Honorable Trey Martinez Fischer, Chair, House Committee on Business & Industry
FROM:
John McGeady, Assistant Director Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:
HB2242 by Vo (Relating to the classification of workers for purposes of the Texas Unemployment Compensation Act; providing an administrative penalty.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2242, As Introduced: an impact of $0 through the biennium ending August 31, 2021.
It is estimated there would be a positive impact of $5,870,948 through the biennium ending August 31, 2021 to General Revenue - Dedicated Unemployment Compensation Special Administration Account 165.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2020
$0
2021
$0
2022
$0
2023
$0
2024
$0
Fiscal Year
Probable Revenue Gain from Unempl Comp Sp Adm Acct 165
2020
$2,935,474
2021
$2,935,474
2022
$2,935,474
2023
$2,935,474
2024
$2,935,474
Fiscal Analysis
The bill would amend the Labor Code relating to the classification of workers for purposes of the Texas Unemployment Compensation Act; providing an administrative penalty. The bill would allow the Texas Workforce Commission (TWC) to assess a penalty on an employer who has previously failed to properly classify an employee in an amount not to exceed $200 for each misclassified employee. The penalties are to be credited to the General Revenue-Dedicated (GR-D) Unemployment Compensation Special Administration Account 165 and used only to pay costs related to identifying, investigating, and preventing worker misclassification. The bill would take effect September 1, 2019.
Methodology
Based on information provided by TWC, this analysis assumes any administrative costs associated with implementing the provisions of the bill could be accomplished by utilizing existing resources.
The bill would create a penalty for misclassified employees deposited into the GR-D Special Administration Account 165. The agency assumes it would assess a penalty of $75 for each misclassification violation for employers with prior violations. Based on identified misclassified workers in 2016 and 2017, the agency anticipates 39,535 violations each fiscal year. TWC anticipates that approximately 99 percent of all assessed penalties will be collected, resulting in a total adjusted penalty revenue of $2,935,474 each fiscal year.
The bill 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 the bill would be subject to funds consolidation review by the current Legislature.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies:
304 Comptroller of Public Accounts, 320 Texas Workforce Commission