House Bill No. 4317 introduces new regulations regarding severance pay for employees and independent contractors of political subdivisions in Texas. It adds Section 180.011 to the Local Government Code, which defines "misconduct" and "severance pay." The bill stipulates that any employment agreement or contract that includes severance pay must limit the severance amount to a maximum of 12 weeks of compensation at the time of termination, excluding paid time off or accrued vacation leave. Additionally, it prohibits severance pay if the termination is due to misconduct as determined by the governing body of the political subdivision.

Furthermore, the bill mandates that all severance agreements be posted prominently on the political subdivision's website. It also establishes that any legal action taken against a political subdivision by an employee or independent contractor regarding termination must comply with the new provisions, and courts are restricted from issuing certain judgments if they do not adhere to these regulations. The provisions of this bill will apply only to agreements or actions initiated on or after its effective date of September 1, 2025.

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