TITLE 28. INSURANCE

PART 2. TEXAS DEPARTMENT OF INSURANCE, DIVISION OF WORKERS' COMPENSATION

CHAPTER 110. REQUIRED NOTICES OF COVERAGE

SUBCHAPTER B. EMPLOYER NOTICES

28 TAC §110.105

The Texas Department of Insurance, Division of Workers' Compensation (division) proposes amendments to 28 Texas Administrative Code (TAC), Subchapter B, §110.105, Employer Requirements for Notifying the Division of Termination of Coverage.

In House Bill (HB) 2112, the 85th legislature primarily amended or repealed certain reporting and notification requirements throughout the Labor Code, including Labor Code §406.007, Termination of Coverage by Employer; Notice. Labor Code §406.007(a) requires an employer who terminates workers' compensation insurance coverage to file a written notice with the division not later than the 10th day after the date the employer notified the insurance carrier to terminate the coverage. HB 2112, which became effective June 9th, 2017, amended §406.007(a) to remove the requirement that the written notice be sent to the division by certified mail. The amendment to §110.105 is necessary to implement this legislative change.

Section 110.105 addresses Employer Requirements for Notifying the Division of Termination of Coverage. Section 110.105 requires an employer who terminates workers' compensation insurance coverage to file written notice of the termination of coverage with the division within 10 days and provides the required information the notice must contain. The division is amending §110.105(b) to delete the requirement that the notice be filed "by certified mail or electronically on the form" and added "in the form and manner" to reflect the legislative changes. An employer may now submit the required notice a number of different ways, including electronically through the division's website, by fax, email, or mail. In conjunction with the proposed amendment, the DWC Form-005, Employer Notice of No Coverage or Termination of Coverage, will be updated to provide information for each submission option.

Dan Paschal, Deputy Commissioner of TDI-DWC Affairs & Strategic Planning, has determined that for each year of the first five years the amended section is in effect, there will be no fiscal impact to state or local governments as a result of enforcing or administering the proposal. There will be no measurable effect on local employment or the local economy as a result of the proposed amendment. Any economic costs to those state and local governments that provide workers' compensation coverage are discussed below.

Mr. Paschal has also determined that for each of the first five years amended §110.105 is in effect, the public benefits anticipated include: (1) easing employer reporting requirements by allowing multiple options for submitting the notice of termination of coverage to the division; (ii) reducing printing and certified mail costs for employers when submitting written notice to the division; and, (iii) implementing the legislative change to ensure consistency between the Labor Code, rules, and forms.

Mr. Paschal anticipates that, for each of the first five years amended §110.105 is in effect, there will be no costs to persons required to comply with the section. Instead, the amendment results in a cost savings to employers by removing existing reporting requirements that specify the method of filing.

Government Code §2001.0045 requires a state agency to offset any costs associated with a proposed rule by: (1) repealing a rule imposing a total cost that is equal to or greater than that of the proposed rule; or (2) amending a rule to decrease the total cost imposed by an amount that is equal to or greater than the cost of the proposed rule. As described above, the division has determined that the proposed amendment will not impose a cost on system participants. The amendment instead provides a cost savings by removing the existing requirement for employers to file a notice of termination of coverage with the division by certified mail. Employers use the DWC Form-005 to notify the division of termination of coverage, as well as when notifying the division of no coverage. The division estimates that as a result of legislative and division rule changes, an individual cost savings of $6.74 is available to employers who would have previously mailed the notice of termination of coverage by certified mail. In Calendar Year 2016, the division estimates that approximately 354 DWC Form-005s were filed notifying the division of termination of coverage. Based on this estimate, the division anticipates the cost savings to system participants could total $2,386 (the individual certified mail cost multiplied by the number of DWC Form-005s filed notifying the division of termination of coverage) for each of the first five years.

Government Code §2006.002(c) provides that if a proposed rule may have an adverse economic effect on small businesses, micro-businesses, or rural communities, state agencies must prepare as part of the rulemaking process an economic impact statement that assesses the potential impact of the proposed rule and a regulatory flexibility analysis that considers alternative methods of achieving the purpose of the rule. Government Code §2006.001(2) defines "small business" as a legal entity, including a corporation, partnership, or sole proprietorship, that is formed for the purpose of making a profit, is independently owned and operated, and has fewer than 100 employees or less than $6 million in annual gross receipts. Government Code §2006.001(1) defines "micro business" similarly to "small business" but specifies that such a business may not have more than 20 employees. Government Code §2005.001(1-a) defines a "rural community" as a municipality with a population of less than 25,000.

In accordance with Government Code §2006.002(c), the division has determined that the proposed amendment will not have an adverse economic effect on small businesses, micro-businesses, or rural communities.

Government Code §2001.0221 requires that a state agency prepare a government growth impact statement that reasonably describes the effects a proposed rule may have during the first five years it is in effect. The division has determined that the proposed amendment to §110.105 will not create or eliminate a government program, and will not require an increase or decrease in fees paid to the division. Implementation of the proposed amendment will not require the creation or elimination of employee positions, and will not require an increase or decrease in future legislative appropriations to the division.

The proposed amendment does not create a new regulation, expand an existing regulation, or repeal an existing regulation. However, the amendment will limit an existing regulation by removing the reporting requirement that an employer file a notice of termination of coverage with the division by certified mail. The number of individuals subject to the rule's applicability is neither increased nor decreased by the proposed amendment, and the proposed amendment has no impact on the state's economy.

The division has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. Therefore, this proposal does not constitute a taking or require a takings impact assessment under the Government Code §2007.043.

