By:  Carona                                            S.B. No. 777

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to the authorization of certain deductions from an

 1-2     employee's pay.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4           SECTION 1.  Section 61.018, Labor Code, is amended to read as

 1-5     follows:

 1-6           Sec. 61.018.  DEDUCTION FROM WAGES.  An employer may not

 1-7     withhold or divert any part of an employee's wages unless the

 1-8     employer:

 1-9                 (1)  is ordered to do so by a court of competent

1-10     jurisdiction;

1-11                 (2)  is authorized to do so by state or federal law;

1-12     [or]

1-13                 (3)  has written authorization from the employee to

1-14     deduct part of the wages for a lawful purpose; or

1-15                 (4)  is authorized to do so for reimbursement under

1-16     Section 61.0185.

1-17           SECTION 2.  Subchapter B, Chapter 61, Labor Code, is amended

1-18     by adding Section 61.0185 to read as follows:

1-19           Sec. 61.0185.  WAGE DEDUCTIONS TO REIMBURSE EMPLOYER.

1-20     (a)  Notwithstanding Section 42.001, Property Code, an employer may

1-21     withhold from any part of an employee's wages without authorization

1-22     from the employee a sum of money equal to the amount necessary to

1-23     reimburse the employer for:

 2-1                 (1)  misappropriation by the employee in which the

 2-2     employee obtained money from the employer without authorization;

 2-3                 (2)  the overpayment of wages or another form of pay to

 2-4     the employee regardless of the reason for the overpayment, if the

 2-5     wage, salary, or other compensation agreement is in writing and

 2-6     signed by the employer and employee;

 2-7                 (3)  a loan in connection with the employee's

 2-8     employment made by the employer to the employee;

 2-9                 (4)  a wage advance from the employer to the employee;

2-10     or

2-11                 (5)  the reasonable cost to the employer of any benefit

2-12     received or obtained by the employee from the employer that the

2-13     employee failed to authorize the employer in writing to deduct from

2-14     the employee's wages.

2-15           (b)  To withhold wages under Subsection (a), an employer must

2-16     show that a deduction from wages under Subsection (a) is permitted

2-17     by providing clear and convincing evidence or, if the deduction is

2-18     for a misappropriation under Subsection (a)(1), by a written

2-19     acknowledgement from the employee that the employee obtained the

2-20     money without authorization.

2-21           (c)  A deduction from wages to reimburse an employer for a

2-22     loan or wage advance shall be permitted according to the terms of

2-23     any written agreement between the employer and employee.  A loan

2-24     for which the repayment period exceeds one year must be evidenced

2-25     by a written repayment agreement signed by the employee or a person

 3-1     legally authorized to sign for the employee.

 3-2           (d)  Unless a written agreement provides otherwise, an

 3-3     employer may deduct from an employee's final paycheck the amount of

 3-4     the loan or advance that is unpaid on the employee's separation

 3-5     date if the deduction is permitted under Subsection (c).

 3-6           (e)  An employer making a deduction from wages under this

 3-7     section must provide written notice to the employee of the reason

 3-8     for each deduction.  The notice must be delivered to the employee

 3-9     not later than the scheduled payday for the wages from which the

3-10     deduction is to be made.

3-11           (f)  An employer that makes a deduction from wages that is

3-12     not in accordance with the requirements of this section or Section

3-13     61.018 is subject to an administrative penalty under Section

3-14     61.053.

3-15           (g)  In this section, "benefit" means anything of monetary

3-16     value, other than compensation for personal services, that an

3-17     employee requests and obtains from an employer and elects to

3-18     retain, in the following categories:

3-19                 (1)  benefits relating to the participation by the

3-20     employee or the employee's family in a health or legal insurance

3-21     plan;

3-22                 (2)  benefits relating to a pension or retirement plan

3-23     that is maintained for the benefit of the employee and in which the

3-24     employee has elected to participate;

3-25                 (3)  goods or services purchased on credit from the

 4-1     employer for the personal use and convenience of the employee; or

 4-2                 (4)  the personal, nonwork-related use of materials,

 4-3     supplies, or equipment, other than materials, supplies, or

 4-4     equipment that is customarily furnished by the employer for the

 4-5     convenience of an employee during a rest or meal period, that

 4-6     belongs to the employer and the use of which results in a charge or

 4-7     expense that is incurred by the employer.

 4-8           (h)  The use by an employee of materials, supplies, or

 4-9     equipment under Subsection (g)(4), the use of which is at the

4-10     election of and for the convenience of the employee, is considered

4-11     to have been requested and obtained by the employee from the

4-12     employer.

4-13           SECTION 3.  This Act takes effect September 1, 1997, and

4-14     applies only to a claim for wages that arises on or after that

4-15     date.  A claim for wages that arises before the effective date of

4-16     this Act is governed by the law in effect on the date the claim

4-17     arises, and the former law is continued in effect for that purpose.

4-18           SECTION 4.  The importance of this legislation and the

4-19     crowded condition of the calendars in both houses create an

4-20     emergency and an imperative public necessity that the

4-21     constitutional rule requiring bills to be read on three several

4-22     days in each house be suspended, and this rule is hereby suspended.