84R1587 MAW-F
  By: Thompson of Harris H.B. No. 434
  relating to the classification of certain construction workers and
  complaints filed with the Texas Workforce Commission; providing a
         SECTION 1.  Subchapter B, Chapter 213, Labor Code, is
  amended by adding Sections 213.026 and 213.027 to read as follows:
  EMPLOYEES; PENALTY. (a) In this section, "construction employer"
  means an employer who employs an individual to provide services
  directly related to the erection, 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, or excavating
  real property.
         (b)  A construction employer shall properly report the
  employment status of each employee of the construction employer for
  the purposes of this subtitle and as required by commission rule.
         (c)  In addition to any other penalty under this subchapter,
  a construction employer who violates this section shall pay to the
               (1)  a penalty in the amount of $100 for each employee
  not properly reported for an initial violation by the employer; and
               (2)  a penalty not to exceed $1,000 for each employee
  not properly reported for each subsequent violation that occurs
  after an initial violation by the employer.
         (d)  In determining the amount of a penalty under Subsection
  (c)(2), the commission shall consider:
               (1)  the seriousness of the violation, including the
  nature, circumstances, consequences, extent, and gravity of the
               (2)  any history of previous violations by the
  construction employer;
               (3)  the demonstrated good faith of the construction
  employer, including actions taken to rectify the consequences of
  the violation;
               (4)  the amount of a penalty necessary to deter future
  violations; and
               (5)  any other matter that justice may require.
         (e)  Based on the criteria listed in Subsection (d), the
  commission by rule shall adopt a schedule of penalties for a
  violation described by Subsection (c)(2) to ensure that the amount
  of a penalty imposed is appropriate to the violation.
         (f)  For a construction employer's initial violation of this
  section, the commission shall assess a penalty against the employer
  as provided by Subsection (c)(1) for each violation determined by
  the commission to have occurred, regardless of the reporting period
  in which the violation occurred.
         (g)  An unpaid penalty assessed 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 construction employer; and
                     (B)  successor business entity; and
               (2)  is engaged in the same or a similar business
  activity as the original construction employer.
         (h)  Except as provided by Subsection (g), the employer of an
  employee who is not properly reported is the only person liable for
  a penalty assessed under this section.
  "construction employer" has the meaning assigned by Section
         (b)  A determination that a construction employer has
  violated Section 213.026 and any penalty assessed for the violation
  may be reviewed and appealed in the same manner as a disputed claim
  under Subchapters C, D, and E, Chapter 212.
         (c)  In ruling on an appeal, the facts and circumstances
  supporting the construction employer's appeal must be considered,
               (1)  the contents of any written contract between the
  construction employer and the individual whose employment status
  was not properly reported;
               (2)  documentation that the individual represents that
  the individual is an independent contractor;
               (3)  an Internal Revenue Service Form W-9 pertaining to
  the individual or a similar form providing the same information as
  that form;
               (4)  an Internal Revenue Service Form 1099, or similar
  form issued by, or that meets the compliance guidelines of, the
  Internal Revenue Service, on which the construction employer has
  reported the amount paid to the individual and that was filed in
  accordance with Internal Revenue Service requirements;
               (5)  whether the individual is not prohibited from
  hiring employees;
               (6)  whether the individual has a substantial
  investment in, and is required to furnish, necessary equipment;
               (7)  whether the individual is free to perform services
  for others;
               (8)  whether the individual has provided evidence of
  any insurance for the individual's business activity;
               (9)  the construction employer's need to control the
  work of the individual if:
                     (A)  customary to the type of work being
  performed; or
                     (B)  required by a general contractor or
  construction project owner in order that the general contractor or
  owner may maintain specific control and direction of the worksite
  or the flow of work being performed; or
               (10)  whether the failure to properly report the
  employment status was intentional.
         SECTION 2.  Section 301.023, Labor Code, is amended to read
  as follows:
         Sec. 301.023.  COMPLAINTS AGAINST COMMISSION. (a) The
  commission shall maintain a file on each written complaint filed
  with the commission and each complaint received by telephone or
  submitted through the commission's Internet website. The file must
               (1)  the name of the person who filed the complaint, if
               (2)  the date the complaint is received by the
               (3)  the subject matter of the complaint;
               (4)  the name of each person contacted in relation to
  the complaint;
               (5)  a summary of the results of the review or
  investigation of the complaint; and
               (6)  an explanation of the reason the file was closed,
  if the commission closed the file without taking action other than
  to investigate the complaint.
         (b)  The commission shall provide to the person filing the
  complaint, if the person's name and contact information are
  available, and to each person who is a subject of the complaint a
  copy of the commission's policies and procedures relating to
  complaint investigation and resolution.
         (c)  The commission, at least quarterly until final
  disposition of the complaint, shall notify the person filing the
  complaint, if the person's name and contact information are
  available, and each person who is a subject of the complaint of the
  status of the investigation unless the notice would jeopardize an
  undercover investigation.
         SECTION 3.  Subchapter D, Chapter 301, Labor Code, is
  amended by adding Section 301.0612 to read as follows:
  It is the policy of this state that each worker in the construction
  industry must be properly classified as an employee or independent
         (b)  The commission shall review its policies and procedures
  for the enforcement of Subtitle A and any commission rule regarding
  the construction industry. The commission shall adopt rules and
  procedures to encourage and enforce the proper classification of
  workers in the construction industry as employees or independent
         (c)  As soon as practicable after the end of each fiscal
  year, the commission shall submit a report to the governor and the
  legislature regarding the efforts of the commission to ensure the
  proper classification of workers in the construction industry. The
  report must include with respect to the construction industry:
               (1)  the number of investigated complaints by the
  commission and any findings; and
               (2)  the amount of unemployment taxes, interest, and
  administrative penalties collected as a result of enforcement
  actions taken under Chapter 213.
         (d)  The report under Subsection (c) may not include
  identifying information about a person subject to this title or a
         SECTION 4.  Section 213.026, Labor Code, as added by this
  Act, applies only to conduct that occurs on or after the effective
  date of this Act. Conduct that occurs before the effective date of
  this Act is governed by the law in effect immediately before the
  effective date of this Act, and the former law is continued in
  effect for that purpose.
         SECTION 5.  The Texas Workforce Commission shall submit the
  first report required by Section 301.0612, Labor Code, as added by
  this Act, not later than December 1, 2016.
         SECTION 6.  This Act takes effect January 1, 2016.