GEC S.B. 777 75(R)BILL ANALYSIS


BUSINESS & INDUSTRY
S.B. 777
By: Carona (McCall)
5-9-97
Committee Report (Amended)


BACKGROUND 

Currently, Texas law prohibits certain deductions by an employer from an
employee's wages if such deductions are not specifically authorized by the
employee in writing, unless the deductions are for payroll taxes or made
as the result of a court order.  This bill would authorize an employer to
deduct from an employee's wages money that corresponds to proceeds of
misappropriation by an employee, wage and salary overpayments, loans, and
wage and salary advancements without having to obtain a written
authorization for the deduction from the employee.   

PURPOSE

As proposed, S.B. 777 authorizes an employer to deduct from an employee's
wages certain expenses to reimburse the employer.   

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 61.018, Labor Code, to prohibit an employer from
withholding or diverting any part of an employee's wages unless the
employer, among other options, is authorized to do so for reimbursement
under Section 61.0185.  Makes conforming changes.  

SECTION 2. Amends Chapter 61B, Labor Code, by adding Section 61.0185, as
follows: 

Sec. 61.0185.  WAGE DEDUCTIONS TO REIMBURSE EMPLOYER.  (a)  Authorizes an
employer, notwithstanding Section 42.001(b)(1), Property Code, to withhold
from any part of an employee's wages without written authorization from
the employee a sum of money equal to the amount necessary to reimburse the
employer for misappropriation by the employee in which the employee
obtained money from the employer without authorization; the overpayment of
wages or another form of pay to the employee regardless of the reason for
the overpayment; a loan made by the employer to the employee; a wage
advance from the employer to the employee; or the reasonable cost to the
employer of any benefit received or obtained by the employee from the
employer that the employee failed to authorize the employer in writing to
deduct from the employee's wages. 

(b)  Requires an employer, in order to withhold wages under Subsection
(a), to show that a deduction from wages is permitted by providing
evidence, including written documentation or, if the deduction is for a
misappropriation under Subsection (a)(1), a written acknowledgment from
the employee that the employee obtained the money without authorization;
audio or video recordings; or testimony given under oath by an eyewitness
to the circumstances under which the employee obtained the funds in
question. 

(c)  Requires a deduction from wages to reimburse an employer for a loan
or wage advance to be permitted according to the terms of any agreement
between the employer and employee regarding repayment of the loan or
advance.  Requires a loan for which the repayment period exceeds one year
to be evidenced by a written repayment agreement signed by the employee or
a person legally authorized to sign for the employee.  
 
(d)  Authorizes an employer to deduct from an employee's final paycheck
the amount of the loan or advance that is unpaid on the employee's
separation date unless a written agreement provides otherwise. 

(e)  Requires an employer making a deduction from wages under this section
to provide written notice to the employee of the reason for each
deduction.  Requires the notice to be delivered to the employee by the
scheduled payday for the wages from which the deduction is to be made.  

(f)  Provides that an employer that makes a deduction from wages that is
not in accordance with the requirements of this section or Section 61.018
is subject to an administrative penalty under Section 61.053. 

(g)  Defines "benefit."  

SECTION 3. Effective date: September 1, 1997.
  Makes application of this Act prospective.

SECTION 4. Emergency clause.

EXPLANATION OF AMENDMENTS

Committee Amendment #1 amends S.B. No. 777 as follows:

(1) On page 2, insert the following between lines 20 and 21 and renumber
the remaining subsections accordingly: 

 (c) An employer shall not make a deduction from wages to reimburse
payments made by the employer to the employee pursuant to Section 408.003,
Labor Code. 

 (d) An employer shall not make a deduction from wages under subsection
(a)(5) for payments made by the employer for fringe benefits during any
period when the employee was receiving workers' compensation income
benefits and the amount paid by the employer for the fringe benefits was
not included in the employee's average weekly wage as defined in Title 5.
Labor Code.