Bill H.B. 2989
This bill would prohibit a contractor who contracts to perform construction services from failing to properly designate an individual as an employee of the contractor. For purposes of the bill, an “independent contractor” is defined as:
A person lawfully engaged in business who performs a service, under contract, for another person free from the control or specific direction of that person, and who:
(a) is registered with the secretary of state and possesses a filing number; or
(b) possesses a valid social security number and:
(i) has unique skills; or
(ii) owns and operates a significant investment in equipment.
The bill defines an “employee” as an individual who provides a service, including service in interstate commerce, for wages or under an express or implied contract of hire, unless it is shown to the satisfaction of the commission that the individual’s performance of the service has been and will continue to be free from control or direction under the contract and in fact.
The bill would also make it a violation for:
- a person to knowingly form or assist in the formation of a corporation, partnership, limited liability corporation, or other business entity, or pay or collect a fee for use of a corporation, partnership, limited liability corporation, or other business entity, for the purpose of facilitating a violation; or
- a person to knowingly assist, aid, or conspire with an individual in committing a violation.
Penalties for violations would constitute $500 per individual for a first misclassification offense and $5,000 per individual for subsequent misclassification offenses. Penalties for assistance violations would constitute $500 for a first offense and $5,000 for each subsequent offense.
The bill would also require a contractor to post in a conspicuous location on the work site in English and Spanish the following notices:
(1) Every individual working for a contractor has the right to be properly classified by the contractor as an employee or independent contractor if the individual meets the requirements under the Workplace Fraud Prevention Act.
(2) If you believe you or someone else has not been properly classified as an employee or independent contractor under the Workplace Fraud Prevention Act, contact the Texas Workforce Commission (“Commission”).
The bill would also create a toll-free telephone number and website for use by the public in reporting violations. The Commission would also be required to investigate any credible complaint that contains specified information and issue an annual report regarding compliance to the Governor and Legislature.
The bill would also provide that if the Commission determines that a contractor or other person has violated the bill, the Commission shall:
(1) initiate enforcement proceedings to collect unpaid unemployment taxes plus interest;
(2) notify the Texas Department of Insurance of the violation and any possible violations of the Insurance Code; and
(3) notify the Attorney General and any other appropriate prosecuting authority of any possible violation of other law.
Contractors that contract with the state or a political subdivision would additionally be required to submit an affidavit attesting that:
- each individual performing services for the contractor has been properly classified as an employee or independent contractor;
- the contractor is in compliance with the requirements of the Family Code; and
- the contractor is not barred from contracting with this state or a political subdivision of the state.
A contractor who knowingly provides a false affidavit would be subject to the penalty of perjury for the first violation and shall be barred from contracting with the state or a political subdivision of the state for three years on a subsequent violation.