If you want to comment on the proposal, submit your written comments by 5:00 p.m. CST on February 26, 2018. A request for a public hearing must be sent separately from your written comments. Send written comments or hearing requests by email to Rulecomments@tdi.texas.gov or by mail to Maria Jimenez, Texas Department of Insurance, Division of Workers' Compensation, Office of Workers' Compensation Counsel, MS-4D, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744-1645. If a hearing is held, the division will consider written comments and public testimony presented at the hearing.

Amended §110.105 is proposed under the authority of Labor Code §402.00111, Relationship Between Commissioner of Insurance and Commissioner of Workers' Compensation, Separation of Authority, Rulemaking; Labor Code §402.061, Adoption of Rules; and, Labor Code §406.007, Termination of Coverage by Employer; Notice.

Labor Code §402.00111(a) states that, except as otherwise provided, the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority, under Title 5 of the Labor Code.

Labor Code §402.061 authorizes the commissioner to adopt rules as necessary for the implementation and enforcement of the Act.

Labor Code §406.007 requires an employer who terminates workers' compensation insurance coverage to file a written notice with the division not later than the 10th day after the date the employer notified the insurance carrier to terminate the coverage.

§110.105.Employer Requirements for Notifying the Division of Termination of Coverage.

(a) (No change.)

(b) The employer shall file the notice of termination required by subsection (a) of this section in the form and manner [by certified mail or electronically on the form] prescribed by the division. The notice shall contain:

(1) - (9) (No change.)

(c) - (f) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 12, 2018.

TRD-201800117

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: February 25, 2018

For further information, please call: (512) 804-4703


CHAPTER 112. SCOPE OF LIABILITY FOR COMPENSATION

The Texas Department of Insurance, Division of Workers' Compensation (division) proposes amendments to 28 Texas Administrative Code (TAC) §112.101, Agreement Regarding Workers' Compensation Insurance Coverage Between General Contractors and Subcontractors and §112.102, Agreements Between Motor Carriers and Owner Operators, in Subchapter B, concerning Application to General Contractor/Subcontractor and Motor Carrier/Owner Operator; and §112.201, Agreement to Establish Employer-Employee Relationship for Certain Building and Construction Workers, and §112.202, Joint Agreement to Affirm Independent Relationship for Certain Building and Construction Workers, in Subchapter C, concerning Application to Certain Building and Construction Workers.

In House Bill (HB) 2112, the 85th legislature primarily amended or repealed certain reporting and notification requirements throughout the Labor Code, including Labor Code §406.144, Election to Provide Coverage; Agreement, and §406.145, Joint Agreement. Labor Code §406.144 permits a hiring contractor and an independent contractor to enter into an agreement under which the hiring contractor, for the purpose of providing workers' compensation insurance coverage, is the employer of the independent contractor. HB 2112 repealed §406.144(c), which required an agreement to be filed with the division, and amended §406.144(d) to require the hiring contractor to send a copy of the agreement to the division when requested instead. Labor Code §406.145 permits a hiring contractor and an independent subcontractor to enter into a joint agreement declaring the subcontractor an independent contractor and not an employee of the hiring contractor for workers' compensation insurance purposes. HB 2112 amended §406.145(c) to remove the requirement that a hiring contractor file the joint agreement with the division, and included a new requirement that a copy be sent to the division when requested instead. Amendments to §112.201 and §112.202 implement HB 2112 by removing the requirement that hiring contractors automatically file a copy of the agreement, under either scenario, to the division.

In addition, the proposal includes substantially similar amendments to §112.101 and §112.102 for consistency among the provisions and division reporting requirements. Labor Code §406.122, Status As Employee, states a subcontractor is not the employee of a general contractor if the parties have entered into a written agreement where the subcontractor assumes the responsibilities of an employer. The section further provides that an owner operator is not the employee of a motor carrier if the parties have entered into a similar agreement. In contrast, Labor Code §406.123, Election to Provide Coverage; Administrative Violation, permits a general contractor and a subcontractor to enter into a written agreement for the general contractor to provide workers' compensation insurance coverage to the subcontractor. The section further provides that a motor carrier and an owner operator may enter into a written agreement where the motor carrier provides workers' compensation insurance coverage to the owner operator. Existing §112.101 and §112.102 require the parties to file a copy of an agreement under §406.123, establishing that a general contractor or a motor carrier will provide workers' compensation insurance coverage to the subcontractor or owner operator, respectively, with the division. Amendments to §112.101 and §112.102 and are necessary to alleviate these system participant filing requirements.

Section 112.101 addresses Agreement Regarding Workers' Compensation Insurance Coverage between General Contractors and Subcontractors. The division amended §112.101(d) to remove "and the Commission" from the general contractor filing requirements. This amendment is necessary to reflect the division's intent that the agreement no longer be automatically filed with the division. Removing the requirement alleviates system participant reporting requirements and is consistent with the Labor Code changes in HB 2112, as well as other TAC changes found throughout the proposal. The division also amended §112.101(d) to replace "Division of Self Insurance Regulation" and "Commission" with "division." These amendments are necessary to reflect the division's current agency name.

Section 112.102 addresses Agreements between Motor Carriers and Owner Operators. The division amended §112.102(d)(5) to remove "the commission in Austin and" from the subparagraph. This amendment is necessary to reflect the division's intent that the agreement no longer be automatically filed with the division. Removing the requirement alleviates system participant reporting requirements and is consistent with the Labor Code changes in HB 2112, as well as other TAC changes found throughout the proposal.

Section 112.201 addresses Agreement to Establish Employer-Employee Relationship for Certain Building and Construction Workers. The division amended §112.201(c) to reflect a change in the agency's name by deleting "commission" and adding "division." The division amended §112.201(g) to delete "the hiring contractor shall file a legible copy of the agreement with the commission, in the form and manner prescribed by the Commission." This amendment is necessary to reflect statutory changes in HB 2112 and the division's intent that the agreement no longer be automatically filed with the division. Removing the requirement also alleviates system participant reporting requirements.

