84R2193 MAW-F

By: Rodriguez of Travis H.B. No. 3148

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of construction contractors; providing an administrative penalty; requiring an occupational registration; authorizing a fee.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 8, Occupations Code, is amended by adding Chapter 1306 to read as follows:

CHAPTER 1306. CONSTRUCTION CONTRACTORS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1306.001. DEFINITIONS. In this chapter:

(1) "Commission" means the Texas Commission of Licensing and Regulation.

(2) "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, drilling, blasting, and excavating real property.

(3) "Construction contractor" means a person who:

(A) contracts to perform construction for compensation; and

(B) employs one or more employees to perform the construction.

(4) "Controlling person" means an individual who:

(A) is an owner, officer, or director of a construction contractor; or

(B) possesses direct or indirect control of 25 percent or more of a construction contractor.

(5) "Department" means the Texas Department of Licensing and Regulation.

(6) "Employee" has the meaning assigned by Section 61.001, Labor Code.

(7) "Executive director" means the executive director of the department.

(8) "Independent contractor" means a person who contracts to perform construction for compensation and who ordinarily:

(A) acts as the employer of any employee of the person 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 construction 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 construction; and

(D) possesses the skills required for the specific type of construction.

Sec. 1306.002. EXEMPTIONS. (a) This chapter does not apply to:

(1) the manufacture, distribution, or sale of a product, material, or merchandise; or

(2) landscaping services that:

(A) consist only of the maintenance or removal of existing plants, shrubs, trees, or other vegetation; or

(B) are not provided in connection with other construction work that the person performing the landscaping services has also contracted to perform.

(b) A construction contractor who holds a license, certificate, or registration under Title 6 or this title is not required to register under this chapter to the extent the construction services performed by the contractor do not violate the applicable chapter under which the contractor is licensed, certified, or registered.

SUBCHAPTER B. POWERS AND DUTIES OF DEPARTMENT AND COMMISSION

Sec. 1306.051. GENERAL POWERS AND DUTIES. The department, executive director, or commission, as appropriate, may take action as necessary to administer and enforce this chapter.

Sec. 1306.052. RULES. The commission shall adopt rules as necessary to administer this chapter.

Sec. 1306.053. CONSTRUCTION CONTRACTOR DATABASE. The department shall make available on its Internet website a publicly accessible list of construction contractors who are or have been registered under this chapter. For each construction contractor, the list must contain:

(1) a statement indicating whether the contractor is registered in good standing; and

(2) information regarding whether the contractor's registration has ever been suspended or revoked.

Sec. 1306.054. ANNUAL REPORT. (a) The department shall submit a report to the legislature not later than September 30 of each year regarding the registration and regulation of construction contractors under this chapter. The report must include the following information for the preceding fiscal year:

(1) the number of:

(A) individuals misclassified as independent contractors by construction contractors;

(B) construction contractors assessed administrative penalties;

(C) construction contractors who are not registered under this chapter, if required to register;

(D) registrations suspended or revoked under this chapter; and

(E) new registrations issued under this chapter;

(2) the total amount of administrative penalties assessed;

(3) the total amount of administrative penalties collected;

(4) the name of each construction contractor whose registration was suspended or revoked; and

(5) any additional information the commission considers necessary.

(b) On request by the department, the Texas Workforce Commission shall provide information to the department or otherwise assist the department in preparing the report.

SUBCHAPTER C. REGISTRATION REQUIREMENTS

Sec. 1306.101. REGISTRATION REQUIRED. A person may not act as or offer to act as a construction contractor unless the person is registered under this chapter.

Sec. 1306.102. APPLICATION; APPLICATION FEE. (a) An applicant for registration must:

(1) apply to the department on a form prescribed by the executive director and under rules adopted by the commission; and

(2) submit with the application a nonrefundable application fee in an amount set by the commission.

