Regular Session
Government Affairs & Regulatory Compliance Analysis
SB1254 fundamentally alters Professional Employer Organization (PEO) liability by mandating that PEOs remain the statutory co-employer for 18 months following license expiration, preventing the "abandonment" of client employees. Additionally, the law grants the Texas Department of Licensing and Regulation (TDLR) explicit authority to discipline unlicensed entities and strictly enforces a 31-day reporting window for organizational changes.
Sen. Judith Zaffirini·Senate Bill·Regular Session
This legislation has regulatory implications for the following Texas businesses and organizations:
Notable regulatory updates (effective 2025-09-01). Consider how these changes may affect your operations.
Affected business types:
lowMinimal cost impact anticipated.
JD Key Consulting provides government affairs and regulatory strategy services. We help businesses navigate Texas agencies, understand legislative impacts, and advocate for their interests.
JD Key Consulting provides strategic guidance on Texas regulatory compliance and legislative impact for your business.
Key implementation requirements and action items for compliance with this legislation
The "Zombie" Operator Conflict:
Section 91.016(d) mandates that a PEO remains the employer for 18 months post-expiration, yet Section 91.020 allows TDLR to discipline a PEO for offering services while expired.
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.
Schedule a ConsultationInformation 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.
This bill's path through the Texas Legislature
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Common questions about SB1254
SB1254 fundamentally alters Professional Employer Organization (PEO) liability by mandating that PEOs remain the statutory co-employer for 18 months following license expiration, preventing the "abandonment" of client employees. Additionally, the law grants the Texas Department of Licensing and Regulation (TDLR) explicit authority to discipline unlicensed entities and strictly enforces a 31-day reporting window for organizational changes.
SB1254 was authored by Texas Senator Judith Zaffirini during the Regular Session.
SB1254 was signed into law by Governor Greg Abbott on June 20, 2025.
SB1254 is enforced by Texas Department of Licensing and Regulation (TDLR).
The regulatory priority for SB1254 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.
The cost impact of SB1254 is estimated as "low". This may vary based on industry and implementation requirements.
SB1254 addresses topics including labor, labor--general, occupational regulation, occupational regulation--health occupations and occupational regulation--other trades & professions.
Key dates for SB1254: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.
SB1254 establishes the following penalties: administrative penalty of Per Ch. 51 Occupations Code (discretionary) for Engaging in or offering PEO services without a license, or while a license is expired, suspended, or inactive (jurisdiction expanded to include non-license holders).; administrative penalty of License Termination for Failure to renew license before the expiration of the 18th month following the initial license expiration date.. Consult with legal counsel for specific applicability to your situation.
SB1254 primarily affects employers and workforce development organizations, healthcare providers and medical facilities. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.
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.
