DAN MORALES 

ATTORNEY GENERAL 

QBffice of tjy !Zlttornep Q&nerd 

%tate of ID;exae 

Mr. Abed F. Hurley 

chancellor 

University of North Texas 

P.O. Box 13737 

Denton, Texas 76203-6737 

August 11,1994 

Opiion No. DM-300 

Re: Whether there is a de minimis exception to 

the requirement that certain wmpsnies that enter 

into a “building or wnstruction contract” under 

Labor Code section 406.096 with the state or a 

political subdivision of the state must provide 

workers’ wmpensation insurance for their 

employees, and related questions (RQ-596) 

Dear Mr. Hurley: 

You ask us to determine what constitutes a “building or construction wntract” 

within section 406.096 of the Labor Code.1 Section 406.096 provides, in pertinent part, 

as follovvs: 

(a) A governmental entity that enters into a building or 

wnstruction wntract shah require the contractor to certity in writing 

that the wntractor provides workers’ compensation insurance 

coverage for each employee of the contractor employed on the public 

project. 

(b) Each subcontractor on the public project shall provide such 

a certhicate relating to wverage of the subwntractor’s employees to 

the genera) contractor, who shah provide the subcontractor’s certiticate to the govemmentsl entity. 

. 

(d) The employment of a maintenance employee by an employer 

who is not engaging in building or construction as the employer’s 

primary business does not wnstitute engaging in building or 

wnstruction. 

%cction 406.0% of the Labor Cede was fcmerly cxnlikd as V.T.C.S. article 8308-3.23(c), (d) 

(1925). a provision of the 1989 Workers’ CompeoYltion An (the “act”). The .Smnly-third Lc&latm 

lepealcdtheactsnd mnaacdifwithoutsubstantiverrvision,astiUe5oftbcLaborc4de. Acts1993, 

73d Leg., ch. 269,s 1, at 1132. 

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Mr. Al&i F. Hurley - Page 2 (DM-300) 

(e) In this section: 

(1) “Building or construction” includes: 

(A) erecting or preparing to erect a structure, 

including a buikliig, bridge, roadway, public utility facility, or related 

appurtenance; 

(B) remodeling, extending, repairing, or demolishing a 

structure; or 

(C) otherwise improving real property or an appurtenance to real property through similar activities. 

(2) “Ciovemmental entity” means this state or a political 

subdivision of this state. The term includes a municipality. 

In particular, you also ask whether section 406.0% applies to the following types 

of jobs: 

(1) the fbmishing and installation of an item in a building (such as 

the instaMion of carpeting for a single office, or a wall system to 

divide a room in half etc.); (2) the service or repair of a certain item 

(such as the replacement of a glass window pane; the repair of a 

nndtImctioning electronic door; resealing seams and restretching a 

carpet, etc.); (3) small sheet metal projects; (4) specialized pipe 

fitting work; or (5) annual service contracts for services such as 

elevator maintenance and tire alarm maintenance. 

We cannot answer this question because the determination in each case may depend on a 

consideration of additional facts to determine whether the job wnstitutes “building or 

wnstruction” as defined in section 406.096(e)(l). Resolution of questions of fact is not a 

tbnction of the attorney general opinion process. For this reason, we cannot amplify the 

statutory definition of “buildi or construction” to provide a formula for determining 

whether or not these jobs are “building or construction contracts.” 

On the assumption that such jobs are “building or construction wntracts,” you ask 

whether section 406.096 of the Labor Code applies to them, no matter how small the 

subject matter of the contract may be. We see in the statutory language no indication of a 

legislative intent to except small contracts from the coverage requirement of section 

406.096. Furthermore, injuries at the work place may occur during the performsnce of 

even minor tasks, so we can think of no reason to interpret this section as applying only to 

large contracts. 

You contend that if this provision applies to small jobs such as a $50 carpet repair 

or a $150 plate glass replacement, then the University of North Texas will not be able to 

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Mr. Alfred F. Hurley - Page 3 (DM-300) 

hire for minor jobs many of the smaller and less expensive independent wntractors that do 

not provide workers’ compensation coverage to their employees. It is obvious that the 

maintenance of workers’ compensation wverage will entail costs that may be factored into 

the rates charged for services provided by the covered wntractor in a building or 

construction contract. Ifthe etTect of section 406.096 is to place an added cost burden on 

a governmental entity, we believe that the legislature anticipated this effect and determined 

that the added cost was justitied by the be&its of requiring coverage. We therefore 

conclude that section 406.096 applies to all contracts falling within its terms regardless of 

the size of the subject matter. 

You next ask whether a “governmental entity” as detined in section 406.096(e)(2) 

may he a “hiring wntractor” as defined in Labor Code section 406.141, which begins 

subchapter G of chapter 406. Subchapter G establishes that in certain construction 

wntracts, see Labor Code 5 406.142, an “independent contractor” as defined in section 

406.141(2), and not the “hiring contractor” as defined in section 406.141(l), is responsible 

for the provision of sny workers’ compensation to any of its employees, see id. 5 406.143, 

unless the hiring contractor and the independent contractor enter into an agreement 

making the hiring contractor the employer of the independent contractor and its employees 

for the purpose of providing workers’ compensation coverage, see id. 5 406.144. 

To answer this question we will need to consider the meaning of the phrase hiring 

contractor as used in subchapter G. Section 406.141 defines hiring conmcfor as follows: 

In this subchapter: 

(1) “Hiring contractor” means a general wntractor or 

subcontractor who, in the wurse of regular business, subcontracts all 

or part of the work to be performed to other persons. 

