Relating to compensation and employment condition standards by municipal charter or collective bargaining agreement and to impasse resolution in collective bargaining with certain political subdivisions, the official text

S.B. No. 777

AN ACT

relating to compensation and employment condition standards by

municipal charter or collective bargaining agreement and to impasse

resolution in collective bargaining with certain political

subdivisions.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 174.005, Local Government Code, is

amended to read as follows:

Sec. 174.005. PREEMPTION OF OTHER LAW. Except as provided

by this chapter, this [This] chapter preempts all contrary local

ordinances, executive orders, legislation, or rules adopted by the

state or by a political subdivision or agent of the state, including

a personnel board, civil service commission, or home-rule

municipality.

SECTION 2. Section 174.022(b), Local Government Code, is

amended to read as follows:

(b) If an arbitration award or other impasse resolution is

rendered as provided by Subchapter E or E-1, the public employer

involved is considered to be in compliance with the requirements of

Section 174.021 as to the conditions of employment provided by the

award for the duration of the collective bargaining period to which

the award applies.

SECTION 3. The heading to Subchapter E, Chapter 174, Local

Government Code, is amended to read as follows:

SUBCHAPTER E. MEDIATION; IMPASSE RESOLUTION [ARBITRATION]

SECTION 4. Section 174.153(a), Local Government Code, is

amended to read as follows:

(a) Except as provided by Sections [Section] 174.1535 and

174.165 and Subchapter E-1, a public employer or an association

that is a bargaining agent may request the appointment of an

arbitration board if:

(1) the parties:

(A) reach an impasse in collective bargaining; or

(B) are unable to settle after the appropriate

lawmaking body fails to approve a contract reached through

collective bargaining;

(2) the parties made every reasonable effort,

including mediation, to settle the dispute through good-faith

collective bargaining; and

(3) the public employer or association gives written

notice to the other party, specifying the issue in dispute.

SECTION 5. Section 174.156(b), Local Government Code, is

amended to read as follows:

(b) Except as provided by Section 174.165 or Subchapter E-1,

an [An] arbitration board shall render an award in accordance with

the requirements of Section 174.021. In settling disputes relating

to compensation, hours, and other conditions of employment, the

board shall consider:

(1) hazards of employment;

(2) physical qualifications;

(3) educational qualifications;

(4) mental qualifications;

(5) job training;

(6) skills; and

(7) other factors.

SECTION 6. Section 174.163, Local Government Code, is

amended to read as follows:

Sec. 174.163. COMPULSORY ARBITRATION NOT REQUIRED;

EXCEPTIONS. Except as provided by Section 174.165 or Subchapter

E-1, this [This] chapter does not require compulsory arbitration.

SECTION 7. Subchapter E, Chapter 174, Local Government

Code, is amended by adding Section 174.165 to read as follows:

Sec. 174.165. OTHER IMPASSE RESOLUTION FOR FIRE FIGHTERS

UNDER MUNICIPAL CHARTER OR COLLECTIVE BARGAINING AGREEMENT. (a)

Except as provided by Subsection (b), this section applies only to:

(1) except as provided by Subdivision (2), if a

municipality has a charter that provides for the resolution of an

impasse in a collective bargaining process governed by this chapter

involving a public employer of the municipality and an association

that is a bargaining agent for employees of the public employer,

that public employer and bargaining agent; or

(2) if a collective bargaining agreement under this

chapter is in effect and provides for the resolution of an impasse

in a collective bargaining process governed by this chapter

involving a public employer of a political subdivision and an

association that is the bargaining agent for the fire fighters of

the public employer, that public employer and bargaining agent.

(b) This section does not apply to a municipality or

association to which Subchapter E-1 applies.

(c) A public employer and an association that is a

bargaining agent for fire fighters shall submit to the impasse

resolution mechanism contained in the charter or agreement

described by Subsection (a), as applicable, if the parties:

(1) reach an impasse in collective bargaining; or

(2) are unable to settle after the 61st day after the

date the appropriate lawmaking body fails to approve a contract

reached through collective bargaining.

(d) A provision of this subchapter relating to arbitration

does not apply to the impasse resolution mechanism described by

Subsection (c), unless the charter or agreement described by

Subsection (a), as applicable, specifically provides otherwise. To

the extent of any conflict, the charter or agreement, as

applicable, prevails over any provision of this subchapter.

SECTION 8. Chapter 174, Local Government Code, is amended

by adding Subchapter E-1 to read as follows:

SUBCHAPTER E-1. ARBITRATION IN CERTAIN MUNICIPALITIES

Sec. 174.181. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to:

(1) a municipality with a population of more than

950,000 and less than 1,050,000; and

(2) an association that is a bargaining agent for the

employees of a fire department of a municipality described by

Subdivision (1).

