Relating to licensing reciprocity agreements entered into by the Texas Department of Licensing and Regulation.
ModeratePlan for compliance
Low Cost
Effective:2025-05-29
Enforcing Agencies
Texas Department of Licensing and Regulation (TDLR) • Texas Commission of Licensing and Regulation (TCLR)
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date:May 29, 2025 (Immediate). TDLR is now legally authorized to recognize out-of-state licenses under reciprocity.
Compliance Deadline:Immediate. You must update hiring and contracting workflows now to accommodate potential reciprocal candidates.
Agency Rulemaking:January 1, 2026. The Texas Commission of Licensing and Regulation (TCLR) must adopt formal rules defining "substantial equivalence" for training and testing.
*Regulatory Gray Zone:* Between now and Jan 1, 2026, TDLR may operate under existing or ad-hoc agreements. Proceed with caution until formal rules are published.
Immediate Action Plan
1.Audit MSAs: Immediately revise subcontractor warranty clauses to include reciprocity language to avoid technical breach of contract.
2.Update Hiring SOPs: Instruct HR to flag out-of-state applicants for "Reciprocity Review" rather than automatic rejection.
3.Establish Verification Channels: Identify the license verification portals for neighboring states (OK, LA, NM, AR) in anticipation of early agreements.
4.Monitor Rulemaking: Assign compliance staff to watch the *Texas Register* for TCLR’s proposed rules on "substantial equivalence" in Q3 2025 and submit comments regarding safety standards.
Operational Changes Required
Contracts
Master Service Agreements (MSAs): Standard clauses requiring personnel to be "Licensed by the State of Texas" are now restrictive and potentially inaccurate.
*Required Amendment:* Change warranty language to: *"Personnel must be licensed by the State of Texas or authorized to practice in Texas under a valid reciprocity agreement pursuant to Ch. 51, Subchapter K, Texas Occupations Code."*
Employment Contracts: Insert a contingency clause for reciprocal hires stating that employment is void if the originating state’s license lapses or if the reciprocity agreement between Texas and that state is terminated.
Hiring/Training
Job Descriptions: Remove "Must hold current Texas License" as a hard filter. Replace with "Must hold current Texas License or eligible equivalent from a reciprocal state."
Gap Training: Implement a "Scope Gap" onboarding module. If a reciprocal hire comes from a state with different code adoption years (e.g., NEC or building codes), you must document that they have been trained on Texas-specific amendments to mitigate negligence claims.
Insurance Review: Confirm with your professional liability carrier that coverage extends to employees working under reciprocal privileges, not just physical Texas licenses.
Reporting & Record-Keeping
Verification Protocol: Do not rely solely on the TDLR database. You must create a compliance file for reciprocal hires containing:
1. Proof of the out-of-state license.
2. Direct verification of "Good Standing" (no active complaints) from the originating state board.
3. A copy of the active reciprocity agreement.
Fees & Costs
Administrative Burden: No new state fees are levied on businesses, but internal administrative costs will increase due to the complexity of multi-state verification.
IT Updates: Expect potential delays in TDLR’s online portal as they integrate data from other states (Fiscal Note indicates IT upgrades are required).
Strategic Ambiguities & Considerations
"Substantially Equivalent" Standards: The law requires reciprocity only when standards are "substantially equivalent," but does not define the percentage of overlap required (e.g., is a 90% match in training hours sufficient?).
*Risk:* If TCLR rules are too loose, you risk hiring under-qualified staff. If too strict, the labor pool remains closed.
Scope of Practice Mismatches: Job titles may match across state lines (e.g., "Journeyman"), but authorized duties often do not. The law is vague on how specific task prohibitions will be communicated to employers.
Need Help Understanding Implementation?
Our government affairs experts can walk you through this bill's specific impact on your operations.
Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
The United States Census Bureau reported that over 600,000 people arrived in Texas in 2023, making Texas the top state for domestic migration. The bill author has informed the committee that, due to this large net migration, Texas has one of the highest occupational licensing burdens of any state in the nation, requiring those who already hold licenses from other states with substantially similar licensing standards to navigate additional training, education, and fees before legally practicing their professions in Texas. C.S.H.B. 11 aims to provide clarity in the occupational licensing process by specifically tasking the Texas Department of Licensing and Regulation to maximize licensing reciprocity agreements with other states, thus ensuring streamlined integration of professionals into the state's workforce.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is expressly granted to the Texas Commission of Licensing and Regulation in SECTION 1 of this bill.
