SECTION 5.41. Payroll Requirements

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Appropriation year--The year that the legal authorization for the charge was granted by the legislature. Multiple appropriation year activity may occur within a single fiscal year.

(2) Casual or task employee--An individual who is employed by an institution of higher education for a short time period or a specific task.

(3) Fiscal year--The accounting period for the state government which begins on September 1 and ends on August 31.

(4) FLSA--The Fair Labor Standards Act of 1938.

(5) GAA--The General Appropriations Act.

(6) HRIS--The human resource information system maintained by the Comptroller of Public Accounts. It captures personnel and payroll information submitted by institutions of higher education and locally funded agencies.

(7) Institution of higher education--Has the meaning assigned by Education Code, §61.003, except that the term does not include a public junior college.

(8) Payroll document--The type of document that a state agency submits to the comptroller in the required format when requesting payment of the compensation of state employees or certain other types of payments as required by the comptroller.

(9) Payroll information--Information concerning the type and amount of compensation earned by a state employee, deductions from the compensation earned by the employee, and the source of funding for the payment of compensation to the employee. The term includes other types of information that the comptroller requires to be reported as payroll information.

(10) Personnel information--Information about a state employee's job, compensation, or personal characteristics. The term includes other types of information that the comptroller requires to be reported as personnel information. Personnel information includes all information related to the individual as an employee and must support statewide reporting, such as for veteran's preference and Equal Employment Opportunity type information.

(11) Qualified deferred compensation plan--A deferred compensation plan that is governed by Internal Revenue Code of 1986, §401(k).

(12) State agency--A department, board, commission, committee, council, agency, office, or other entity in the executive, legislative, or judicial branch of Texas state government, the jurisdiction of which is not limited to a geographical portion of this state. The term includes the State Bar of Texas, the Board of Law Examiners, and an institution of higher education.

(13) State employee--An officer or employee of a state agency. The term includes an elected or appointed officer; a full-time or part-time employee or officer; an hourly employee; a temporary state employee; a casual or task employee; an individual whose employment with a state agency is conditional on the individual being a student; a line item exempt employee; or an employee not covered by the Position Classification Act; an employee that works in a nonacademic position at a state institution of higher education and any other individual to whom wages are paid by a state agency or institution of higher education.

(14) USAS--The uniform statewide accounting system maintained by the Comptroller of Public Accounts. It is the official accounting system for the State of Texas.

(15) USAS format--The USAS layout that a state agency uses to submit payroll documents to the comptroller.

(16) USPS--The uniform statewide payroll/personnel system maintained by the Comptroller of Public Accounts. It is used as the internal personnel and payroll system by user agencies.

(17) Calendar month--The period from the first day through the last day of January, February, March, April, May, June, July, August, September, October, November or December.

(18) Workday--Any day except Saturday and Sunday. The term includes a state or national holiday under GAA or Government Code, §§662.001 - 662.010.

(19) SPRS--The standardized payroll/personnel system maintained by the Comptroller of Public Accounts. It captures personnel and payroll information submitted by state agencies that report their data to SPRS.

(20) CAPPS--The centralized accounting, payroll and personnel system maintained by the Comptroller of Public Accounts or a version held elsewhere as authorized by the Comptroller of Public Accounts. The payroll and personnel components are used by state agencies that use CAPPS as their internal system and it submits personnel and payroll information to SPRS.

(21) Standard work schedule--A schedule with the number of workdays and hours per month as published annually by the Comptroller of Public Accounts. It represents the number of workdays and hours per month that a Monday through Friday, 40 hour per week employee would work.

(22) Non-standard work schedule--A schedule other than a standard work schedule.

(23) Locally funded agencies--State agencies whose funds are held in banks outside of the state treasury department.

(b) Required submission of payroll documents.

(1) A state agency must submit a payroll document to the comptroller if the agency is requesting reimbursement for the agency's payment of compensation to its employees. The payroll document must be in proper USAS format.

(2) A state agency may electronically submit a payroll detail to the comptroller according to the comptroller's requirements.

(c) Deadline for receipt of payroll documents.

(1) Generally. Except as provided in paragraph (2) of this subsection, a payroll document must be received by the comptroller, according to the comptroller's requirements, not later than the seventh workday before payday. This applies regardless of how often a state agency pays its employees.

(2) Exceptions.

(A) If a state agency wants to pick up its warrants before payday under a bailment contract the agency has executed with the comptroller, then the agency's payroll document must be received not later than the seventh workday before the day on which the agency wants to pick up the warrants.

(B) A payroll document that is submitted by a state agency that uses USPS or uses CAPPS or reports to SPRS must be received by the comptroller, according to the comptroller's requirements, not later than the fourth workday before payday to ensure direct deposit of net pay.

(d) Supplemental payroll documents.

(1) When allowed. A state agency may submit a supplemental payroll document to the comptroller if a change occurs between the agency's submission of its regular payroll document and the end of the month.