Section 112.202 addresses Joint Agreement to Affirm Independent Relationship for Certain Building and Construction Workers. The division amended §112.202(b) and (b)(6) to reflect a change in the agency's name by deleting "Commission" and adding "division." The division amended §112.202(d) to delete "file a legible copy of the agreement with the Commission in the form and manner prescribed by the Commission." This amendment is necessary to reflect statutory changes in HB 2112, which became effective for agreements signed on or after June 9th, 2017, and the division's intent that the agreement no longer be automatically filed with the division. Removing the requirement also alleviates system participant reporting requirements. The division amended §112.202(f) to delete "(A)ll hiring contracts executed by the parties during the year after an agreement under subsection (a) of this section is filed are subject to that agreement, unless such contract expressly states that the agreement does not apply." The statement "(A)n agreement signed under subsection (a) applies to each hiring agreement executed by the parties until the first anniversary of the date the agreement was filed with the hiring contractor's workers' compensation insurance carrier, unless a subsequent agreement is executed expressly stating that the agreement does not apply" was added. The amended subsection specifies that the agreement's end date is based on when the agreement is filed with the workers' compensation insurance carrier. The specification is necessary to reflect the change in filing requirements in the Labor Code and §112.202, namely that the agreement is no longer automatically filed with the division. Thus, the agreement applies from the date it is executed through the first anniversary of the date it is filed with the workers' compensation insurance carrier. The division notes that 28 TAC §102.4(h), General Rules for Non-Commission Communications, establishes the date a written communication is deemed to have been sent on as the date received, if sent by fax, personal delivery, or electronic transmission, or the date postmarked if sent via the United States Postal Service. If the postmark date is unavailable, then the date sent is the later of the signature date or the date it was received minus five days. Thus, for the purposes of establishing the date an agreement is filed with the workers' compensation insurance carrier, unless the great weight of evidence indicates otherwise, the agreement is deemed filed according to §102.4(h). Amended §112.202(f) also more closely mirrors the statutory language in §406.145(e), which states a joint agreement "applies to each hiring agreement between the hiring contractor and the independent contractor until the first anniversary of its filing date ..." Consistency in language between the statute, rule, and form helps system participants understand the applicability of joint agreements and avoids confusion.

Dan Paschal, Deputy Commissioner of TDI-DWC Affairs & Strategic Planning, has determined that for each year of the first five years the amended sections are in effect, there will be no fiscal impact to state or local governments as a result of enforcing or administering the proposal. There will be no measurable effect on local employment or the local economy as a result of the proposed amended sections. Any economic costs to those state and local governments that provide workers' compensation coverage are discussed below.

Mr. Paschal has also determined that for each of the first five years amended §§112.101, 112.102, 112.201, and 112.202 are in effect, there will be a number of public benefits. The public benefits anticipated as a result of the proposed sections include: (i) alleviating system participant reporting requirements to the division for multiple Chapter 112 agreements; (ii) increasing administrative efficiency by eliminating the need for processing and storage of the agreements; and (iii) reducing costs to system participants for printing, and sometimes mailing, a copy for the division.

Mr. Paschal anticipates that, for each of the first five years amended §§112.101, 112.102, 112.201, and 112.202 are in effect, there will be no costs to persons required to comply with the amended sections. Instead, the amendments result in a cost savings to system participants by removing existing reporting requirements.

Government Code §2001.0045 requires a state agency to offset any costs associated with a proposed rule by: (1) repealing a rule imposing a total cost that is equal to or greater than that of the proposed rule; or (2) amending a rule to decrease the total cost imposed by an amount that is equal to or greater than the cost of the proposed rule. As described above, the division has determined that the proposed amendments will not impose a cost on system participants. The amendments instead provide a cost savings by removing existing requirements for parties to send a copy of certain Chapter 112 agreements to the division, which are found in the DWC Form-081, DWC Form-082, and DWC Form-083. The division is not able to estimate the exact number of hard copies submitted for each specific form. However, in Fiscal Year 2016 the division received approximately 24,000 hard copies of the DWC Form-081- DWC Form-084. By removing the requirement that a copy of the DWC Form-081, DWC Form-082, and DWC Form-083 be automatically provided to the division, the division estimates a total cost savings to system participants of approximately $2,400 (the total number of hard copies received multiplied by a printing cost of $.10 per page) for each of the first five years. An additional cost savings may also apply for system participants who previously mailed their copy of the agreement, which would equal $0.49 for each agreement mailed to the division.

Government Code §2006.002(c) provides that if a proposed rule may have an adverse economic effect on small businesses, micro-businesses, or rural communities, state agencies must prepare as part of the rulemaking process an economic impact statement that assesses the potential impact of the proposed rule and a regulatory flexibility analysis that considers alternative methods of achieving the purpose of the rule. Government Code §2006.001(2) defines "small business" as a legal entity, including a corporation, partnership, or sole proprietorship, that is formed for the purpose of making a profit, is independently owned and operated, and has fewer than 100 employees or less than $6 million in annual gross receipts. Government Code §2006.001(1) defines "micro business" similarly to "small business" but specifies that such a business may not have more than 20 employees. Government Code §2006.001(1-a) defines a "rural community" as a municipality with a population of less than 25,000.

In accordance with Government Code §2006.002(c), the division has determined that the proposed amendments will not have an adverse economic effect on small businesses, micro-businesses, or rural communities. Instead, amended §§112.101, 112.102, 112.201, and 112.202 result in a cost savings to system participants, including small or micro businesses, by removing existing reporting requirements.