Section 406.121, in turn, defines general contractor and subcontmctor as follows: 

In this subchapter: 

(1) “General contractor” means a person who undertakes to 

procure the performance of work or a service, either separately or 

through the use of subcontractors. The term includes a “principal 

contractor,” “original contractor,” “prime contractor,” or other 

analogous term. The term does not include a motor carrier that 

provides a transportation service through the use of an owner 

operator. 

. 

(5) “Subcontractor” means a person who contracts with a 

general contractor to perform all or part of the work or services that 

the general contractor has undertaken to perform. 

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Mr. Alfkd F. Hurl9 - Page 4 (DM-300) 

The statutory definition of general coniractor is consistent, for the most part, with that 

found in Black’s Law Dictionary: 

One who wntracts for the construction of an entire building or 

project, rather than for a portion of the work. The general 

wntractor hires subcontractors (e.g. plumbii electrical, etc.), 

wordiites all work, and is responsible for payment to 

subwntractors. Also called “prime” contractor. 

BLACK’S LAW DICTIONARY 683 (6th ed. 1990). 

Although the foregoing Labor Code provisions do not define hiring wntructor or 

general contractor in teams expressly limiting the phrases to include a person who is a 

“contractor,” it is helpibl to consider the meaning of the word contractor in order better to 

understand the these phrases. Bkxk’s defines coniracior, in part, as: 

One who wntracts to do workfor another. This term is strictly 

applicable to any person who enters into a contract, but is wmmonly 

resetved to designate one who, for a t&d price, undertakes to 

procure the performance of works or services on a large scale, or the 

tiunishing of goods in large quantities, wheiher for the public or a 

compary or ina?viaM. 

A wntractor is a person who, in the pursuii of any idpendeni 

business, undertakes to do a specific piece of work for another or 

other persons. 

Id. at 326 (emphasis added). We believe that a “hiring contractor” under section 45141 

and a “genersl contractor” under section 496.121 do not include the entity that grurrrs a 

prime contract-such entity not being a “contractor” in wmmon usage-but may include 

the entity that is gronfed the contract. See Gov’t Code 5 312.002(b) (“If a word is 

wnnected with and used with reference to a particular trade or subject matter or is used as 

a word of art, the word shag have the meaning given by experts in the particular trade, 

subject matter, or art”). 

The University of North Texas, in hiring a company to extend a campus building, 

for example, does not act as a “hiring contractor” as that phrase is defined in section 

466.141 because it does not act even as a “contractor” as that term is wnnnonly 

understood. In regard to such a project, the university does not undertake to provide 

goods or services for another. The company would be the “contractor” because it 

undertakes to do the project for the university, and not vice versa Nor does the 

university, we assume, make a “business”-that is, a “wmmercial activity engaged in for 

gain,” BLACK’S LAW DICTIONARY 198-out of entering into wntracts with companies to 

have its buildings extended (such contracts being, rather, merely necessary to the pursuit 

of the university’s purposes as an educational and research institution); but the company 

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Mr. A&d F. Hurley - Page 5 (DM-300) 

that it hires probably does pursue a “busiiess” of entering into contracts to extend 

buildmgs. Because your concern appears to be limited to contracts to perform “building 

or construction” on buildings on the university’s campus, we do not need to engage here in 

speculation to determine whether any “govemmentsl entity” as detined in section 

406.096(e)(Z) may in some situations be a “hiring contractor” as defined in Labor Code 

section 406.14 1. It s&ices to conclude that the University of North Texas is not a “hiring 

contractor” as detined in Labor Code section 406.141(l) when it hires an individuai or a 

wmpany to petform on campus buildings any activity that constitutes “building or 

wnstruction” for purposes of section 406.096. 

You finally ask whether an agreement under Labor Code section 406.145 satisSes 

the requirements of a certiticate of wverage under section 406.096, subsections (a) and 

(b). Section 406.145, which is part of subchapter G, provides that a joint agreement 

between the hiring contractor and an independent contractor aSInning that the 

independent contractor is not an employee of the hiring contractor will establish as a 

matter of law that the subcontractor “is an independent contractor and not an employee, 

and is not entitled to workers’ compensation insurance coverage through the hiring 

contractor unless an agreement is entered into under Section 406.144 to provide workers’ 

wmpensation insursnw coverage.” Section 406.096 requires that the contractor, see id. 

5 406.096(a), and any subcontractors, see $406.096(b), in a building or construction 

wntract with a governmental entity certify in writing that each employee of the contractor 

or subcontractor that is working on the project is being provided workers’ compensation 

insurance wverage. Because an agreement under section 406.145 does not certify that 

the contractor and any subcontractor are in fact providing workers’ compensation 

coverage to its employees, we conclude that such an agreement would not satisfy the 

certitIcate requirements of section 406.096. 

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SUMMARY 

Labor Code section 406.096 applies to every “building or 

construction w&-act” entered into by the State or a political 

subdivision of the State, no matter how small the subject matter of 

the contract may be. The University of North Texas is not a “hiring 

contractor” as de&d in Labor Code section 406.141(l) when it 

hires an individual or a company to perfortn on campus buildings any 

activity that constitutes “building or wnstruction” for purposes of 

section 406.096. An agreement under Labor Code section 406.145 

between a hhing contractor and an independent wntractor a&ming 

that the independent contractor is not an employee of the hiring 

wntractor does not certify that the contractor and any subcontractor 

is in fact providing workers’ compensation coverage to its employees 

and therefore would not satisfy the certiticate requirements of section 

406.096. 

DAN MORALES 

Attorney General of Texas 

JORGE VEGA 

Fii Assistant Attorney Genera) 

DREW DURHAM 

Deputy Attorney General for Criminal Justice 

JAVJER AGUILAR 

Special Assistant Attorney General 

RENEA HICKS 

State Solicitor 

SARAH.J. SHIRLEY 

Chair, Opinion Committee 

Prepsred by James B. Pinson 

Assistant Attorney General 

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