By: Garcia  S.B. No. 640
         (In the Senate - Filed February 19, 2015; February 24, 2015,
  read first time and referred to Committee on State Affairs;
  April 28, 2015, reported adversely, with favorable Committee
  Substitute by the following vote:  Yeas 8, Nays 1; April 28, 2015,
  sent to printer.)
Click here to see the committee vote
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 640 By:  Nelson
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to automatic employee participation in and administration
  of a deferred compensation plan provided by certain hospital
  districts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 609.007(c), Government Code, is amended
  to read as follows:
         (c)  Except as provided by Section 609.202 or 609.5025, to
  participate in a deferred compensation plan, an employee must
  consent in the contract to automatic payroll deductions in an
  amount equal to the deferred amount.
         SECTION 2.  Chapter 609, Government Code, is amended by
  adding Subchapter B-1 to read as follows:
  SUBCHAPTER B-1. PARTICIPATION IN DEFERRED COMPENSATION PLAN BY
  CERTAIN HOSPITAL DISTRICT EMPLOYEES
         Sec. 609.201.  APPLICABILITY OF SUBCHAPTER. (a)  This
  subchapter applies only to a hospital district created under
  general or special law if the district offers a deferred
  compensation plan to the district's employees under Subchapter B.
         (b)  A hospital district subject to this subchapter may, at
  the district's option, elect to require automatic employee
  participation in a deferred compensation plan under Section
  609.202.
         Sec. 609.202.  AUTOMATIC PARTICIPATION; DEFAULT INVESTMENT
  PRODUCT.  (a)  This section applies only to an employee of a
  hospital district that elects under Section 609.201(b) to require
  automatic employee participation in a deferred compensation plan
  under this section.
         (b)  An employee automatically participates in a deferred
  compensation plan provided by the hospital district unless the
  employee affirmatively elects not to participate in the plan.
  Notwithstanding Sections 609.007(a) and (c), an employee is not
  required to affirmatively contract for and consent to participation
  in a plan under this section.
         (c)  An employee participating in a deferred compensation
  plan under this section makes a contribution of one percent of the
  compensation earned by the employee to a default investment product
  selected by the plan administrator based on the criteria
  established under Section 609.113 and the rules adopted under
  Subsection (f).  The contribution is made by automatic payroll
  deduction.
         (d)  At any time, an employee participating in a deferred
  compensation plan under this section may, in accordance with rules
  adopted by the board of the hospital district, elect to end
  participation in the plan, to contribute to a different investment
  product, to contribute a different amount to the plan, or to
  designate all or a portion of the employee's contribution as a Roth
  contribution subject to the availability of a Roth contribution
  program.
         (e)  A hospital district to which this subchapter applies
  shall ensure that, at the time of employment, each employee is
  informed of:
               (1)  the elections the employee may make under this
  section; and
               (2)  the responsibilities of the employee under Section
  609.010.
         (f)  The board of the hospital district shall adopt rules to
  implement the requirements of this section.  The rules must ensure
  that the operation of a deferred compensation plan under this
  section conforms to the applicable requirements of any federal rule
  that provides fiduciary relief for investments in qualified default
  investment alternatives or otherwise governs default investment
  alternatives under participant-directed individual account plans.
         (g)  The amount deducted under this section from an
  employee's compensation is not deducted for payment of a debt and
  the automatic payroll deduction is not garnishment or assignment of
  wages.
         (h)  Using existing resources, the hospital district shall
  inform new employees of their automatic enrollment in a deferred
  compensation plan and their right to opt out of enrollment.  Using
  existing resources, this information must be included as part of
  the new employee orientation process.  The district shall maintain
  a record of a new employee's acknowledgment of receipt of
  information regarding the ability to opt out of enrollment in a
  deferred compensation plan.
         Sec. 609.203.  DISCRETIONARY TRANSFER. (a)  A hospital
  district may transfer an employee's deferred amounts and investment
  income from a qualified investment product to the trust fund of the
  deferred compensation plan in which the employee participates if
  the district determines that the transfer is in the best interest of
  the plan and the employee.
         (b)  The hospital district is not required to give notice of
  a transfer under Subsection (a) to the employee before the transfer
  occurs.
         (c)  Promptly after a transfer under Subsection (a) occurs,
  the hospital district shall give to the employee a notice that:
               (1)  states the reason for the transfer; and
               (2)  requests that the employee promptly designate
  another qualified investment product to receive the transferred
  amount.
         Sec. 609.204.  ALTERNATIVE TO FUND DEPOSIT. Instead of
  depositing deferred amounts and investment income in the trust fund
  of the deferred compensation plan, a hospital district may invest
  deferred amounts and investment income in a qualified investment
  product specifically designated by the district for that purpose.
         Sec. 609.205.  CONTRACTS FOR GOODS AND SERVICES. (a)  A
  hospital district may contract for necessary goods and consolidated
  billing, accounting, and other services to be provided in
  connection with a deferred compensation plan.
         (b)  In a contract under Subsection (a), the hospital
  district may provide for periodic audits of the person with whom the
  contract is made. An audit may cover:
               (1)  the proper handling and accounting of public or
  trust funds; and
               (2)  other matters related to the proper performance of
  the contract.
         (c)  The hospital district may contract with a private entity
  to conduct an audit under Subsection (b).
         SECTION 3.  Section 609.202, Government Code, as added by
  this Act, applies only to an employee of a hospital district subject
  to that section who initially begins employment on or after January
  1, 2016.
         SECTION 4.  (a)  Except as provided by Subsection (b) of
  this section, the acts of a hospital district created under general
  or special law that relate to discretionary transfers of funds and
  consolidation of billing and accounting for deferred compensation
  plans provided by the district to the district's employees and that
  occurred before the effective date of this Act are validated as if
  the acts had occurred as authorized by law.
         (b)  This section does not validate an act that, under the
  law of this state at the time the act occurred, was a misdemeanor or
  felony.
         SECTION 5.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2015.
 
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