Relating to severance pay for political subdivision employees and independent contractors, the official text

H.B. No. 762

AN ACT

relating to severance pay for political subdivision employees and

independent contractors.

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

SECTION 1. Chapter 180, Local Government Code, is amended

by adding Section 180.011 to read as follows:

Sec. 180.011. LIMITATION ON SEVERANCE PAY FOR EMPLOYEES AND

INDEPENDENT CONTRACTORS. (a) In this section:

(1) "Misconduct" means an act or omission by an

employee or contractor of a political subdivision in the

performance of the employee's or contractor's duties that the

governing body of the political subdivision determines to be

misconduct. The term includes any finding of criminal conduct.

(2) "Severance pay" means dismissal or separation

income paid on termination of:

(A) the employment of an employee that is in

addition to the employee's usual earnings from the employer at the

time of termination; or

(B) the contract of an independent contractor

that is in addition to the contractor's usual compensation from the

employer as prescribed by the contract.

(b) This section does not apply to a public or teaching

hospital.

(c) A political subdivision that enters into a contract or

employment agreement, or renewal or renegotiation of an existing

contract or employment agreement, that contains a provision for

severance pay with an employee or independent contractor must

include:

(1) a requirement that severance pay that is paid from

public money may not exceed the amount of compensation, at the rate

at the termination of employment or the contract, the employee or

independent contractor would have been paid for 20 weeks, excluding

paid time off or accrued vacation leave; and

(2) a prohibition of the provision of severance pay

when the employee or independent contractor is terminated for

misconduct.

(d) A political subdivision shall post each severance

agreement in a prominent place on the political subdivision's

Internet website.

(e) This subsection applies to an action brought against a

political subdivision by an employee or independent contractor of

the political subdivision arising from the termination of the

person's employment or contract. A court may not issue a writ of

execution or mandamus in connection with a judgment in the action if

the judgment does not comply with this section.

SECTION 2. Section 180.011, Local Government Code, as added

by this Act, applies only to a contract entered into or an action

filed on or after the effective date of this Act.

SECTION 3. This Act takes effect September 1, 2025.

______________________________
______________________________

President of the Senate
Speaker of the House

I certify that H.B. No. 762 was passed by the House on May 1,

2025, by the following vote: Yeas 128, Nays 6, 1 present, not

voting; and that the House concurred in Senate amendments to H.B.

No. 762 on May 28, 2025, by the following vote: Yeas 121, Nays 13,

1 present, not voting.

______________________________

Chief Clerk of the House

I certify that H.B. No. 762 was passed by the Senate, with

amendments, on May 21, 2025, by the following vote: Yeas 30, Nays

1.

______________________________

Secretary of the Senate

APPROVED: __________________

Date

__________________

Governor