(2) Adjustments in compensation. When a change results in a state agency owing money to a state employee, the agency should adjust the employee's compensation for the following month instead of submitting a supplemental payroll if the delay would not cause hardship to the employee.

(e) Non-regular payments. A state agency may make a payment to a state employee for other than the employee's regular compensation on a regular payroll document. The agency must select the proper comptroller object code for the payment.

(f) Cancellations of payments of compensation.

(1) Cancellations of warrants. When a state agency needs to cancel a payroll warrant, the agency must follow the comptroller's warrant cancellation procedures.

(2) Cancellation of electronic funds transfers. When a state agency needs to cancel a payment of compensation via the comptroller's electronic funds transfer system, the agency must follow the procedures specified by the comptroller.

(3) Issuance of new warrants. When a state agency needs to issue a new payroll warrant after canceling the original payroll warrant, the agency must follow the comptroller's procedures for supplemental payrolls.

(g) Payroll conversions. In early September of each year, state agencies that are subject to the Position Classification Act must furnish payroll conversion information to the comptroller and the state auditor according to their guidelines. Although the comptroller sends the guidelines to each state agency once each year, the guidelines are always available from the comptroller upon request.

(h) Reporting of personnel information to HRIS.

(1) Applicability. This subsection applies to a state agency only if it does not use USPS, CAPPS or report to SPRS.

(2) Reporting requirements.

(A) A state agency shall report personnel information to HRIS if:

(i) a state employee is added to or removed from the agency's payroll;

(ii) the agency changes a state employee's compensation rate;

(iii) the agency changes a state employee's classification or job title;

(iv) the legal name of a state employee of the agency changes;

(v) the social security number of a state employee of the agency changes;

(vi) a state employee of the agency goes on leave without pay or faculty development leave;

(vii) the home address of a state employee of the agency changes;

(viii) deduction information concerning a state employee of the agency changes, if HRIS requires reporting of that information; or

(ix) other job or descriptive information concerning a state employee of the agency changes, if HRIS requires reporting of that information.

(B) A state agency shall ensure that HRIS receives its report not later than the seventh day of the month after the month in which the change or event occurs that triggers the requirement for the agency to file the report.

(C) A report to HRIS under this paragraph must be made in the manner, frequency, and form required by the comptroller.

(i) Reporting of payroll information to HRIS.

(1) Applicability. This subsection applies to:

(A) an institution of higher education that does not use USPS, CAPPS or report to SPRS;

(B) the State Bar of Texas; and

(C) the Board of Law Examiners.

(2) Reporting requirements.

(A) A state agency shall report payroll information to HRIS.

(B) A state agency's report of payroll information must be complete not later than the seventh day of the month following the month covered by the report. A report is complete only if:

(i) it encompasses all the pay periods that end in the month covered by the report; and

(ii) HRIS receives it by the deadline.

(C) A report to HRIS under this paragraph must be made in the manner, frequency, and form required by the comptroller.

(j) Reporting errors. If the comptroller detects an error in a state agency's report of personnel or payroll information, then the comptroller shall provide a description of the error to the agency. The agency shall then correct the error according to the comptroller's requirements. The agency must correct the error not later than the seventh day of the month following the month in which the agency receives a description of the error.

(k) Additional mail codes. A state agency may establish an additional mail code for a state employee only by submitting the proper application to the comptroller's Fiscal Management division.

(l) Reporting of personnel information to USPS, CAPPS or SPRS.

(1) Applicability. This subsection applies to a state agency only if it does not report to HRIS.

(2) Reporting requirements.

(A) A state agency shall be considered to have reported personnel information to USPS, CAPPS or SPRS if:

(i) a state employee is added to or removed from the agency's payroll;

(ii) the agency changes a state employee's compensation rate;

(iii) the agency changes a state employee's classification or job title;

(iv) the legal name of a state employee of the agency changes;

(v) the social security number of a state employee of the agency changes;

(vi) a state employee of the agency goes on leave without pay or faculty development leave;

(vii) the home address of a state employee of the agency changes;

(viii) deduction information concerning a state employee of the agency changes; or

(ix) other job or descriptive information concerning a state employee of the agency changes.

(B) A state agency must ensure that the information is provided in the manner, frequency, and form required by the comptroller.

(m) Reporting of payroll information to USPS, CAPPS or SPRS.

(1) Applicability. This subsection applies to a state agency that does not report to HRIS.

(2) Reporting requirements.

(A) A state agency shall be considered to have reported payroll information to USPS, CAPPS or SPRS if the agency successfully completes the processing of payroll information.

(B) A state agency's report of payroll information must include any payments of regular salary, twice monthly salary, overtime pay, longevity, benefit replacement pay, lump sum payment of unused vacation and sick leave, emoluments and special pays such as bilingual or fire brigade pay. A report is complete only if:

(i) it encompasses all the pay periods that end in the month covered by the report; and

(ii) the comptroller receives it by the deadline.

(C) Payroll information under this paragraph must be processed in the manner, frequency, and form required by the comptroller.

