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Signed Into Law
Signed June 20, 2025Effective 2025-09-01
SB2237

Regular Session

Relating to severance pay for certain political subdivision employees.

Government Affairs & Regulatory Compliance Analysis

SB2237: Government Affairs Overview

SB2237 imposes a strict statutory cap of 20 weeks on severance pay for executive employees of Texas political subdivisions (cities, counties, school districts) and strictly prohibits severance payments in cases of misconduct. Effective September 1, 2025, Texas courts are stripped of the authority to enforce severance judgments exceeding these limits, rendering non-compliant contract provisions legally void and unenforceable.

Sen. Paul Bettencourt·Senate Bill·Regular Session

Critical
Low Cost
Effective:2025-09-01
Enforcing Agencies

Governing Bodies of Political Subdivisions (School Boards, City Councils, etc.) • Texas Civil Courts

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SB2237
Critical
Relating to severance pay for certain political subdivision employees.
Critical Compliance Urgency
Requires immediate attention
Cost Impact
Low
Effective
2025-09-01
Enforcing Agencies
Governing Bodies of Political Su...Texas Civil Courts
Primary Author: Sen. Paul Bettencourt
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025.
  • Compliance Deadline: September 1, 2025. (Applies immediately to any contract entered into, renewed, extended, or renegotiated on or after this date).
  • Agency Rulemaking: No state-level rulemaking is mandated. However, local governing bodies (School Boards, City Councils) must establish internal protocols for determining "misconduct" prior to the effective date to avoid litigation.

Immediate Action Plan

  • Audit Contracts: Immediately identify all executive contracts expiring or renewing after September 1, 2025.
  • Finalize Pending Deals: Execute any long-term contracts currently under negotiation *before* September 1, 2025, to lock in pre-statute terms if necessary.
  • Update Web Ops: Direct IT/Communications to create the compliance landing page for posting severance agreements.
  • Revise Bylaws: Ensure the governing body has a procedural mechanism to vote on and record "misconduct" findings.

Operational Changes Required

Contracts

  • Template Overhaul: All standard executive employment agreements must be redrafted to explicitly cap severance at 20 weeks of compensation.
  • Misconduct Clause: Contracts must include a mandatory provision stating that no severance will be paid if the employment is terminated for misconduct.
  • Renewal Review: Audit all existing "evergreen" or automatic renewal clauses. If a contract automatically renews after September 1, 2025, it must be amended to comply with the new cap.

Hiring/Training

  • Negotiation Hard Stop: Legal and HR negotiation teams must be instructed that the 20-week cap is a statutory bar and cannot be waived or negotiated away.
  • Board Protocol: Governing bodies must be trained on the requirement to formally document findings of "misconduct" in the official record before denying severance.

Reporting & Record-Keeping

  • Public Transparency: Entities must post the full text of every executive severance agreement on their public-facing website. This must be a prominent posting, not buried in meeting minutes.
  • Calculation Audit: Payroll must maintain records distinguishing "severance" from accrued PTO or vacation pay, as the latter are generally excluded from the 20-week cap calculation.

Fees & Costs

  • No New State Fees.
  • Litigation Risk: While severance payouts will decrease, anticipate increased legal costs associated with defending "misconduct" determinations, as terminated executives will litigate this classification to unlock severance eligibility.

Strategic Ambiguities & Considerations

  • Definition of "Misconduct": The statute allows the governing body to determine what constitutes misconduct but does not define the standard.
  • *Risk:* If a Board defines misconduct subjectively at the time of firing, it invites a wrongful termination suit.
  • *Strategy:* Define "misconduct" explicitly within the four corners of the employment contract to align with the statute, reducing ambiguity.
  • Scope of "Department Head": The law applies to "agency or department heads" without defining the organizational hierarchy.
  • *Risk:* Inconsistent application to Assistant Directors or sub-department chiefs.
  • *Strategy:* Adopt a formal policy defining exactly which titles constitute a "Department Head" for Chapter 180 compliance purposes.

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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
Mar 11, 2025
Passed Senate
Apr 16, 2025
Passed House
May 23, 2025
Signed
Jun 20, 2025
Effective
Sep 1, 2025
TopicsCity GovernmentCity Government--employees/officersCounty GovernmentCounty Government--employees/officersPolitical Subdivisions
03

Senate Authors

Sen. Paul BettencourtRepublican · Primary Author

House Sponsor

Rep. Cecil BellRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

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Quick Reference

Frequently Asked Questions

Common questions about SB2237

Q

What does Texas SB2237 do?

SB2237 imposes a strict statutory cap of 20 weeks on severance pay for executive employees of Texas political subdivisions (cities, counties, school districts) and strictly prohibits severance payments in cases of misconduct. Effective September 1, 2025, Texas courts are stripped of the authority to enforce severance judgments exceeding these limits, rendering non-compliant contract provisions legally void and unenforceable.

Q

Who authored SB2237?

SB2237 was authored by Texas Senator Paul Bettencourt during the Regular Session.

Q

When was SB2237 signed into law?

SB2237 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce SB2237?

SB2237 is enforced by Governing Bodies of Political Subdivisions (School Boards, City Councils, etc.) and Texas Civil Courts.

Q

How significant are the changes in SB2237?

The regulatory priority for SB2237 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB2237?

The cost impact of SB2237 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does SB2237 address?

SB2237 addresses topics including city government, city government--employees/officers, county government, county government--employees/officers and political subdivisions.

Q

What are the key dates for SB2237?

Key dates for SB2237: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.

Q

What are the penalties under SB2237?

SB2237 establishes the following penalties: Judicial Restriction penalty of Forfeiture of severance payments exceeding statutory caps for Courts are prohibited from issuing writs of execution or mandamus for judgments enforcing severance agreements that violate the 20-week cap or misconduct prohibitions.. Consult with legal counsel for specific applicability to your situation.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 25, 2026