H.A.-CBW, C.H. HB. 762 77(R) BILL ANALYSIS Office of House Bill AnalysisHB. 762 By: Coleman Economic Development 2/23/2001 Introduced BACKGROUND AND PURPOSE Under current law, a state contractor or an employer who obtains financial assistance by loan, grant, tax abatement, or other subsidy from the state or from a state agency is not required to pay employees a living wage. The concept of a living wage is that if a person works a forty hour week then he or she should be able to access basic housing and still have enough left to pay for utilities, food, and clothing. A living wage incorporates two federal guidelines. The first guideline uses the U.S. Department of Housing and Urban Development (HUD) standard that no more than approximately one-third of a person's gross monthly income should be spent on housing. The second guideline uses the fair market rent index determined by HUD to establish the affordability of housing in a market area. Statistics from the United States Department of Labor show that the federal minimum hourly wage has increased from $3.10 an hour to $5.15 an hour in the past 20 years while inflation, as measured by the Consumer Price Index, has increased approximately twice as fast. In addition, the minimum wage in Texas, which is $3.35 an hour, is less than the federal minimum wage of $5.15 an hour. House Bill 762 requires all contractors and employers who contract with or receive financial assistance from the state or a state agency to pay each employee a living wage commensurate with the local economy. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Workforce Commission in SECTION 1 (Sections 65.004, 65.005, and 65.007, Labor Code) of this bill. ANALYSIS House Bill 762 amends the Labor Code to require an employer who contracts with or receives financial assistance from the state or a state agency and a subcontractor who works on a service contract to pay each employee not less than the living wage for the market area. The bill specifies the process for computing a living wage, and requires an employer to post at each place of the employer's business a conspicuous notice, as prescribed by Texas Workforce Commission (TWC) rule, that includes the living wage rate, the telephone number of TWC, and procedures for filing a claim. An employer is required to keep complete and accurate payroll records for each employee and to report this information periodically to TWC as prescribed by TWC rule. The bill prohibits an employer from retaliating or discriminating against an employee who makes or files a complaint, or testifies, assists, or participates in an investigation, proceeding, or hearing. TWC is required to adopt rules for monitoring employer compliance, and is authorized to require reports, conduct investigations, and to take other appropriate action. TWC is also required to file an annual report with the legislature regarding the operation of the living wage requirement. If an employer violates a provision of this bill, an employee or former employee is authorized to file a claim with TWC no later than the first anniversary of the violation or the date the employee has reason to know of the violation. TWC is required to investigate a claim, make a preliminary determination, recommend a penalty, and mail a notice of the preliminary determination to the employer and the complainant. Both parties are authorized to request a hearing to contest the preliminary determination. As an additional remedy, TWC is authorized to assess an administrative penalty, withhold payment due the employer in the amount sufficient to pay the employee, terminate, cancel, or suspend the service contract or financial assistance agreement, disqualify the employer from contracting with or receiving financial assistance from the state or state agency, or from working on a service contract for up to three years. A party is authorized to seek judicial review of TWC's order. An employee or former employee may be awarded reinstatement, back pay, damages, attorney's fees, court costs, and other appropriate equitable relief. A requirement to pay a living wage supersedes a requirement to pay a prevailing wage to a worker employed on a public work by or on behalf of the state or political subdivision of the state. EFFECTIVE DATE September 1, 2001.