ANALYSIS
C.S.H.B. 11 amends the Occupations Code to require the Texas Department of Licensing and Regulation (TDLR) to maximize licensing reciprocity agreements, with respect to licenses issued by TDLR, to the extent allowed by law and to identify state laws that prevent TDLR from entering into a reciprocity agreement with a licensing authority in another state.
C.S.H.B. 11 requires the Texas Commission of Licensing and Regulation (TCLR), not later than January 1, 2026, to adopt rules necessary to implement the bill's provisions and requires the rules to establish procedures for TDLR to take the following actions:
·determine whether the licensing requirements of another state are substantially equivalent to Texas' requirements, taking into consideration the following:
othe level of required training and testing to obtain a license, including methods used to evaluate work experience to fulfill training or testing requirements;
othe scope of practice for which the license is issued; and
othe procedures used in the other state to resolve complaints and to determine whether a license holder is in good standing; and
·enter into and implement reciprocity agreements with licensing authorities in other states that have licensing requirements substantially equivalent to Texas' requirements.
C.S.H.B. 11 requires TDLR, not later than December 1 of each odd-numbered year, to submit to the governor and the Legislative Budget Board a written report that does the following:
·summarizes TDLR's efforts in maximizing reciprocity agreements and identifying state laws that prevent TDLR from entering into such an agreement, including a description of the extent to which the state's licensing requirements exceed the requirements of other states;
·describes TDLR's efforts to enter into reciprocity agreements with licensing authorities in other states, including a list of each reciprocity agreement entered into and any unsuccessful effort to enter into a reciprocity agreement with a licensing authority of another state; and
·recommends any legislative action that is necessary or appropriate to increase the number of license reciprocity agreements as directed by the bill, including any reduction of the state's licensing requirements that would make more reciprocity agreements possible.
The bill requires TDLR to submit the initial report not later than December 1, 2027.
EFFECTIVE DATE
On passage, or, if the bill does not receive the necessary vote, September 1, 2025.
COMPARISON OF INTRODUCED AND SUBSTITUTE
While C.S.H.B. 11 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.
Whereas the introduced required any department, commission, board, office, or other agency of the state that issues or renews an occupational license to perform the actions required by the bill, adopt rules as required by the bill, and submit the report required by the bill, the substitute requires TDLR to take those actions and submit the report and requires TCLR to adopt those rules.
With respect to the bill's requirement that licensing reciprocity agreements be maximized to the extent allowed by law, the introduced specified that those are occupational licensing reciprocity agreements, but the substitute specifies that the requirement is applicable to licensing reciprocity agreements with respect to licenses issued by TDLR.
Honorable Dade Phelan, Chair, House Committee on Licensing & Administrative Procedures
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB11 by Phelan (Relating to occupational licensing reciprocity agreements.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB11, As Introduced: a negative impact of ($949,552) through the biennium ending August 31, 2027.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($457,523)
2027
($492,029)
2028
($492,909)
2029
($493,641)
2030
($484,389)
All Funds, Five-Year Impact:
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Probable Revenue Gain/(Loss) from Dept Ins Operating Acct 36
Probable Savings/(Cost) from Dept Ins Operating Acct 36
Change in Number of State Employees from FY 2025
2026
($457,523)
$224,593
($224,593)
6.0
2027
($492,029)
$218,897
($218,897)
6.0
2028
($492,909)
$82,496
($82,496)
5.0
2029
($493,641)
$82,496
($82,496)
5.0
2030
($484,389)
$82,496
($82,496)
5.0
Fiscal Analysis
The bill would require each licensing authority to maximize occupational licensing reciprocity agreements and identify state laws that prevent a reciprocity agreement with another state.
The bill would require rules that establish procedures for a licensing authority to follow to determine whether licensing requirements of another state are substantially equivalent to Texas requirements. If occupational licensing requirements of another state are substantially equivalent to Texas requirements, the licensing authority would be required to implement a reciprocity agreement.
The bill would require development of a biennial report to be submitted by each licensing authority to the Legislative Budget Board and the Governor describing the extent where the state's licensing requirements exceed the requirements of other states; describing efforts by the licensing authority to enter into reciprocity agreements with other states; and recommendations for legislative action to increase the number of license reciprocity agreements.
Methodology
This estimate assumes that the Department State Health Services (DSHS) would require 4.0 additional Program Specialist IV full-time equivalent positions (FTE) to research other states' occupational licensing and certification requirements; to develop interest and negotiate with states to develop an agreement with Texas; review current rules and recommendations for amendments; and to develop the biennial report.
