H.B. No. 762 introduces new regulations regarding severance pay for employees and independent contractors of political subdivisions in Texas. The bill adds Section 180.011 to the Local Government Code, which defines "misconduct" and "severance pay." It stipulates that severance pay, when provided, cannot exceed the equivalent of 20 weeks of compensation at the time of termination, excluding paid time off or accrued vacation leave. Additionally, severance pay is prohibited if the employee or contractor is terminated for misconduct.

The bill also mandates that any severance agreement must be posted prominently on the political subdivision's website. Furthermore, it establishes that courts cannot issue a writ of execution or mandamus related to judgments in actions against political subdivisions if those judgments do not comply with the new severance pay regulations. The provisions of this bill will apply only to contracts entered into or actions filed on or after its effective date of September 1, 2025.

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