2013 Texas Legislature - Moving Forward on Fighting Employee Misclassification

Texas Legislature Moving Forward on Misclassification by Bob PriceFor several years, TexasGOPVote and ConstructionCitizen.com have been sounding the alarm about issues related to employee misclassification and why this is a problem for Texas taxpayers and businesses. The 2011 Legislative Session was unable to pass any meaningful changes to the law to help correct the problems caused by misclassification. It now appears that a coalition of business associations and concerned legislators may well move the issue forward during the 2013 session.

Testimony was heard in the Texas Senate on SB 676 filed by Senator John Carona (R-Dallas). The committee heard testimony from business owners, trade association and labor groups, all of whom expressed support for the bill which will finally put some teeth in the existing labor laws which prohibit classifying workers as independent contractors when they meet the specifications of being an employee.

The bill was laid out and the latest version does the following:

  • Leaves the current common law test definition in place for independent contractor. 
  • Imposes a penalty of $100 for those in construction that misclassify their worker for the first time. 
  • Imposes up to a $1,000 penalty per employee, for each subsequent violation (this amount will be determined by the Texas Workforce Commission on a case-by-case basis). 
  • Allows an employer to appeal a violation and get the violation removed or get the penalty reduced based on certain criteria. 
  • Requires the Texas Workforce Commission to submit a report to the Legislature about its efforts to curb misclassification of construction workers.

This bill does not create any new regulation on business. It is already against the law to improperly classify workers as independent contractors when they are, in fact, employees. The Texas Workforce Commission is already tasked with conducting workplace audits to ensure misclassification is not taking place. The new bill simply increases the penalties to create more of a deterrent and to encourage employers to properly classify their workers.

While normally, we would oppose burdensome regulations on businesses, this bill helps create a level playing field for all companies. Currently unethical companies cheat the system and create an unfair competitive advantage while at the same time, robbing Texas taxpayers by not properly paying employment taxes. This is a proper role for the state government. By enforcing the existing laws, companies will be able to equally compete in contract bids and workers receive equal protection under employment law.

The bill focuses on the construction industry. While other industries may also be guilty of this practice, it is rampant in construction companies. Starting with the most serious offenders is a good place to make the most dramatic impact on the workplace of Texas companies.

Support for this bill comes for both unions and independent companies who are seeking a level playing field for all workers and all companies.  

Employee misclassification is also a huge draw for illegal immigrants as many flock to day labor sites knowing that unethical companies will hire them. This is a huge draw for undocumented workers and could easily be stopped with the passage of this bill.

With overwhelming support in the committee (not one person testified or registered as being against the bill), it would appear to be clear sailing ahead. However, we all know that back-room conversations happen at high levels of government. These smoke-filled rooms often lead to "deals" that negate the hard work put in to create a good bill and undermine the will of the people. It is important that we not let this happen.

Below is a list of senators whose votes we need to pass SB 676 out of committee. Please contact them in addition to your senator and state representative and let them know you want companies to stop cheating the system.  Ask them to pass SB 676.

Senator and Chairman Bob Deuell : (512) 463-0102

Senator Brian Birdwell : (512) 463-0122

Senator Kelly Hancock :  (512) 463-0109

Senator Kevin Eltife :  (512) 463-0101   

Senator Troy Fraser :  (512) 463-0124

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