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Signed Into Law
Signed May 29, 2025Effective 2025-05-29
HB3698

Regular Session

Relating to participation in reemployment services as a condition of eligibility for unemployment benefits.

Government Affairs & Regulatory Compliance Analysis

HB3698: Government Affairs Overview

HB3698 mandates that unemployment claimants participate in reemployment services (training, job search assistance) as a strict condition of eligibility, granting the Texas Workforce Commission (TWC) authority to disqualify those who refuse without reasonable cause. This legislation provides employers a statutory mechanism to reduce Unemployment Insurance (UI) chargeback exposure by potentially shortening claim durations, applicable to all claims filed on or after September 1, 2025.

Rep. Hubert Vo·House Bill·Regular Session

Low
Low Cost
Effective:2025-05-29
Enforcing Agencies

Texas Workforce Commission

Business Impact

Who HB3698 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: low

Standard regulatory changes (effective 2025-05-29). Review during normal business planning.

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Manufacturing & Business

Affected business types:

  • Manufacturers
  • Industrial facilities
  • Supply chain companies
  • Logistics providers
View all manufacturing & business legislation

Key Operational Considerations

  • 1HR & Payroll Training: Staff managing UI claims must be trained to flag claims extending beyond reasonable durations for audit.
  • 2Protest Protocols: Update protest workflows to specifically inquire if a claimant is compliant with Section 207.021(a)(9)(B) reemployment service mandates during any dispute.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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HB3698
Relating to participation in reemployment services as a condition of eligibility for unemployment benefits.
Low Urgency
Passed with Opposition
House Vote138 - 1
YEA
99% in favor139 voting
Senate Vote27 - 4
YEA
87% in favor31 voting
5
Total Opposition Votes
Cost Impact
Low
Effective
2025-05-29
Enforcing Agencies
Texas Workforce Commission
Primary Author: Rep. Hubert Vo
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025 (Applicable to claims filed on or after this date).
  • Compliance Deadline: September 1, 2025 (Internal audit protocols must be updated).
  • Agency Rulemaking: The TWC must update its "profiling system" and define "reasonable cause" for non-participation. Monitor the Texas Register through Q3 2025 for proposed rules defining valid exemptions.

Immediate Action Plan

  • Notify UI Vendors: Immediately instruct third-party UI administrators (e.g., Equifax, Thomas & Company) to flag the September 1, 2025 cutoff for new claim audits.
  • Update Separation Checklists: Require HR to document all reemployment assistance offered at the time of termination to support future TWC determinations.
  • Monitor Rulemaking: Assign legal counsel to track TWC proposed rules regarding "reasonable cause" definitions to prepare for potential disputes.

Operational Changes Required

Contracts

  • Severance Agreements: Review standard separation agreements. Ensure clauses regarding "cooperation with unemployment claims" or "non-contestation" do not conflict with TWC mandates. You cannot contractually waive the TWC’s authority to disqualify a claimant for failure to participate in state-mandated training.

Hiring/Training

  • HR & Payroll Training: Staff managing UI claims must be trained to flag claims extending beyond reasonable durations for audit.
  • Protest Protocols: Update protest workflows to specifically inquire if a claimant is compliant with Section 207.021(a)(9)(B) reemployment service mandates during any dispute.

Reporting & Record-Keeping

  • Separation Responses: When responding to the initial Notice of Claim, document and report any outplacement services or severance packages provided. This assists TWC in determining the claimant's "need" for services.
  • Refusal of Work: Maintain precise records if a former employee refuses a recall due to "training." Only TWC-mandated services constitute a valid excuse; voluntary training does not.

Fees & Costs

  • No Direct Fee Increases: There are no new administrative fees.
  • Cost Mitigation: This is a cost-control measure. Successful enforcement will lower experience ratings and reduce tax liability for tax-rated employers and direct payouts for reimbursing employers.

Strategic Ambiguities & Considerations

The statute relies on terms that TWC rulemaking must clarify. Watch for the following definitions in upcoming regulations:

  • "Reasonable Cause": The TWC must define what constitutes a valid excuse for skipping services. A broad definition will nullify the cost-saving intent of the bill.
  • "Reemployment Services": The scope is currently vague. It is unclear if online modules, third-party staffing registration, or only in-person TWC seminars satisfy this requirement.
  • "Furtherance of Goals": TWC may mandate services to "demonstrate effectiveness." Ensure this does not result in claimants being forced into ineffective pilot programs that delay workforce reentry.

Need Compliance Guidance on This Legislation?

JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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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.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 4, 2025
Passed House
Apr 30, 2025
Passed Senate
May 19, 2025
Signed
May 29, 2025
Effective
May 29, 2025
TopicsLaborLabor--unemploymentWorkforce Commission, Texas
03

House Authors

Rep. Hubert VoDemocrat · Primary Author

Senate Sponsor

Sen. Carol AlvaradoDemocrat · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

Explore more bills from this author and on related topics

More from Rep. Hubert Vo

View all bills by Rep. Hubert Vo

Related by Topic

View more Labor legislation
Quick Reference

Frequently Asked Questions

Common questions about HB3698

Q

What does Texas HB3698 do?

HB3698 mandates that unemployment claimants participate in reemployment services (training, job search assistance) as a strict condition of eligibility, granting the Texas Workforce Commission (TWC) authority to disqualify those who refuse without reasonable cause. This legislation provides employers a statutory mechanism to reduce Unemployment Insurance (UI) chargeback exposure by potentially shortening claim durations, applicable to all claims filed on or after September 1, 2025.

Q

Who authored HB3698?

HB3698 was authored by Texas Representative Hubert Vo during the Regular Session.

Q

When was HB3698 signed into law?

HB3698 was signed into law by Governor Greg Abbott on May 29, 2025.

Q

Which agencies enforce HB3698?

HB3698 is enforced by Texas Workforce Commission.

Q

How significant are the changes in HB3698?

The regulatory priority for HB3698 is rated as "low". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB3698?

The cost impact of HB3698 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does HB3698 address?

HB3698 addresses topics including labor, labor--unemployment and workforce commission, texas.

Q

What are the key dates for HB3698?

Key dates for HB3698: Effective date is 2025-05-29. Consult with legal counsel regarding applicability.

Q

What are the penalties under HB3698?

HB3698 establishes the following penalties: administrative penalty of Disqualification from/Denial of unemployment benefits for Claimant failure to participate in TWC-mandated reemployment services without reasonable cause. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by HB3698?

HB3698 primarily affects employers and workforce development organizations. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026