| TO: | Honorable Joe Deshotel, Chair, House Committee on Business & Industry |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | HB2989 by Deshotel (Relating to establishing the Workplace Fraud Prevention Act; providing penalties.), Committee Report 1st House, Substituted |
No significant fiscal implication to the State is anticipated, however the provisons of the bill would increase the number of individuals performing construction services classified as employees and unemployment insurance assessments would increase. The amount of this increase and the amount and timing of any penalty revenue that would be generated under the provisons of the bill is unknown.
The bill would amend the Labor Code relating to establishing the Workplace Fraud Prevention Act; providing penalties. This bill would create the Workplace Fraud Prevention Act, to require that construction contractors classify individuals performing construction services as either employees or independent contractors. The bill would prohibit any person from knowingly forming or assisting in the formation of a business entity, or paying or collecting a fee for the use of a business entity, for the purpose of facilitating a violation of this chapter, or knowingly assisting or conspiring with an individual to commit such a violation.
The bill would require the Texas Workforce Commission (TWC) to (1) provide a toll-free telephone number and website for use by the public in reporting violations of this chapter, and investigate any credible complaint received; (2) upon determining that a person has violated this chapter initiate enforcement actions to collect unpaid unemployment taxes, notify the Texas Department of Insurance of the violation, and notify the Attorney General of any possible violation of other law; and (3) issue an annual report regarding compliance with and enforcement of this act. Under the provisions of the bill, contractors performing services for the state or a political subdivision would be required to submit an affidavit affirming that (1) each individual performing services for the contractor has been properly classified; (2) the contractor is in compliance with Subchapter B, Chapter 234, of the Family Code, regarding the state directory of new hires; and (3) that the contractor will follow the provisions of this act.
The bill would provide for a penalty of $500 for a first violation of this act and $5,000 for each subsequent violation. The bill would create the Workplace Fraud Prevention Fund and would establish the fund to enforce the chapter created by the bill. The bill would require TWC to administer the fund and would establish that the fund would consist of money appropriated to the fund and any penalties collected under the provisions of Section 313.008 of the bill.
This legislation would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either with or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
According to the analysis of the Comptroller of Public Accounts this analysis assumes: to the extent that passage of the bill would increase the number of individuals performing construction services classified as employees, unemployment insurance assessments would increase. According to CPA, the amount of this increase and the amount and timing of any penalty revenue is unknown.
Based on the analyis of the Texas Workforce Commission, the Office of the Attorney General and the Department of Insurance, it is assumed that duties and responsibilities associated with implementing the provisions of the bill could be accomplished by utilizing existing resources.
This bill would take effect September 1, 2011.
| Source Agencies: | 302 Office of the Attorney General, 320 Texas Workforce Commission, 454 Department of Insurance, 304 Comptroller of Public Accounts
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| LBB Staff: | JOB, AG, MW, NV
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