Government Code §2001.0221 requires that a state agency prepare a government growth impact statement that reasonably describes the effects a proposed rule may have during the first five years it is in effect. The division has determined that the proposed amendments to §§112.101, 112.102, 112.201, and 112.202 will not create or eliminate a government program, and will not require an increase or decrease in fees paid to the division. Implementation of the proposed amendments will not require the creation or elimination of employee positions, and will not require an increase or decrease in future legislative appropriations to the division.

The proposed amendments do not create a new regulation, expand an existing regulation, or repeal an existing regulation. However, the amendments will limit existing regulations by removing the reporting requirement that a copy of certain Chapter 112 agreements be provided to the division. The number of individuals subject to the rules' applicability is neither increased nor decreased by the proposed amendments, and the proposed amendments have no impact on the state's economy.

The division has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. Therefore, this proposal does not constitute a taking or require a takings impact assessment under the Government Code §2007.043.

If you want to comment on the proposal, submit your written comments by 5:00 p.m. CST on February 26, 2018. A request for a public hearing must be sent separately from your written comments. Send written comments or hearing requests by email to Rulecomments@tdi.texas.gov or by mail to Maria Jimenez, Texas Department of Insurance, Division of Workers' Compensation, Office of Workers' Compensation Counsel, MS-4D, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744-1645. If a hearing is held, the division will consider written comments and public testimony presented at the hearing.

SUBCHAPTER B. APPLICATION TO GENERAL CONTRACTOR/SUBCONTRACTOR AND MOTOR CARRIER/OWNER OPERATOR

28 TAC §112.101, §112.102

Amended §112.101 and §112.102 are proposed under the authority of Labor Code §402.00111, Relationship Between Commissioner of Insurance and Commissioner of Workers' Compensation; Separation of Authority; Rulemaking; Labor Code §402.061, Adoption of Rules; Labor Code §406.122, Status As Employee; Labor Code §406.123, Election to Provide Coverage; Administrative Violation; Labor Code §406.144, Election to Provide Coverage, Agreement; and Labor Code §406.145, Joint Agreement.

Labor Code §402.00111(a) states that, except as otherwise provided, the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority, under Title 5 of the Labor Code.

Labor Code §402.061 authorizes the commissioner to adopt rules as necessary for the implementation and enforcement of the Act.

Labor Code §406.122 states that a subcontractor and the subcontractor's employees are not employees of a general contractor if they have entered into a written agreement where the subcontractor assumes the responsibilities of an employer. The section further provides that an owner operator and the owner operator's employees are not employees of a motor carrier if they have entered into an agreement where the owner operator assumes the responsibilities of an employer.

Labor Code §406.123 provides that a general contractor and a subcontractor may enter into certain agreements and requires the general contractor to file a copy of the agreement with their insurance carrier. The general contractor must file a copy with the division only if they are a certified self-insurer. The section further allows motor carriers and owner operators to enter into agreements where the motor carrier agrees to provide workers' compensation insurance to the owner operator.

Labor Code §406.144 states a hiring contractor is not responsible for providing workers' compensation insurance coverage for an independent contractor unless the hiring contractor and independent contractor enter into an agreement under which the hiring contractor, for the purpose of providing workers' compensation insurance coverage, is the employer of the independent contractor.

Labor Code §406.145 permits a hiring contractor and an independent subcontractor to enter into a joint agreement declaring the subcontractor an independent contractor and not an employee of the hiring contractor for workers' compensation purposes. The joint agreement applies to each hiring agreement between the parties until the first anniversary of its filling date, unless a subsequent hiring agreement expressly states the joint agreement does not apply.

§112.101.Agreement Regarding Workers' Compensation Insurance Coverage between General Contractors and Subcontractors.

(a) - (c) (No change.)

(d) The general contractor shall maintain the original and file a legible copy of the agreement with the general contractor's workers' compensation insurance carrier [and the Commission] within 10 days of the date of execution. An agreement is not considered filed if it is illegible or incomplete. If a general contractor and subcontractor enter into a written agreement in which the subcontractor assumes the responsibilities of an employer, as provided in the Texas Labor Code, §406.122(b) the general contractor shall provide a copy of the agreement to its carrier within 10 days of execution. After January 1, 1993, a general contractor who is a certified self-insurer shall file a copy of the agreement with the division [Division of Self-Insurance Regulation] within 10 days of the date of execution. Filing shall be made in the form and manner prescribed by the division [Commission].

(e) - (f) (No change.)

§112.102.Agreements between Motor Carriers and Owner Operators.

(a) - (c) (No change.)

(d) An agreement made under subsection (c) of this section shall be made at or before the time the contract for the work is made and shall:

(1) - (4) (No change.)

(5) be filed with [the commission in Austin and] the insurance carrier of the motor carrier within 10 days of execution.

(e) - (f) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 12, 2018.

TRD-201800119

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: February 25, 2018

For further information, please call: (512) 804-4703


SUBCHAPTER C. APPLICATION TO CERTAIN BUILDING AND CONSTRUCTION WORKERS

28 TAC §112.201, §112.202

Amended §112.201 and §112.202 are proposed under the authority of Labor Code §402.00111, Relationship Between Commissioner of Insurance and Commissioner of Workers' Compensation; Separation of Authority; Rulemaking; Labor Code §402.061, Adoption of Rules; Labor Code §406.122, Status As Employee; Labor Code §406.123, Election to Provide Coverage; Administrative Violation; Labor Code §406.144, Election to Provide Coverage, Agreement; and Labor Code §406.145, Joint Agreement.

Labor Code §402.00111(a) states that, except as otherwise provided, the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority, under Title 5 of the Labor Code.

Labor Code §402.061 authorizes the commissioner to adopt rules as necessary for the implementation and enforcement of the Act.

