means a person who contracts to |
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perform construction services, including a subcontractor. |
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(3) "Employee" means an individual who provides a |
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service, including service in interstate commerce, for wages or |
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under an express or implied contract of hire, unless it is shown to |
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the satisfaction of the commission that the individual's |
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performance of the service has been and will continue to be free |
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from control or direction under the contract and in fact. |
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(4) "Independent contractor" means a person lawfully |
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engaged in business who performs a service, under contract, for |
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another person free from the control or specific direction of that |
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person, and who: |
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(A) is registered with the secretary of state and |
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possesses a filing number; or |
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(B) possesses a valid social security number and: |
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(i) has unique skills; or |
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(ii) owns and operates a significant |
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investment in equipment. |
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(5) "Performing service" means the performance of |
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construction service for payment. |
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Sec. 313.003. APPLICABILITY. This chapter does not apply |
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to a common law or statutory action for tort liability and does not |
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change or affect the common law interpretation of independent |
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contractor status as it relates to tort liability or a workers' |
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compensation claim. |
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Sec. 313.004. EMPLOYEE STATUS. A contractor shall properly |
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classify an individual performing construction services as an |
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employee. |
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Sec. 313.005. PROHIBITED ACTS. It is a violation of this |
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chapter for: |
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(1) a contractor to fail to properly designate an |
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individual as an employee of the contractor; |
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(2) a person to knowingly form or assist in the |
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formation of a corporation, partnership, limited liability |
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corporation, or other business entity, or pay or collect a fee for |
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use of a corporation, partnership, limited liability corporation, |
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or other business entity, for the purpose of facilitating a |
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violation of this chapter; or |
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(3) a person to knowingly assist, aid, or conspire |
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with an individual in committing a violation of this chapter. |
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Sec. 313.006. TELEPHONE HOTLINE AND INTERNET WEBSITE. The |
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commission shall provide a toll-free telephone number and website |
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for use by the public in reporting violations of this chapter. |
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Information obtained by the commission under this chapter is |
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confidential. |
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Sec. 313.007. DUTY TO INVESTIGATE. The commission shall |
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investigate, in a timely manner, any credible complaint made under |
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Section 313.006 that contains the name and contact information of |
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the person alleged to have committed a violation, the job site |
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location at which the alleged violation occurred, and a description |
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of the alleged violation. |
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Sec. 313.008. ADMINISTRATIVE PENALTY. (a) If the |
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commission determines that a contractor or other person has |
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violated this chapter, the contractor or other person shall pay to |
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the commission a penalty in an amount not to exceed: |
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(1) $500 per individual who is not properly designated |
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as an employee of the contractor for the first violation of Section |
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313.005(1); |
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(2) $5,000 per individual who is not properly |
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designated as an employee of the contractor for each subsequent |
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violation of Section 313.005(1); |
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(3) $500 for the first violation of Section 313.005(2) |
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or (3); and |
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(4) $5,000 for each subsequent violation of Section |
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313.005(2) or (3). |
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(b) Any penalty issued under this chapter applies to a |
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successor business entity that: |
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(1) has one or more officers in common with the |
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original employer; and |
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(2) is engaged in the same or similar business |
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activity. |
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(c) An administrative penalty imposed under this section |
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shall be imposed in the same manner as the commission imposes an |
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administrative penalty under other law. |
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Sec. 313.009. NOTIFICATION OF OTHER VIOLATIONS. (a) If the |
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commission determines that a contractor or other person has |
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violated this chapter, the commission shall: |
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(1) initiate enforcement proceedings under Chapter |
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213 to collect unpaid unemployment taxes plus interest; |
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(2) notify the Texas Department of Insurance of the |
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violation and any possible violations of the Insurance Code; and |
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(3) notify the attorney general and any other |
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appropriate prosecuting authority of any possible violation of |
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other law. |
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(b) The commission may enter into interagency agreements |
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with another state agency and adopt any rules necessary to |
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administer this section. |
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Sec. 313.010. ANNUAL REPORT. (a) The commission shall |
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issue an annual report regarding compliance with and enforcement of |
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this chapter. The report must include: |
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(1) the number of complaints received through the |
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hotline or website under Section 313.006; |
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(2) the number of investigated complaints and any |
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resulting findings; |
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(3) the amount of unemployment taxes, interest, |
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administrative penalties, and fines collected under this chapter; |
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and |
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(4) the number of referrals to other agencies or |
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authorities under Section 313.009 and the outcomes of those |
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referrals. |
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(b) The commission shall submit the report annually to the |
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governor and legislature. |
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Sec. 313.011. POSTED NOTICE. A contractor shall post in a |
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conspicuous location on the job site in English and Spanish the |
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following notice: |
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(1) Every individual working for a contractor has the |
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right to be properly classified by the contractor as an |
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employee or independent contractor if the individual |
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meets the requirements under the Workplace Fraud |
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Prevention Act. |
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(2) If you believe you or someone else has not been |
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properly classified as an employee or independent |
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contractor under the Workplace Fraud Prevention Act, |
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contact the Texas Workforce Commission. |
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Sec. 313.012. CONTRACTOR AFFIDAVIT REQUIRED FOR CONTRACT |
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WITH STATE OR POLITICAL SUBDIVISION; PENALTY. (a) A contract |
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between this state or a political subdivision of this state and a |
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contractor performing construction services must require: |
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(1) the contractor to submit an affidavit attesting |
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that: |
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(A) each individual performing services for the |
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contractor has been properly classified as an employee or |
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independent contractor under this chapter; |
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(B) the contractor is in compliance with the |
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requirements of Subchapter B, Chapter 234, Family Code; and |
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(C) the contractor is not barred from contracting |
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with this state or a political subdivision of this state under |
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Subsection (c); and |
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(2) that a contractor performing construction |
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services pursuant to the contract follow the provisions of this |
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chapter. |
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(b) Violation of this section by a contractor is grounds for |
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rescission of the contract by the state or political subdivision. |
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(c) A contractor who knowingly provides a false affidavit |
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under Subsection (a) is subject to the penalty of perjury for the |
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first violation and shall be barred from contracting with this |
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state or a political subdivision of this state for three years on a |
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subsequent violation. |
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Sec. 313.013. WORKPLACE FRAUD PREVENTION ENFORCEMENT FUND. |
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The workplace fraud prevention enforcement fund is established to |
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fund the enforcement of this chapter. The commission shall |
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administer the fund. The fund consists of money appropriated to the |
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fund by the legislature and any penalties collected under Section |
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313.008. |
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SECTION 2. Section 313.012, Labor Code, as added by this |
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Act, applies to a contract entered into on or after the effective |
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date of this Act. A contract entered into before the effective date |
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of this Act is governed by the law in effect on the date the contract |
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was entered into, and the former law is continued in effect for that |
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purpose. |
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SECTION 3. This Act takes effect September 1, 2011. |