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." It specifies that severance pay, which is additional income paid upon termination, cannot exceed the compensation equivalent to 20 weeks of pay at the time of termination, excluding paid time off or accrued vacation leave. Furthermore, the bill prohibits severance pay for executive employees who are terminated due to misconduct.

Additionally, the bill mandates that any employment agreement involving severance pay for executive employees must include these limitations and requires political subdivisions to publicly post severance agreements on their websites. It also states that courts cannot enforce judgments related to severance pay if they do not comply with the new regulations. The provisions of this bill will apply only to employment agreements entered into or actions filed after the effective date of the Act, which is set for September 1, 2025.

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