Labor Code §406.122 states that a subcontractor and the subcontractor's employees are not employees of a general contractor if they have entered into a written agreement where the subcontractor assumes the responsibilities of an employer. The section further provides that an owner operator and the owner operator's employees are not employees of a motor carrier if they have entered into an agreement where the owner operator assumes the responsibilities of an employer.

Labor Code §406.123 provides that a general contractor and a subcontractor may enter into certain agreements and requires the general contractor to file a copy of the agreement with their insurance carrier. The general contractor must file a copy with the division only if they are a certified self-insurer. The section further allows motor carriers and owner operators to enter into agreements where the motor carrier agrees to provide workers' compensation insurance to the owner operator.

Labor Code §406.144 states a hiring contractor is not responsible for providing workers' compensation insurance coverage for an independent contractor unless the hiring contractor and independent contractor enter into an agreement under which the hiring contractor, for the purpose of providing workers' compensation insurance coverage, is the employer of the independent contractor.

Labor Code §406.145 permits a hiring contractor and an independent subcontractor to enter into a joint agreement declaring the subcontractor an independent contractor and not an employee of the hiring contractor for workers' compensation purposes. The joint agreement applies to each hiring agreement between the parties until the first anniversary of its filling date, unless a subsequent hiring agreement expressly states the joint agreement does not apply.

§112.201.Agreement to Establish Employer-Employee Relationship for Certain Building and Construction Workers.

(a) - (b) (No change.)

(c) An agreement made under subsection (b) of this section shall be filed in the form and manner prescribed by the division [commission].

(d) - (f) (No change.)

(g) [The hiring contractor shall file a legible copy of the agreement with the commission, in the form and manner prescribed by the Commission.] The hiring contractor must [also ] maintain the original and file a legible copy of the agreement with the hiring contractor's workers' compensation insurance carrier within 10 days of the date of execution. An agreement is not considered filed if it is illegible or incomplete.

(h) - (j) (No change.)

§112.202.Joint Agreement to Affirm Independent Relationship for Certain Building and Construction Workers.

(a) (No change.)

(b) The agreement shall be filed in the form and manner prescribed by the division [Commission] and shall:

(1) - (5) (No change.)

(6) state that: "Once this agreement is signed, the subcontractor and the subcontractor's employees shall not be entitled to workers' compensation coverage from the hiring contractor unless a subsequent written agreement is executed, and filed according to division [Commission] rules, expressly stating that this agreement does not apply."

(c) (No change.)

(d) The hiring contractor shall maintain the original and [file a legible copy of the agreement with the Commission in the form and manner prescribed by the Commission. The hiring contractor must also] file a legible copy of the agreement with the hiring contractor's workers' compensation insurance carrier, if any, within 10 days of the date of execution. An agreement is not considered filed if it is illegible or incomplete.

(e) (No change.)

(f) An agreement signed under subsection (a) of this section applies to each hiring agreement executed by the parties until the first anniversary of the date the agreement was filed with the hiring contractor's workers' compensation insurance carrier, unless a subsequent agreement is executed expressly stating that the agreement does not apply. [All hiring contracts executed by the parties during the year after an agreement under subsection (a) of this section is filed are subject to that agreement, unless such contract expressly states that the agreement does not apply.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 12, 2018.

TRD-201800118

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: February 25, 2018

For further information, please call: (512) 804-4703


CHAPTER 130. IMPAIRMENT AND SUPPLEMENTAL INCOME BENEFITS

The Texas Department of Insurance, Division of Workers' Compensation (division), proposes the repeal of 28 Texas Administrative Code (TAC) §130.10, Commission Review of Employment Status during the Impairment Income Benefits Period, and amendments to §130.101, Definitions, and §130.102, Eligibility for Supplemental Income Benefits; Amount.

In House Bill (HB) 2112, the 85th Legislature primarily amended or repealed certain reporting and notification requirements throughout the Labor Code. The bill included the repeal of Labor Code §408.086, Division Determination of Extended Unemployment or Underemployment, which required the commissioner to determine, at least annually, whether any unemployment or underemployment was the direct result of the employee's impairment. Additionally, HB 2112 repealed Labor Code §409.012(d), which permitted a private provider of vocational rehabilitation services to register with the division. As a result of the repeal of Labor Code §409.012(d), the division is no longer maintaining a Registry of Private Providers of Vocational Rehabilitation Services, and removed the registry from the division website. The proposed amendments to §130.101 and §130.102, as well as the repeal of §130.10, are necessary to implement these legislative changes, which became effective June 9th, 2017.

Section 130.10 addresses Commission Review of Employment Status during the Impairment Income Benefits Period. Section 130.10 requires the division to review the employment status of injured employees with an impairment rating of 15% or greater to determine whether the employee is unemployed or underemployed, and, if so, whether that unemployment or underemployment is a direct result of the impairment. The division proposes the repeal of §130.10 to implement the legislative repeal of Labor Code §408.086 in HB 2112, which related to the required determination by the division of extended unemployment or underemployment.

Section 130.101 addresses Definitions. Section 130.101(8) defines a "vocational rehabilitation program" as any program, provided by the Texas Department of Assistive and Rehabilitative Services (DARS), a comparable federally-funded rehabilitation program in another state, or a private provider of vocational rehabilitation services that is included in the Registry of Private Providers of Vocational Rehabilitation Services, for the provision of vocational rehabilitation services designed to assist the injured employee to return to work that includes a vocational rehabilitation plan. The division amended §130.101(8) to replace "Texas Department of Assistive and Rehabilitative Services (DARS)" with "Texas Workforce Commission (TWC)" and "DARS" with "TWC." This amendment is necessary to reflect a change in the state agency tasked with providing vocational rehabilitation services to injured employees. The division also amended §130.101(8) to delete "that is included in the Registry of Private Providers of Vocational Rehabilitation Services" because the division will no longer maintain a registry.

