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Texas Payday Law Deduction Summary

Required by Law - no authorization needed:

1. Court-ordered child support and alimony

2. Guaranteed student loan wage attachment

3. IRS tax levy

4. Withholding tax

5. FICA tax

6. Any garnishments mandated by a federal court (such as in bankruptcy cases)

Allowed/Authorized by Law - Written Employee Authorization Needed:

1. Child and spousal support administrative fees^{1, 2}

2. Student loan wage attachment administrative fee^{1, 2}

3. Meals, lodging, and other facilities¹

4. Voluntary wage assignments¹

5. Loans¹

6. Wage or salary advances¹

7. Vacation pay advances¹

8. Wage overpayments¹

9. Uniform and uniform cleaning costs¹

10. Union dues¹

11. Misappropriated cash¹

12. Any other deduction for a lawful purpose - examples:

1. Store inventory sold to employees on credit - treat this as a loan or wage advance and get a written repayment agreement from the employee¹

2. Personal use of company equipment or accounts - if possible to do so in advance, treat this as a loan and get a written repayment agreement from the employee¹

3. Damage or losses caused by the employee¹

4. Employee physicals and drug screens (minimum wage issue)¹

5. Employee's traffic tickets, bail, and court costs paid by the employer, if incurred outside the course and scope of employment - before paying anything like this, the employer should get a written agreement from the employee to the effect that the payment is a loan or wage advance¹

¹ See the discussions in "Allowable Deductions Under the FLSA" and "Deduction Problems under the Texas Payday Law" regarding minimum wage and other restrictions on these types of deductions.
² Written authorization is recommended - see the discussion in the section of this article regarding "Deductions for Administrative Fees".

A partial refund or repayment of non-routine expenses, such as sign-on bonuses, relocation grants, or educational loans for an employee's personal enrichment may be legally allowable, if provided for in a valid written contract and carried out in compliance with the written agreement. An employer should definitely consult a qualified employment law attorney before asking a new hire or other employee to sign such an agreement.

What an Employer Should Not Attempt to Deduct

In general, employers should never attempt to deduct from an employee's regular pay any amount relating to the following:

• Illegal transactions, such as debts for sales of illegal substances or stolen property to an employee, or debts related to illegal gambling - such debts are void and unenforceable and are not for a "lawful purpose" under the Texas Payday Law.

• Routine business costs of the company, such as on-the-job training, the administrative costs of the hiring process, and other ordinary business expenses normally associated with "overhead" costs. In other words, do not expect employees to bear the costs of running the business.

• Penalty-related payments, such as an early-leaving penalty for not remaining with the company for a stated period of time, or a deduction designed to cover the company's risk of hiring an employee who ultimately does not perform as well as hoped. Such costs are really part of the inherent risks of owning and operating a business and should not be borne by employees.

Go to the Employer Commissioner's Page
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