Sec. 174.182. BINDING INTEREST ARBITRATION. (a) A

municipality and an association that is a bargaining agent shall

submit to binding interest arbitration as provided by this

subchapter if the parties have reached an impasse as defined by

Section 174.152.

(b) The municipality or the association that is a bargaining

agent may request arbitration after the party provides written

notice to the other party specifying the issues in dispute.

(c) If a party requests arbitration under this section, the

parties shall submit all issues in dispute to arbitration not later

than the 45th day after the date the other party received the

requesting party's written arbitration request.

Sec. 174.183. ARBITRATION BOARD. (a) Not later than the

fifth day after the date the original written request to arbitrate

is received, each party shall:

(1) select one arbitrator; and

(2) immediately notify the other party in writing of

the name and contact information of the arbitrator selected.

(b) Not later than the 10th day after the date arbitrators

are selected under Subsection (a), the arbitrators shall attempt to

select a third, neutral arbitrator to form a three-person

arbitration board.

(c) If the arbitrators are unable to agree on a third

arbitrator as provided by Subsection (b), the parties shall request

a nationwide list of nine qualified neutral arbitrators from the

American Arbitration Association. The parties may agree on one of

the nine neutral arbitrators on the list. If the parties do not

agree within five days after the date they receive the list, each

party shall alternate striking a name from the list, and the name

remaining is the third arbitrator.

(d) The third arbitrator selected under this section

presides over the arbitration board.

(e) A decision made by the arbitration board at any stage of

the arbitration process must be determined by majority vote of the

arbitrators on the board.

Sec. 174.184. ARBITRATION PROCESS; JUDICIAL REVIEW. (a)

Except as provided by this subchapter, Subchapter E does not apply

to arbitration conducted under this subchapter. Arbitration under

this subchapter must be conducted in accordance with Sections

174.155, 174.157, 174.158, 174.159, 174.160, 174.161, 174.162, and

174.164.

(b) An award of an arbitration board issued under this

subchapter may be reviewed by a district court in accordance with

Section 174.253.

Sec. 174.185. ARBITRATION AWARD CONSIDERATIONS. In making

an award under this subchapter, the arbitration board may consider

only the following:

(1) the history of collective bargaining agreements

and negotiations between the parties;

(2) compensation and conditions of employment that

prevail in comparable public sector employment in other

municipalities;

(3) the rate of increase or decrease in the cost of

living for the municipality's metropolitan area as determined by

the Consumer Price Index for Urban Wage Earners and Clerical

Workers (CPI-W), adjusted as necessary to account for housing and

tax costs in the metropolitan area and other relevant local

factors;

(4) any of the following conditions of employment:

(A) hazards of employment;

(B) physical qualifications;

(C) educational qualifications;

(D) mental qualifications;

(E) job training;

(F) skills;

(G) employee morale; and

(H) any other factors with respect to a condition

of employment the arbitration board determines to be relevant to

the issues raised by the parties; and

(5) revenues available to and contractual obligations

of the municipality and the impact of any arbitration ruling on the

taxpayers of the municipality.

SECTION 9. (a) The change in law made by this Act validates

impasse resolution provisions provided in a municipal charter,

collective bargaining agreement, or arbitration award that are in

effect on the effective date of this Act, and applies to collective

bargaining negotiations in progress on the effective date of this

Act or started on or after the effective date of this Act.

(b) A change in law made by this Act is not grounds to

challenge a collective bargaining agreement or arbitration award

that was entered into or awarded before the effective date of this

Act.

SECTION 10. This Act takes effect immediately if it

receives a vote of two-thirds of all the members elected to each

house, as provided by Section 39, Article III, Texas Constitution.

If this Act does not receive the vote necessary for immediate

effect, this Act takes effect September 1, 2025.

______________________________
______________________________

President of the Senate
Speaker of the House

I hereby certify that S.B. No. 777 passed the Senate on

May 9, 2025, by the following vote: Yeas 31, Nays 0; and that the

Senate concurred in House amendment on May 28, 2025, by the

following vote: Yeas 31, Nays 0.

______________________________

Secretary of the Senate

I hereby certify that S.B. No. 777 passed the House, with

amendment, on May 24, 2025, by the following vote: Yeas 96,

Nays 37, two present not voting.

______________________________

Chief Clerk of the House

Approved:

______________________________

Date

______________________________

Governor