Texas Deductions From Pay laws & compensation compliance analysis

Texas Deductions From Pay: What you need to know

All employers are required to make payroll deductions for federal, state, and local income taxes. Texas law limits the employer's right to make deductions from an employee's pay (TX Labor Code Sec. 61.018, TX Admin. Code Sec. 821.28). Employers may make deductions that are:
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• Authorized by state or federal law
• Authorized in writing, in advance, by the employee for a lawful purpose
• Ordered by a court; e.g., a garnishment (there is additional information and details)
An assignment of wages is an agreement between an employee and one of his or her creditors under which the employee gives the creditor the right to collect a portion of the employee's wages for repayment of a debt. In Texas, certain types of wage assignments are illegal, including assignments to repay small loans, installment loans, and retail installment contracts or charge agreements. Other wage assignments are legal if authorized in writing by the employee and if the employer is given written notice of the assignment immediately after the employee agrees to it (TX Labor Code Sec. 63.001). If the wage assignment is legal, the employer deducts the specified amount from the employee's wages and transfers it to the creditor. The creditor may sue the employer in court to enforce a legal wage assignment.
At the end of each pay period, the employer must give each employee a written earnings statement covering that pay period. The statement must be signed by the employer and include the employee's name, the rate of pay, the total amount of pay earned during the pay period, any deductions made, the amount of pay remaining after the deductions, and the total hours worked. For employees earning piece rates, ...

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