1-1     By:  Carona                                            S.B. No. 777

 1-2           (In the Senate - Filed February 25, 1997; March 3, 1997, read

 1-3     first time and referred to Committee on State Affairs;

 1-4     March 26, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 11, Nays 0; March 26, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 777                   By:  Carona

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the authorization of certain deductions from an

1-11     employee's pay.

1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-13           SECTION 1.  Section 61.018, Labor Code, is amended to read as

1-14     follows:

1-15           Sec. 61.018.  DEDUCTION FROM WAGES.  An employer may not

1-16     withhold or divert any part of an employee's wages unless the

1-17     employer:

1-18                 (1)  is ordered to do so by a court of competent

1-19     jurisdiction;

1-20                 (2)  is authorized to do so by state or federal law;

1-21     [or]

1-22                 (3)  has written authorization from the employee to

1-23     deduct part of the wages for a lawful purpose; or

1-24                 (4)  is authorized to do so for reimbursement under

1-25     Section 61.0185.

1-26           SECTION 2.  Subchapter B, Chapter 61, Labor Code, is amended

1-27     by adding Section 61.0185 to read as follows:

1-28           Sec. 61.0185.  WAGE DEDUCTIONS TO REIMBURSE EMPLOYER.

1-29     (a)  Notwithstanding Section 42.001(b)(1), Property Code, an

1-30     employer may withhold from any part of an employee's wages without

1-31     authorization from the employee a sum of money equal to the amount

1-32     necessary to reimburse the employer for:

1-33                 (1)  misappropriation by the employee in which the

1-34     employee obtained money from the employer without authorization;

1-35                 (2)  the overpayment of wages or another form of pay to

1-36     the employee regardless of the reason for the overpayment;

1-37                 (3)  a loan made by the employer to the employee;

1-38                 (4)  a wage advance from the employer to the employee;

1-39     or

1-40                 (5)  the reasonable cost to the employer of any benefit

1-41     received or obtained by the employee from the employer that the

1-42     employee failed to authorize the employer in writing to deduct from

1-43     the employee's wages.

1-44           (b)  To withhold wages under Subsection (a), an employer must

1-45     show that a deduction from wages under Subsection (a) is permitted

1-46     by providing evidence including:

1-47                 (1)  written documentation or, if the deduction is for

1-48     a misappropriation under Subsection (a)(1), a written

1-49     acknowledgement from the employee that the employee obtained the

1-50     money without authorization;

1-51                 (2)  audio or video recordings; or

1-52                 (3)  testimony given under oath by an eyewitness to the

1-53     circumstances under which the employee obtained the funds in

1-54     question.

1-55           (c)  A deduction from wages to reimburse an employer for a

1-56     loan or wage advance shall be permitted according to the terms of

1-57     any agreement between the employer and employee regarding repayment

1-58     of the loan or advance.  A loan for which the repayment period

1-59     exceeds one year must be evidenced by a written repayment agreement

1-60     signed by the employee or a person legally authorized to sign for

1-61     the employee.

1-62           (d)  Unless a written agreement provides otherwise, an

1-63     employer may deduct from an employee's final paycheck the amount

1-64     of the loan or advance that is unpaid on the employee's separation

 2-1     date.

 2-2           (e)  An employer making a deduction from wages under this

 2-3     section must provide written notice to the employee of the reason

 2-4     for each deduction.  The notice must be delivered to the employee

 2-5     not later than the scheduled payday for the wages from which the

 2-6     deduction is to be made.

 2-7           (f)  An employer that makes a deduction from wages that is

 2-8     not in accordance with the requirements of this section or Section

 2-9     61.018 is subject to an administrative penalty under Section

2-10     61.053.

2-11           (g)  In this section, "benefit" means anything of monetary

2-12     value, other than compensation for personal services, that an

2-13     employee requests and obtains from an employer and elects to

2-14     retain.

2-15           SECTION 3.  This Act takes effect September 1, 1997, and

2-16     applies only to a claim for wages that arises on or after that

2-17     date.  A claim for wages that arises before the effective date of

2-18     this Act is governed by the law in effect on the date the claim

2-19     arises, and the former law is continued in effect for that purpose.

2-20           SECTION 4.  The importance of this legislation and the

2-21     crowded condition of the calendars in both houses create an

2-22     emergency and an imperative public necessity that the

2-23     constitutional rule requiring bills to be read on three several

2-24     days in each house be suspended, and this rule is hereby suspended.

2-25                                  * * * * *