JD Key Consulting Logo
HB762

Regular Session

Relating to severance pay for political subdivision employees and independent contractors.

Critical
Low Cost
Effective:2025-06-22
Enforcing Agencies

Governing Body of the Political Subdivision (sole authority to determine 'misconduct') • Texas Civil Courts (prohibited from enforcing non-compliant judgments)

HB762
Relating to severance pay for political subdivision employees and independent contractors.
Critical Urgency
Passed with Opposition
House Vote128 - 6
YEA
96% in favor134 voting
Senate Vote30 - 1
YEA
97% in favor31 voting
7
Total Opposition Votes
Cost Impact
Low
Effective
2025-06-22
Enforcing Agencies
Governing Body of the Political ...Texas Civil Courts
Primary Author: Rep. Jeff Leach
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: June 22, 2025 (Immediate effect triggered by legislative vote count).
  • Compliance Deadline: June 22, 2025. Any contract entered into, renewed, or renegotiated on or after this date must comply.
  • Agency Rulemaking: None. The "governing body" of the subdivision is the sole authority for determining misconduct. There is no grace period for regulatory guidance.

Immediate Action Plan

  • Immediate Audit: Review all vendor and executive contracts scheduled for renewal between June and December 2025.
  • Drafting: Legal counsel must finalize the "20-Week Cap" and "Misconduct Clawback" clauses by June 1.
  • Web Compliance: Launch the public severance agreement repository on the entity's website.
  • Vendor Notice: Send formal notice to independent contractors regarding the new statutory limits on separation fees.

Operational Changes Required

Contracts

  • Template Overhaul: You must immediately revise Master Services Agreements (MSAs), executive employment contracts, and independent contractor agreements.
  • Mandatory Clauses: Insert language capping severance at 20 weeks and explicitly prohibiting payment upon a finding of misconduct.
  • Evergreen Audits: Identify all auto-renewing contracts. You cannot allow a non-compliant contract to auto-renew after June 22, 2025; it must be amended to include the statutory cap.

Hiring/Training

  • Negotiation Hard-Stop: Instruct Procurement Officers and HR Directors that the 20-week cap is non-negotiable. It is a statutory bar, not a policy guideline.
  • Misconduct Determinations: Governing bodies (City Councils, Commissioners Courts) must establish a workflow to formally vote on or document "misconduct" findings during termination proceedings to legally withhold severance.

Reporting & Record-Keeping

  • Public Transparency: The IT/Communications department must create a dedicated section on the entity’s website. The law requires the full text of any severance agreement to be posted prominently.
  • Documentation: Retain proof of the "misconduct" determination by the governing body to defend against future breach of contract claims.

Fees & Costs

  • Litigation Risk: While there are no new filing fees, anticipate increased legal costs associated with wrongful termination suits, as former employees/contractors will fight "misconduct" labels to unlock their severance eligibility.

Strategic Ambiguities & Considerations

  • Definition of "Misconduct": The law allows the governing body to determine what constitutes misconduct. This subjectivity is a litigation trap. Recommendation: Define "misconduct" explicitly within the contract (referencing specific policy manuals or criminal acts) to limit the governing body's discretion and reduce ambiguity.
  • Contractor "Liquidated Damages": The law defines severance for contractors as payment "in addition to usual compensation." It is unclear if standard early termination fees or liquidated damages in construction/IT contracts fall under this cap. Until case law clarifies, treat *any* termination-triggered payment as subject to the 20-week limit.

Need Help Understanding Implementation?

Our government affairs experts can walk you through this bill's specific impact on your operations.

Schedule Consultation

Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Nov 12, 2024
Passed House
May 1, 2025
Passed Senate
May 21, 2025
Signed
Jun 22, 2025
TopicsCity GovernmentCity Government--employees/officersCounty GovernmentCounty Government--employees/officersPolitical SubdivisionsSalaries & ExpensesContractors & Subcontractors
03

House Authors

Rep. Jeff LeachRepublican · Primary Author
Joint Authors
Coauthors (2)

Senate Sponsors

Sen. Paul BettencourtRepublican · Primary Sponsor
Cosponsors (1)

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

Explore more bills from this author and on related topics

More from Rep. Jeff Leach

View all bills by Rep. Jeff Leach

Related by Topic

View more City Government legislation
Quick Reference

Frequently Asked Questions

Common questions about HB762

Q

What does Texas HB762 do?

HB762 imposes a strict statutory cap on severance pay for all political subdivision employees and independent contractors, limiting payouts to 20 weeks of compensation. The law voids any contractual provision exceeding this cap and prohibits severance entirely if the individual or vendor is terminated for "misconduct. " This impacts all cities, counties, and special districts (excluding public hospitals) and the private sector vendors contracting with them.

Q

Who authored HB762?

HB762 was authored by Texas Representative Jeff Leach during the Regular Session.

Q

When was HB762 signed into law?

HB762 was signed into law by Governor Greg Abbott on June 22, 2025.

Q

Which agencies enforce HB762?

HB762 is enforced by Governing Body of the Political Subdivision (sole authority to determine 'misconduct') and Texas Civil Courts (prohibited from enforcing non-compliant judgments).

Q

How urgent is compliance with HB762?

The compliance urgency for HB762 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

Q

What is the cost impact of HB762?

The cost impact of HB762 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does HB762 address?

HB762 addresses topics including city government, city government--employees/officers, county government, county government--employees/officers and political subdivisions.

Legislative data provided by LegiScanLast updated: November 25, 2025

Need Strategic Guidance on This Bill?

Need help with Government Relations, Lobbying, or compliance? JD Key Consulting has the expertise you're looking for.