Section 130.102 addresses Eligibility for Supplemental Income Benefits; Amount. Section 130.102(i) permits an insurance carrier to provide vocational rehabilitation services as long as the provider is registered on the division's Registry of Private Providers of Vocational Rehabilitation Services. In addition, subsection (i) states that an insurance carrier is responsible for reasonable travel expenses if the employee is required to travel in excess of 20 miles one way to obtain the vocational rehabilitation services. The division amended §130.102(i) to delete "[T]he insurance carrier may provide vocational rehabilitation services through a provider of such services provided that the individual is registered as a private provider in accordance with §136.2 of this title (relating to Registry of Private Providers of Vocational Rehabilitation Services) and that the." This amendment is necessary to reflect that, as a result of HB 2112 and the repeal of Labor Code §409.012(d), the division will no longer maintain a registry of private providers. However, Labor Code §408.150 continues to authorize an insurance carrier to provide services through a private provider of vocational rehabilitation services. Thus, subsection (i) remains to inform system participants of the insurance carrier's responsibility for reasonable travel when the injured employee is required to travel in excess of 20 miles one way to obtain vocational rehabilitation services from a private provider. The division also replaced "will be" with "is" and added "[T]he" and "from a private provider" to the remaining sentence to help ensure this responsibility is stated in a clear and concise manner. The division emphasizes that amendments to Chapter 130, including §130.102, do not change the eligibility criteria or work search requirements for supplemental income benefits.

Dan Paschal, Deputy Commissioner of TDI-DWC Affairs & Strategic Planning, has determined that for each year of the first five years the amended sections and repeal are in effect, there will be no fiscal impact to state or local governments as a result of enforcing or administering the proposal. There will be no measurable effect on local employment or the local economy as a result of the proposed amendments and repeal. Any economic costs to those state and local governments that provide workers' compensation coverage are discussed below.

Mr. Paschal has also determined that for each of the first five years amended §130.101 and §130.102 are in effect, as well as the repeal of §130.10, the public benefits anticipated include aligning division rules with the Labor Code by repealing mirror provisions and making conforming amendments.

Mr. Paschal anticipates that, for each of the first five years the repeal of §130.10 and amended §130.101 and §130.102 are in effect, there will be no costs to persons required to comply with the proposal.

Government Code §2001.0045 requires a state agency to offset any costs associated with a proposed rule by: (1) repealing a rule imposing a total cost that is equal to or greater than that of the proposed rule; or (2) amending a rule to decrease the total cost imposed by an amount that is equal to or greater than the cost of the proposed rule. As described above, the division has determined that the proposed amendments and repeal will not impose a cost on system participants.

Government Code §2006.002(c) provides that if a proposed rule may have an adverse economic effect on small businesses, micro-businesses, or rural communities, state agencies must prepare as part of the rulemaking process an economic impact statement that assesses the potential impact of the proposed rule and a regulatory flexibility analysis that considers alternative methods of achieving the purpose of the rule. Government Code §2006.001(2) defines "small business" as a legal entity, including a corporation, partnership, or sole proprietorship, that is formed for the purpose of making a profit, is independently owned and operated, and has fewer than 100 employees or less than $6 million in annual gross receipts. Government Code §2006.001(1) defines "micro business" similarly to "small business" but specifies that such a business may not have more than 20 employees. Government Code §2005.001(1-a) defines a "rural community" as a municipality with a population of less than 25,000.

In accordance with Government Code §2006.002(c), the division has determined that the proposed repeal and amendments will not have an adverse economic effect on small businesses, micro-businesses, or rural communities.

Government Code §2001.0221 requires that a state agency prepare a government growth impact statement that reasonably describes the effects a proposed rule may have during the first five years it is in effect. The division has determined that the proposed repeal of §130.10 and amendments to §130.101 and §130.102 will not create or eliminate a government program, and will not require an increase or decrease in fees paid to the division. Implementation of the proposal will not require the creation or elimination of employee positions, and will not require an increase or decrease in future legislative appropriations to the division.

The proposal does not create a new regulation, expand an existing regulation, or limit an existing regulation. However, the amendments will repeal existing regulations that require insurance carriers only provide private vocational rehabilitation services through a private provider registered with the division, and that limit vocational rehabilitation programs provided by private providers to only those providers registered with the division. The number of individuals subject to the rules' applicability is neither increased nor decreased by the proposal, and the proposal has no impact on the state's economy.

The division has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. Therefore, this proposal does not constitute a taking or require a takings impact assessment under the Government Code §2007.043.

If you want to comment on the proposal, submit your written comments by 5:00 p.m. CST on February 26, 2018. A request for a public hearing must be sent separately from your written comments. Send written comments or hearing requests by email to Rulecomments@tdi.texas.gov or by mail to Maria Jimenez, Texas Department of Insurance, Division of Workers' Compensation, Office of Workers' Compensation Counsel, MS-4D, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744-1645. If a hearing is held, the division will consider written comments and public testimony presented at the hearing.

SUBCHAPTER A. IMPAIRMENT INCOME BENEFITS

28 TAC §130.10

Existing §130.10 is repealed under the authority of Labor Code §402.00111, Relationship Between Commissioner of Insurance and Commissioner of Workers' Compensation, Separation of Authority, Rulemaking; and Labor Code §402.061, Adoption of Rules.

Labor Code §402.00111(a) states that, except as otherwise provided, the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority, under Title 5 of the Labor Code. Labor Code §402.061 authorizes the commissioner to adopt rules as necessary for the implementation and enforcement of the Act.

§130.10.Commission Review of Employment Status during the Impairment Income Benefits Period.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 12, 2018.

