89R3596 RDS-F     By: Turner H.B. No. 1069       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 an administrative penalty.          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" has the meaning   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" has the meaning assigned by Section   61.001.          Sec. 301.202.  APPLICABILITY. (a) An individual may not be   considered an employee based solely on the fact that the person for   whom the individual is providing construction services 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)  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;                (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.          (c)  This subchapter does not apply to services performed by   an individual in the employ of:                (1)  a state, a political subdivision of a state, or an   Indian tribe or an instrumentality of a state, political   subdivision of a state, or Indian tribe that is wholly owned by one   or more states, political subdivisions, or Indian tribes, provided   that the services are excluded from employment as defined in the   Federal Unemployment Tax Act (26 U.S.C. Section 3301 et seq.)   solely because of Section 3306(c)(7) of that Act; or                (2)  a religious, charitable, educational, or other   organization, provided that the services are excluded from   employment as defined in the Federal Unemployment Tax Act (26   U.S.C. Section 3301 et seq.) solely because of Section 3306(c)(8)   of that Act.          Sec. 301.203.  EMPLOYEE STATUS. A contractor shall properly   classify each individual providing construction services as either   an employee or an independent contractor in accordance with   commission rules.          Sec. 301.204.  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. 301.205.  ADMINISTRATIVE PENALTY. (a) The commission   may impose an administrative penalty on a contractor who violates   Section 301.203.  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. 301.206.  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. 301.207.  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, 2025.