Estimated salaries, benefits, and related costs for the new FTEs at DSHS total $411,178 in fiscal year 2026 from the General Revenue Fund and $479,205 from the General Revenue Fund in fiscal year 2027. The lower cost in the first fiscal year is attributable to an assumed start date for these positions later in the fiscal year. The agency would require ongoing licensing and data broker services fees related to other states' licensing data of $15,720 in fiscal year 2026 and $12,824 in fiscal year 2027 and one-time staff augmentation costs of $30,625 in fiscal year 2026 for modifications to the existing licensing system to store data from the implementation tasks, including setting up new licensing transactions that expedite reciprocity-related applications, all from the General Revenue Fund.
This estimate assumes that the Department of Insurance would require additional staffing resources to implement the provisions of the bill and that any additional appropriated funds would be from the Department of Insurance Operation Account, General Revenue-Dedicated Account No. 36. For the first two years of implementation, the agency anticipates needing 1.0 Attorney FTE to review the current license types in the Insurance Code at a cost of $139,247 in fiscal year 2026 and $136,401 in fiscal year 2027 for salaries, benefits, and operating costs. Additionally, the agency anticipates permanently needing a Program Specialist to assess training and scope of practice of reciprocal programs and continuously monitor reciprocity requirements across other states at a cost of $82,496 each fiscal year with an additional $2,850 in fiscal year 2026 for onboarding costs.
Due to the self-leveling nature of the Insurance Operating Account 36, any expenditure increases would be reflected in the annual adjustment of the maintenance tax rates for insurance carriers. Therefore, the overall revenue into the Insurance Operating Account 36 will equal overall expenses.
According to the Department of Public Safety (DPS), there would be significant costs related to updating information technology systems and application for programs impacted by an occupational licensing reciprocity agreement. Such updates would be necessary to track and report any businesses or individuals performing regulated activities and operating under a reciprocity agreement. DPS identified four licensing systems that would require updates if reciprocity agreements were reached: Texas Online Private Security, Vehicle Inspection Connection, Texas Online Metals, Compassionate Use Registry of Texas. The fiscal implications of the bill for DPS cannot be determined because it is unknown which occupational licenses would meet the conditions of a reciprocity agreement and would therefore require information technology upgrades.
Analysis of responses by the Department of Information Resources, Real Estate Commission, Department of Licensing and Regulation, Board of Plumbing Examiners, Board of Public Accountancy, Board of Architectural Examiners, Board of Professional Engineers and Land Surveyors, Texas Racing Commission, Texas Medical Board, Board of Dental Examiners, Texas Board of Nursing, Behavioral Health Executive Council, Board of Pharmacy, Health and Human Services Commission, and Board of Veterinary Medical Examiners, indicated that any costs associated with the bill could be absorbed within existing resources.
Technology
Information technology costs associated with new FTEs would be minimal. DSHS would require licensing system modifications and ongoing licensing and data broker services fees.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
313 Department of Information Resources, 329 Real Estate Commission, 405 Department of Public Safety, 452 Department of Licensing and Regulation, 454 Department of Insurance, 456 Board of Plumbing Examiners, 457 Board of Public Accountancy, 459 Board of Architectural Examiners, 460 Board of Professional Engineers and Land Surveyors, 476 Racing Commission, 503 Texas Medical Board, 504 Texas State Board of Dental Examiners, 507 Texas Board of Nursing, 510 Behavioral Health Executive Council, 515 Board of Pharmacy, 529 Health and Human Services Commission, 537 State Health Services, Department of, 578 Board of Veterinary Medical Examiners
LBB Staff:
JMc, TUf, ER, APA, NV, KVEL, BFa
Related Legislation
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HB11 is effective immediately, mandating the Texas Department of Licensing and Regulation (TDLR) to execute reciprocity agreements with other states to alleviate labor shortages. This legislation expands the eligible labor pool for skilled trades and health professions but shifts the burden of credential verification and liability management directly onto employers. You must immediately adjust hiring protocols to validate out-of-state licenses rather than automatically rejecting them.
Q
Who authored HB11?
HB11 was authored by Texas Representative Dade Phelan during the Regular Session.
Q
When was HB11 signed into law?
HB11 was signed into law by Governor Greg Abbott on May 29, 2025.
Q
Which agencies enforce HB11?
HB11 is enforced by Texas Department of Licensing and Regulation (TDLR) and Texas Commission of Licensing and Regulation (TCLR).
Q
How urgent is compliance with HB11?
The compliance urgency for HB11 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HB11?
The cost impact of HB11 is estimated as "low". This may vary based on industry and implementation requirements.
