83R8065 MAW-F
 
  By: Carona S.B. No. 676
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the classification of certain construction workers and
  the eligibility of those workers for unemployment benefits;
  providing penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter E, Chapter 201, Labor Code, is
  amended by adding Section 201.079 to read as follows:
         Sec. 201.079.  SERVICE BY INDEPENDENT CONTRACTOR IN
  CONSTRUCTION. (a) In this section, "construction" and
  "independent contractor" have the meanings assigned by Section
  301.201.
         (b)  In this subtitle, "employment" does not include
  construction performed by an individual as an independent
  contractor.
         SECTION 2.  Chapter 301, Labor Code, is amended by adding
  Subchapter L to read as follows:
  SUBCHAPTER L. CLASSIFICATION OF INDIVIDUAL EMPLOYED IN
  CONSTRUCTION
         Sec. 301.201.  DEFINITIONS.  In this subchapter:
               (1)  "Construction" means work related to the erection,
  improvement, alteration, repair, renovation, maintenance, or
  remodeling of a building, structure, appurtenance, road, highway,
  bridge, dam, levee, canal, jetty, or other improvement to or on real
  property, including moving, demolishing, dredging, shoring,
  scaffolding, drilling, blasting, and excavating real property.
               (2)  "Contractor" means a person who contracts to
  perform construction.
               (3)  "Employee" means an individual who performs
  services for another under an express or implied contract of hire.
               (4)  "Independent contractor" means an individual who
  is an independent contractor as provided by Section 301.202.
         Sec. 301.202.  INDEPENDENT CONTRACTOR.  For purposes of this
  subchapter, an individual is an independent contractor if the
  individual satisfies at least five of the following conditions:
               (1)  the individual performs a service under a written
  contract with the person for whom the service is performed that
  states that the relationship of the individual to the person for
  whom the service is performed is that of an independent contractor
  and not an employee;
               (2)  the individual represents that the individual is
  an independent contractor and not an employee;
               (3)  the individual is required to submit to the person
  for whom a service is performed an Internal Revenue Service Form W-9
  or a similar form providing the same information;
               (4)  the individual operates a business entity in which
  the individual shares in the profits or losses of the entity;
               (5)  the individual is not prohibited from hiring
  employees and acting as the employer of any employee of the
  individual by paying wages, directing activities, and performing
  other similar functions characteristic of an employer-employee
  relationship;
               (6)  the individual has substantially invested in, and 
  is required to furnish, necessary tools, supplies, or materials to
  perform a service;
               (7)  the individual obtains and pays for any
  occupational license required by this state to perform a service;
               (8)  the individual is free to perform services for any
  other person; or
               (9)  the individual  submits to the person for whom a
  service is performed evidence of any insurance coverage required by
  law to perform a construction service.
         Sec. 301.203.  APPLICABILITY; REBUTTABLE PRESUMPTION. (a)
  An individual may not be considered an employee based solely on the
  fact that the person for whom the individual is providing a service
  requires that any employee hired by the individual must:
               (1)  submit to a criminal background check or
  preemployment drug screening; or
               (2)  possess a certain license or certification
  relating to the work the employee will perform.
         (b)  It is a rebuttable presumption that an individual
  providing construction services is an employee if the individual is
  not an independent contractor as provided by Section 301.202.
         (c)  A person for whom an individual is providing
  construction services is not required to report to the commission
  under Subtitle A that the individual is an employee of the person if
  the person:
               (1)  shows that the individual is an independent
  contractor as provided by Section 301.202;
               (2)  provides to the individual an Internal Revenue
  Service Form 1099, or a similar form issued by, or that meets the
  compliance guidelines of, the Internal Revenue Service, on which
  the person reports the amount paid to the individual in accordance
  with Internal Revenue Service requirements; and
               (3)  files the form described by Subdivision (2) with
  the Internal Revenue Service in accordance with Internal Revenue
  Service requirements.
         Sec. 301.204.  EMPLOYEE STATUS. A contractor shall properly
  classify each person providing construction services as either an
  employee or an independent contractor.
         Sec. 301.205.  INFORMATION REGARDING COMPLAINTS. The
  commission shall provide on its Internet website information
  regarding the procedure for the public to report violations of this
  subchapter.
         Sec. 301.206.  ADMINISTRATIVE PENALTY. (a) The commission
  may impose an administrative penalty on a contractor who violates
  Section 301.204.  The amount of the penalty may not exceed:
               (1)  $100 for each individual who is not properly
  classified; and
               (2)  $1,000 for each individual who is not properly
  classified for each subsequent violation that occurs after the
  imposition of a penalty for a prior violation.
         (b)  Any penalty issued under this section applies to a
  successor business entity that:
               (1)  has one or more owners who jointly control at least
  50 percent of the:
                     (A)  original employer; and
                     (B)  successor business entity; and
               (2)  is engaged in the same or similar business
  activity.
         (c)  An administrative penalty imposed under this section
  shall be imposed in the same manner as the commission imposes an
  administrative penalty under other law.
         Sec. 301.207.  NOTIFICATION TO GOVERNMENTAL ENTITY.  If the
  commission determines that a contractor has violated this
  subchapter, the commission shall provide notice of the violation to
  each governmental entity that the commission reasonably believes
  has received construction services provided by the contractor.  The
  notice must identify the contractor and, for each violation,
  specify the type of service provided and the location at which the
  service was provided, if known to the commission.  In this section,
  "governmental entity" has the meaning assigned by Section 406.096.
         Sec. 301.208.  ANNUAL REPORT. The commission shall issue an
  annual report regarding compliance with and enforcement of this
  subchapter. The report must include:
               (1)  the number of complaints received from the public;
               (2)  the number of investigated complaints and any
  resulting findings; and
               (3)  the amount of unemployment taxes, interest,
  administrative penalties, and fines actually collected as a result
  of:
                     (A)  violations of this subchapter; or
                     (B)  the exclusion of construction performed by an
  individual from the application of Subtitle A, unless the services
  are excluded by application of Section 201.079.
         SECTION 3.  The change in law made by this Act applies only
  to a claim for unemployment compensation benefits that is filed
  with the Texas Workforce Commission on or after the effective date
  of this Act. A claim filed before the effective date of this Act is
  governed by the law in effect on the date the claim was filed, and
  the former law is continued in effect for that purpose.
         SECTION 4.  This Act takes effect September 1, 2013.