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 included in contracts or employment agreements, cannot exceed the equivalent of 20 weeks of compensation at the time of termination, excluding paid time off or accrued vacation leave. Additionally, the bill prohibits severance pay for individuals terminated due to misconduct, as defined by the governing body of the political subdivision.

Furthermore, the bill mandates that any severance agreements must be publicly posted on the political subdivision's website. It also establishes that courts cannot enforce judgments related to severance pay unless they comply with the new regulations. The provisions of this bill will apply only to contracts entered into or actions filed after its effective date of September 1, 2025.

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