TRD-201800124

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: February 25, 2018

For further information, please call: (512) 804-4703


SUBCHAPTER B. SUPPLEMENTAL INCOME BENEFITS

28 TAC §130.101, §130.102

Amended §130.101 and §130.102 are proposed under the authority of Labor Code §402.00111, Relationship Between Commissioner of Insurance and Commissioner of Workers' Compensation, Separation of Authority, Rulemaking; Labor Code §402.061, Adoption of Rules; Labor Code §408.150, Vocational Rehabilitation; and, Labor Code §409.012, Vocational Rehabilitation Information.

Labor Code §402.00111(a) states that, except as otherwise provided, the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority, under Title 5 of the Labor Code.

Labor Code §402.061 authorizes the commissioner to adopt rules as necessary for the implementation and enforcement of the Act.

Labor Code §408.150 permits an insurance carrier to provide vocational rehabilitation or training services through a private provider of vocational rehabilitation services.

Labor Code §409.012 requires the division to analyze reports of injury to determine whether the injured employee would be assisted by vocational rehabilitation, and, if so, to notify the injured employee and the Texas Workforce Commission.

§130.101.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) (No change.)

(2) - (7) (No change.)

(8) Vocational rehabilitation program--Any program, provided by the Texas Workforce Commission (TWC) [Texas Department of Assistive and Rehabilitative Services (DARS)], a comparable federally-funded rehabilitation program in another state under the Rehabilitation Act of 1973, as amended, or a private provider of vocational rehabilitation services [that is included in the Registry of Private Providers of Vocational Rehabilitation Services], for the provision of vocational rehabilitation services designed to assist the injured employee to return to work that includes a vocational rehabilitation plan. A vocational rehabilitation plan, also known as an Individual Plan for Employment at TWC, [DARS,] includes, at a minimum, an employment goal, any intermediate goals, a description of the services to be provided or arranged, the start and end dates of the described services, and the injured employee's responsibilities for the successful completion of the plan.

(9) (No change.)

§130.102.Eligibility for Supplemental Income Benefits; Amount.

(a) - (h) (No change.)

(i) Services Provided by a Carrier Through a Private Provider of Vocational Rehabilitation Services. The [The insurance carrier may provide vocational rehabilitation services through a provider of such services provided that the individual is registered as a private provider in accordance with §136.2 of this title (relating to Registry of Private Providers of Vocational Rehabilitation Services) and that the] insurance carrier is [will be] responsible for reasonable travel expenses incurred by the injured employee if the employee is required to travel in excess of 20 miles one way from the injured employee's residence to obtain vocational rehabilitation services from a private provider.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 12, 2018.

TRD-201800120

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: February 25, 2018

For further information, please call: (512) 804-4703


CHAPTER 136. BENEFITS--VOCATIONAL REHABILITATION

28 TAC §136.1

The Texas Department of Insurance, Division of Workers' Compensation (division) proposes the amendments to 28 Texas Administrative Code (TAC) §136.1, Review of Employer Report of Injury, and the repeal of 28 TAC §136.2, Registry of Private Providers of Vocational Rehabilitation Services.

In House Bill (HB) 2112, the 85th legislature primarily amended or repealed certain reporting and notification requirements throughout the Labor Code. HB 2112 repealed Labor Code §409.012(d), which permitted a private provider of vocational rehabilitation services to register with the division. As a result of the repeal of Labor Code §409.012(d), the division is no longer maintaining a Registry of Private Providers of Vocational Rehabilitation Services and removed the registry from the division website. The Legislature removed Labor Code §409.012(d) and the division is proposing to repeal §136.2 to conform to the legislative repeal. The proposed amendments to §136.1 and the proposed repeal of §136.2 are necessary to implement the legislative changes in HB 2112, which became effective June 9th, 2017.

Additionally, HB 2112 amended Labor Code §408.150 and §409.012 to substitute the "Department of Assistive and Rehabilitation Services" with "Texas Workforce Commission."

Section 136.1 addresses Review of Employer Report of Injury. The division amended §136.1(b), (c)(1), and (c)(3) to replace "Texas Department of Assistive and Rehabilitative Services" with "Texas Workforce Commission." This amendment is necessary to reflect a change in the state agency tasked with providing vocational rehabilitation services to injured employees.

The division also deleted the existing text in §136.1(c)(2), which stated "a brief description of the availability of private providers registered with the division according to §136.2 of this title (relating to Registry of Private Providers of Vocational Rehabilitation Services)," and renumbered §136.1(c)(3) to §136.1(c)(2). This deletion is necessary because the division is proposing to repeal §136.2.

Section 136.2 addresses Registry of Private Providers of Vocational Rehabilitation Services. Section 136.2 requires the division to maintain a registry of private providers of vocational rehabilitation services. The division proposes the repeal of §136.2 to implement the legislative repeal of Labor Code §409.012(d) in HB 2112. This repeal is necessary to reflect that, as a result of HB 2112 and the repeal of Labor Code §409.012(d), the division will no longer maintain a registry of private providers.

Dan Paschal, Deputy Commissioner of Internal Affairs & Strategic Planning, has determined that for each year of the first five years the amended sections and repeal are in effect, there will be no fiscal impact to state or local governments as a result of enforcing or administering the proposal. There will be no measurable effect on local employment or the local economy as a result of the proposed amendments and repeal. Any economic costs to those state and local governments that provide workers' compensation coverage are discussed below.

Mr. Paschal has also determined that, for each of the first five years amended §136.1 and the repeal of §136.2 are in effect, the public benefits anticipated as a result of the proposed amendments include aligning §136.1 with the current statute, decreasing system participant requirements by removing the registry of private providers of vocational rehabilitation services, and providing guidance on which agency the division will direct an injured employee to for vocational rehabilitation.

