In January, lawmakers from across the state of Texas convened in Austin for the 87th Texas Legislative Session. This is the first time that all 181 legislators have come together since the start of the COVID-19 pandemic. While the focus of this session will likely be on responding to the pandemic and the financial ramifications it has caused, there will unquestionably be legislation introduced and enacted in 2021 that will impact the construction industry. This article provides an overview of key dates for the 87th regular session, potential measures that will directly impact the construction industry, and issues that could dominate the unprecedented 2021 session.

Of the 7,324 bills introduced during the 86th Legislative Session, only 1,429 were signed into law. As grim as these statistics may appear, the journey to the Governor’s desk is long and sometimes unpredictable. Whether hoping a bill will fizzle out in committee, or be fast tracked into law, the deadlines for the 2021 session listed below are important to follow when tracking legislation:

• November 9, 2020 – First day to pre-file bills for the 87th Legislature
• January 12, 2021 – 87th Legislature convenes
• March 12, 2021 – Deadline to file bills and joint resolutions, other than local bills, emergency appropriations and emergency matters submitted by the Governor
• May 31, 2021 – Last day of 87th regular session
• June 20, 2021 – Last Day for the Governor to sign or veto bills passed during the 87th regular session
• August 30, 2021 – Effective date (91st day after adjournment)

In 2021, there will undoubtedly be legislation introduced that will affect members of the construction industry. Below is a non-exhaustive list of potential legislation in 2021 that could have a major impact on the construction industry:

HB692 relates to retainage requirements for certain public works construction projects.

If enacted, for contracts of $1 million or more, government entities may not withhold retainage in an amount that exceeds five percent of the contract price, and the rate of retainage may not exceed five percent for any item in a bid schedule, including materials and equipment delivered on-site to be installed. Importantly, in most situations, the prime contractor would not be able to withhold from a subcontractor a greater percentage of retainage than the percentage that would be withheld from the prime contractor by the governmental entity.

Additionally, for a competitively awarded contract with a value of $10 million or more, and for a contract that was awarded using a method other than competitive bidding, a governmental entity and prime contractor may agree to deposit in an interest-bearing account the retainage withheld on periodic contract payments.

HB 692 also seeks to amend when government entities are entitled to withhold retainage from contractors. Owners and contractors should track this bill closely. If enacted, government entities and contractors would be forced to think of additional methods to ensure performance.

SB 219 seeks to lower a contractor’s civil liability and responsibility for the consequences of contractually inherited defects in design documents. If enacted, a contractor would not be responsible for the accuracy or suitability of design documents provided to the contractor by a person with whom the contractor contracted. SB 219 would also prevent government entities from requiring that architectural or engineering services be performed beyond a level of professional skill and care ordinarily exhibited by prudent architects and engineers under the same circumstances.

Owners should track this bill closely, as it could affect their ability to hold contractors liable for design defects or omissions in certain situations.

HB 776 and SB305 would require contractors to provide workers' compensation insurance coverage for employees of building and construction contractors and subcontractors.HB 965 and SB 338 both amend Chapter 44 of the Education Code to include a provision allowing school districts to adopt uniform general conditions to be incorporated into all district building construction contracts. If enacted, the Education Code would also require the committee that reviews the general conditions to include individuals representing the Texas Association of School Boards and the Texas Association of School Administrators.HB 263 seeks to amend Chapter 2252 of the Government Code. If enacted, this law would require government entities to provide a contractor or subcontractor’s employees at least a 10-minute paid rest break within every four-hour work period. Owners and contractors should be keenly aware of this new requirement should it become law, as it carries a fine up to $500/day if violated.HB 863 would require a prevailing wage for work associated with public work contracts; authorizing a penalty of $90 if violated.

Each legislative session typically has two or three key issues that result in much debate and consume much of the second half of the session. As a result, many bills, including those that may be important to the construction industry, die if they are stuck in a legislative backlog or overshadowed by a hot-button issue (e.g., the Bathroom Bill and Sanctuary City Legislation in 2017). With pandemic related legislation grabbing most of the focus this year, we can expect many of these bills to monopolize the session.

Apart from tracking the progress of legislation, one the best ways to get involved and stay in the loop during the 87th regular session is to join or participate in a trade association. Typically, these industry associations monitor and report on bills that could specifically impact the construction industry. Moreover, it is important to get to know your legislator and attend local fundraising events. Always remember, your elected officials are there to serve you – do not hesitate to pick up the phone and call your legislator’s office if there is an issue that is important to you or your company.