S.B. No. 1254

AN ACT

relating to the regulation of professional employer organizations.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 91.001(11), Labor Code, is amended to read as follows:

(11) "License holder" means a person who holds a license issued by the department [licensed under this chapter] to provide professional employer services.

SECTION 2. The heading to Section 91.016, Labor Code, is amended to read as follows:

Sec. 91.016. LICENSE ISSUANCE; TERM; EFFECT OF EXPIRATION.

SECTION 3. Section 91.016, Labor Code, is amended by amending Subsection (b) and adding Subsection (d) to read as follows:

(b) A license issued or renewed by the department under this chapter is valid for one year from the date of the issuance or renewal. The department shall renew a license in accordance with Subchapter H, Chapter 51, Occupations Code, and the rules adopted by the department [on receipt of a complete renewal application form and payment of the license renewal fee].

(d) Notwithstanding any other law, for purposes of this chapter, if a license holder fails to timely apply for license renewal, the license holder's status as employer of a covered employee continues until the expiration of 18 months after the date the license expires. If the license holder fails to apply for license renewal before the expiration of the 18th month after the license expiration date:

(1) the license holder's status as employer of a covered employee terminates; and

(2) the license holder is subject to disciplinary action if the license holder engages in or offers professional employer services at any time while the license is expired.

SECTION 4. Section 91.020, Labor Code, is amended to read as follows:

Sec. 91.020. GROUNDS FOR DISCIPLINARY ACTION. The department may take disciplinary action against a person under Subchapter F, Chapter 51, Occupations Code, regardless of whether the person holds a license under this chapter, [license holder] on any of the following grounds:

(1) engaging in professional employer services or offering to engage in the provision of professional employer services:

(A) without a license; or

(B) while the person's license is expired, suspended, or inactive;

(2) transferring or attempting to transfer a license issued under this chapter;

(3) violating this chapter or any order or rule issued by the executive director or commission under this chapter;

(4) failing after the 31st day after the date on which a felony conviction of a controlling person is final to notify the department in writing of the conviction;

(5) failing to cooperate with an investigation, examination, or audit of the license holder's records conducted by the license holder's insurance company or the insurance company's designee, as allowed by the insurance contract or as authorized by law by the Texas Department of Insurance;

(6) failing after the 31st day after the effective date of a change in ownership, principal business address, or the address of accounts and records to notify the department and the Texas Department of Insurance of the change;

(7) failing to correct any tax filings or payment deficiencies within a reasonable time as determined by the executive director;

(8) refusing, after reasonable notice, to meet reasonable health and safety requirements within the license holder's control and made known to the license holder by a federal or state agency;

(9) being delinquent in the payment of the license holder's insurance premiums other than those subject to a legitimate dispute;

(10) being delinquent in the payment of any employee benefit plan premiums or contributions other than those subject to a legitimate dispute;

(11) knowingly making a material misrepresentation to an insurance company or to the department or other governmental agency;

(12) failing to maintain the working capital required under Section 91.014; or

(13) using professional employer services to avert or avoid an existing collective bargaining agreement.

SECTION 5. The changes in law made by this Act apply only to conduct that occurs on or after the effective date of this Act. Conduct that occurs before that date is governed by the law in effect on the date the conduct occurred, and the former law is continued in effect for that purpose.

SECTION 6. This Act takes effect September 1, 2025.

______________________________ ______________________________

President of the Senate Speaker of the House

I hereby certify that S.B. No. 1254 passed the Senate on April 10, 2025, by the following vote: Yeas 30, Nays 0.

______________________________ Secretary of the Senate

I hereby certify that S.B. No. 1254 passed the House on May 23, 2025, by the following vote: Yeas 122, Nays 14, two present not voting.

______________________________ Chief Clerk of the House

Approved:

______________________________

Date

______________________________

Governor