Texas Loans laws & HR compliance analysis

Texas Loans: What you need to know

Texas law permits employers to make deductions from their employees' wages to repay loans made by the employer (TX Labor Code Sec. 61.018). The deductions must be authorized in writing by the employee and must be included on the statement of deductions provided with each paycheck.
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The following transactions may be treated as loans from the employer to the employee provided that the employer has a written repayment agreement with the employee:
• Store inventory sold to employees on credit
• Personal use of company equipment or accounts
• Employer payment for non-work-related training
• Education loans
• Relocation expenses advanced to an employee
Before paying anything like an employee's traffic tickets, bail, or court costs, an employer should get a written agreement from the employee to the effect that the payment is a loan or wage advance.
The Texas Constitution provides that current wages for personal service may not be subject to garnishment, except for the enforcement of court-ordered child support payments or spousal maintenance. The Texas Supreme Court, however, has ruled that garnishment necessarily involves a third party, which is not the case when an employee owes a debt to an employer. Thus, the constitutional prohibition does not apply to an employer's withholding from an employee's compensation to repay a loan or other debt(Orange County, Texas v. Ware, 819 S.W.2d 472 (1991)).
There is additional information.
Last reviewed on March 10, 2016.

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