Relating to the regulation of professional employer organizations.

Contracts

• Client Companies: Must amend Master Service Agreements (MSAs) to include an immediate "Termination for Cause" clause triggered by PEO license expiration. Do not rely on the statutory 18-month extension; you must reserve the contractual right to exit immediately if your vendor becomes unlicensed.
• PEOs: Must revise indemnification clauses to account for the mandatory 18-month liability tail. Ensure contracts do not promise performance (e.g., soliciting new employees) that would violate a potential Cease and Desist order during a lapse.

Hiring/Training

• Compliance Training: HR and Legal staff must be trained on the strict 31-day notification window. Failure to report specific changes is now a primary actionable offense.
• Vendor Management: Client companies must assign responsibility for quarterly verification of PEO licensure via the TDLR database, rather than relying on static annual certificates.

Reporting & Record-Keeping

• 31-Day Notices: You must establish a "Compliance Docket" to track and prove submission of notices to TDLR (and TDI where applicable) within 31 days for:
• Final felony conviction of a controlling person.
• Change in ownership.
• Change in principal business or records address.
• Renewal Synchronization: PEOs must align renewal protocols with Subchapter H, Chapter 51, of the Occupations Code, as the specific renewal language has been removed from the Labor Code.

Fees & Costs

• Administrative Penalties: While base licensing fees remain unchanged, the shift to Chapter 51 of the Occupations Code subjects PEOs to the standard TDLR penalty matrix.
• Liability Tail Costs: PEOs facing expiration must budget for 18 months of potential workers' compensation and wage liability without the ability to generate new revenue.