S.B. No. 2237 introduces new regulations regarding severance pay for executive employees of political subdivisions in Texas. The bill adds Section 180.011 to the Local Government Code, defining "misconduct" and "severance pay," and establishing criteria for severance agreements. Specifically, it mandates that any severance pay from tax revenue cannot exceed the equivalent of 20 weeks of the employee's compensation at the time of termination, excluding paid time off or accrued vacation. Additionally, the bill prohibits severance pay if the executive employee is terminated for misconduct.

Furthermore, the bill requires political subdivisions to publicly post each severance agreement on their websites. It also stipulates that any legal action taken against a political subdivision by an executive employee regarding their termination cannot result in a court issuing a writ of execution or mandamus unless it complies with the new provisions. The law will apply only to employment agreements entered into or actions filed after the effective date of September 1, 2025.

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