Mr. Paschal anticipates that, for each of the first five years amended §136.1 and the repeal of §136.2 are in effect, there will be no costs to persons required to comply with the proposal. Instead, the amendments result in a cost savings to system participants by removing existing application requirements.

Government Code §2001.0045 requires a state agency to offset any costs associated with a proposed rule by: (1) repealing a rule imposing a total cost that is equal to or greater than that of the proposed rule; or (2) amending a rule to decrease the total cost imposed by an amount that is equal to or greater than the cost of the proposed rule. As described above, the division has determined that the proposed amendments and repeal will not impose a cost on system participants. The amendments instead provide a cost savings by removing existing requirements for a private provider of vocational rehabilitation services to send the DWC Form-065, Application for Inclusion on Registry of Private Providers of Vocational Rehabilitation Services, to the division. The division estimates an individual cost savings to private providers for the amount to print and mail the DWC Form-065 to the division.

Government Code §2006.002(c) provides that if a proposed rule may have an adverse economic effect on small businesses, micro-businesses, or rural communities, state agencies must prepare as part of the rulemaking process an economic impact statement that assesses the potential impact of the proposed rule and a regulatory flexibility analysis that considers alternative methods of achieving the purpose of the rule. Government Code §2006.001(2) defines "small business" as a legal entity, including a corporation, partnership, or sole proprietorship, that is formed for the purpose of making a profit, is independently owned and operated, and has fewer than 100 employees or less than $6 million in annual gross receipts. Government Code §2006.001(1) defines "micro business" similarly to "small business" but specifies that such a business may not have more than 20 employees. Government Code §2005.001(1-a) defines a "rural community" as a municipality with a population of less than 25,000.

In accordance with Government Code §2006.002(c), the division has determined that the proposed amendments and repeal will not have an adverse economic effect on small businesses, micro-businesses, or rural communities.

Government Code §2001.0221 requires that a state agency prepare a government growth impact statement describing the effects that a proposed rule may have during the first five years that the rule would be in effect. The proposed amendments and repeal will not create or eliminate a government program and will not require the creation or elimination of existing employee positions. The proposed amendments and repeal will not require an increase or decrease in future legislative appropriations to the division and will not result in an increase or decrease in fees paid to the division.

The proposal does not create a new regulation, expand an existing regulation, or limit an existing regulation. However, the proposal will repeal existing regulations that require private providers of vocational rehabilitation services to register with the division. The number of individuals subject to the rules' applicability is neither increased nor decreased by the proposal, and the proposal has no impact on the state's economy.

The division has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. Therefore, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.

If you would like to comment on this proposal, please submit your written comments by 5:00 p.m. CST on February 26, 2018. A request for a public hearing must be sent separately from your written comments. Send written comments or hearing requests by email to rulecomments@tdi.texas.gov or by mail to Maria Jimenez, Texas Department of Insurance, Division of Workers' Compensation, Office of the General Counsel, MS-4D, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744-1645. If a hearing is held, written comments and public testimony presented at the hearing will be considered.

Amended §136.1 is proposed under the authority of Labor Code §402.00111, Relationship Between Commissioner of Insurance and Commissioner of Workers' Compensation; Separation of Authority; Rulemaking; Labor Code §402.061, Adoption of Rules; Labor Code §408.150, Vocational Rehabilitation; and Labor Code §409.012, Vocational Rehabilitation Information.

Labor Code §402.00111 states that the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority, under the Texas Workers' Compensation Act.

Labor Code §402.061 states that the commissioner shall adopt rules as necessary for the implementation and enforcement of the Texas Workers' Compensation Act.

Labor Code §408.150 states that the division should refer an employee to the appropriate administrative agency with a recommendation for appropriate services if the division determines that an employee could be materially assisted by vocational rehab or training.

Labor Code §409.012 states that the division shall analyze each report of injury to determine whether the injured employee could be assisted by vocational rehabilitation.

§136.1.Review of Employer Report of Injury.

(a) (No change.)

(b) Whenever the division finds facts that suggest one or more of the conditions listed in subsection (a) of this section, the division shall notify the injured employee and the Texas Workforce Commission[, the Department of Assistive and Rehabilitative Services, and the insurance carrier] that the division has identified an injured employee who may be assisted by vocational rehabilitation. The notice shall:

(1) - (2) (No change.)

(c) In addition to the information required by subsection (b) of this section, the division's notice to the injured employee shall contain the following:

(1) the address and telephone number of the central office of the Texas Workforce Commission [Department of Assistive and Rehabilitative Services]; and

[(2) a brief description of the availability of private providers registered with the division according to §136.2 of this title (relating to Registry of Private Providers of Vocational Rehabilitation Services); and]

(2) [(3)] a statement that the division notified the Texas Workforce Commission [Department of Assistive and Rehabilitative Services and the insurance carrier] that the injured employee may be assisted by vocational rehabilitation.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 12, 2018.

TRD-201800121

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: February 25, 2018

For further information, please call: (512) 804-4703


28 TAC §136.2

Existing §136.2 is proposed to be repealed under authority of Labor Code §402.00111, Relationship Between Commissioner of Insurance and Commissioner of Workers' Compensation; Separation of Authority; Rulemaking; Labor Code §402.061, Adoption of Rules; and Labor Code §409.012, Vocational Rehabilitation Information.

Labor Code §402.00111 states that the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority, under the Texas Workers' Compensation Act.

Labor Code §402.061 states that the commissioner shall adopt rules as necessary for the implementation and enforcement of the Texas Workers' Compensation Act.

Labor Code §409.012 states that the division shall analyze each report of injury to determine whether the injured employee could be assisted by vocational rehabilitation.

§136.2.Registry of Private Providers of Vocational Rehabilitation Services.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 12, 2018.

TRD-201800123

Nicholas Canaday III

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: February 25, 2018

For further information, please call: (512) 804-4703