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Relating to the classification of workers for purposes of the Texas Unemployment Compensation Act; providing an administrative penalty.
Estimated Two-year Net Impact to General Revenue Related Funds for HB 2242, 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
HB 2242 would establish that, for purposes of employment under the Texas Unemployment Compensation Act, an individual performing a service for wages or under a contract of hire is presumed to be an employee of the person for whom the service is performed. This presumption may be rebutted if the employer shows 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.
A person would be required to properly classify as an employee or independent contractor in accordance with the Act, and pay a contribution on wages for employment, for any individual the person directly retains and compensates for the performance of a service. The Texas Workforce Commission (TWC) would be able to assess a penalty against a person who fails to properly classify, or pay a contribution on wages for, an individual as required if the TWC determines that the person has previously failed to properly classify, or pay a contribution on wages for, one or more individuals as required. The bill would cap penalties at $200 per individual.
Texas Action remains opposes HB 2242 which is out of alignment with limited government. This bill would create the rebuttable presumption that contract laborers are employees. This shifts the burden of proof from the state to the employer. The burden of proof should remain with the state, rather than allowing the state to presume that a violation has been committed and force the employer to prove their innocence. For these reasons we oppose HB 2242.