(b) The commission by rule shall specify the information that must be included on an application submitted to the department. The rules must require that an application include the following information for an applicant, including each controlling person of an applicant:

(1) full legal name;

(2) business address and telephone number;

(3) tax identification number;

(4) number of employees of the applicant, if any; and

(5) if applicable:

(A) federal employer identification number;

(B) employer identification number issued to the applicant by the Texas Workforce Commission for purposes of unemployment compensation; and

(C) evidence that the applicant has obtained workers' compensation insurance.

Sec. 1306.103. TERM OF REGISTRATION. A registration under this chapter is valid for one year.

Sec. 1306.104. CHANGE IN INFORMATION. A registration holder shall notify the department in the manner prescribed by the department not later than the 15th day after the date of any change that occurs in the information submitted in the application.

Sec. 1306.105. CONFIDENTIALITY. (a) Except as provided by Subsection (b) and Section 1306.053, information submitted to the department in an application under Section 1306.102 is confidential and not subject to disclosure under Chapter 552, Government Code.

(b) The department shall release to the Texas Workforce Commission information regarding an applicant for or holder of a registration, including information regarding disciplinary action taken against a registration holder.

SUBCHAPTER D. PENALTIES AND OTHER ENFORCEMENT PROVISIONS

Sec. 1306.151. NOTICE TO DEPARTMENT. The Texas Workforce Commission shall notify the department if the Texas Workforce Commission has knowledge that a person required to register under this chapter is not registered or is otherwise violating this chapter.

Sec. 1306.152. GROUNDS FOR LICENSE DENIAL AND DISCIPLINARY ACTION. (a) The commission or executive director may refuse to issue or renew a registration, revoke or suspend a registration, place on probation a person whose registration has been suspended, or reprimand a registration holder who violates this chapter, a rule adopted under this chapter, or an order of the commission or executive director.

(b) The commission or executive director shall suspend a registration for not less than six months if the registration holder has been:

(1) assessed a penalty under Section 214.008, Labor Code; or

(2) convicted of an offense under:

(A) Section 61.019, Labor Code; or

(B) Section 31.04, Penal Code, if the offense involved the theft of a service that was rendered by an employee of the registration holder.

(c) The commission or executive director shall revoke a registration if the registration holder is:

(1) assessed a penalty under Section 214.008, Labor Code, before the fifth anniversary of the date of a prior penalty assessed under that section; or

(2) convicted of an offense described by Subsection (b)(2) before the fifth anniversary of the date of a prior conviction for an offense described by that subsection.

Sec. 1306.153. ELIGIBILITY OF PERSON WHOSE REGISTRATION HAS BEEN REVOKED. A person whose registration has been revoked by order of the commission or executive director is not eligible to submit a new application for registration until the first anniversary of the date of the revocation.

Sec. 1306.154. PROHIBITED ACTS. A construction contractor may not:

(1) require an individual through coercion, misrepresentation, or fraudulent means to:

(A) perform services as an independent contractor; or

(B) form a business entity;

(2) knowingly misclassify an employee as an independent contractor; or

(3) knowingly contract with or pay a person for construction services if the person is required to register under this chapter and is not registered.

Sec. 1306.155. ADMINISTRATIVE PENALTY. The commission or executive director may impose an administrative penalty on a person under Subchapter F, Chapter 51, if the person is required to register under this chapter and fails to register on or before the 30th day after the date of receiving notice from the department that the person is required to register. The amount of the administrative penalty may not exceed $1,000.

SECTION 2. Not later than December 1, 2015, the Texas Commission of Licensing and Regulation, the Texas Department of Licensing and Regulation, and the executive director of the Texas Department of Licensing and Regulation, as appropriate, shall adopt rules and forms necessary to implement Chapter 1306, Occupations Code, as added by this Act.

SECTION 3. (a) Except as provided by Subsection (b) of this section, this Act takes effect September 1, 2015.

(b) Section 1306.101, Occupations Code, and Subchapter D, Chapter 1306, Occupations Code, as added by this Act, take effect January 1, 2016.