(D) Reporting errors. If the comptroller detects an error in a state agency's report of personnel or payroll information, then the comptroller shall provide a description of the error to the agency. The agency shall then correct the error according to the comptroller's requirements.

(n) Standard payroll calculation.

(1) Exemption. This subsection does not apply to an institution of higher education.

(2) Required use of USPS.

(A) Except as provided in subparagraph (B) of this paragraph, a state agency must use USPS to:

(i) calculate and otherwise generate the agency's payments of compensation to its state employees; and

(ii) maintain the agency's personnel and payroll information.

(B) A state agency is not subject to subparagraph (A) of this paragraph if the comptroller has allowed the agency to report to SPRS or to use the payroll and personnel components of CAPPS.

(3) Conforming to payroll calculation. A state agency must conform its payroll calculation with the payroll calculation set forth in comptroller policies and procedures.

(o) Deceased state employees.

(1) Required payees. A state agency must pay the compensation earned by a deceased state employee to the employee's estate unless Estates Code, §453.004, or another law authorizes or requires a different payment method.

(2) Additional mail codes. When a state agency pays the estate of a deceased state employee, the agency must establish an additional mail code under the payee identification number of the employee.

(p) Overtime payments.

(1) Generally. A state employee covered by the overtime provisions of the FLSA must be credited or paid for overtime hours worked according to the GAA, the FLSA, and the regulations adopted by the United States Department of Labor under the FLSA. Those regulations and the FLSA prevail over the GAA to the extent of conflict, if any.

(2) Method for making overtime payments. A state agency may pay overtime on any payroll document submitted to the comptroller, including a supplemental payroll document.

(q) Payments of compensation for working partial months.

(1) State employees paid once each month.

(A) This paragraph applies only to a state employee who is paid once each month.

(B) A state agency must calculate the amount of compensation a state employee is entitled to receive for working less than a full month by:

(i) calculating the employee's hourly rate of pay according to the comptroller's requirements; and

(ii) multiplying the employee's hourly rate of pay by the number of hours worked to determine the correct amount of compensation.

(C) Subparagraph (B) of this paragraph also applies to the compensation paid to a state employee who is on leave without pay for less than an entire calendar month.

(2) State employees paid twice each month.

(A) This paragraph applies only to a state employee who is paid twice each month.

(B) This subparagraph applies to a state employee who does not work all the available hours in the first half of a month but works all the available hours in the second half of the month.

(i) The total compensation that must be paid to a state employee for an entire month is equal to the product of:

(I) the hours worked in the month by the employee; and

(II) the employee's hourly rate for the month calculated according to the comptroller's requirements.

(ii) The amount of compensation that must be paid to a state employee for services provided during the first half of a month is equal to the product of:

(I) the hours worked in that half of the month by the employee; and

(II) the employee's hourly rate for the month calculated according to the comptroller's requirements.

(iii) The amount of compensation that must be paid to a state employee for services provided during the second half of a month equals the difference between:

(I) the total compensation that must be paid to the employee for the entire month as determined under clause (i) of this subparagraph; and

(II) the compensation that must be paid to the employee for services provided during the first half of the month as determined under clause (ii) of this subparagraph.

(C) This subparagraph applies to a state employee who works all the available hours in the first half of a month but does not work all the available hours in the second half of that month.

(i) The total compensation that must be paid to a state employee for an entire month is equal to the product of:

(I) the hours worked in the month by the employee; and

(II) the employee's hourly rate for the month calculated according to the comptroller's requirements.

(ii) The amount of compensation that must be paid to a state employee for services provided during the first half of a month equals 50% of the employee's compensation for the month.

(iii) The amount of compensation that must be paid to a state employee for services provided during the second half of a month equals the difference between:

(I) the total compensation that must be paid to the employee for the entire month as determined under clause (i) of this subparagraph; and

(II) the compensation that must be paid to the employee for services provided during the first half of the month as determined under clause (ii) of this subparagraph.

(r) Payroll deductions.

(1) Special definitions. The following words and terms, when used in this subsection, shall have the following meanings unless the context clearly indicates otherwise.

(A) Certified state employee organization--A state employee organization that the comptroller has certified according to §5.46 of this title (relating to Deductions for Paying Membership Fees to Employee Organizations).

(B) State agency--

(i) a board, commission, department, office, or other agency that is in the executive branch of state government and that was created by the constitution or a statute of the state, including an institution of higher education as defined by Education Code, §61.003;

(ii) the legislature or a legislative agency; or

(iii) the supreme court, the court of criminal appeals, a court of appeals, the State Bar of Texas, or another state judicial agency.

(2) Statutory limitation. Government Code, §659.002, prohibits a state agency from making a deduction from the compensation paid to an employee whose compensation is paid in full or in part from state funds unless the deduction is authorized by law.

(3) List of authorized deductions. The deductions authorized by law are:

(A) court-ordered deductions under Bankruptcy Code, Chapter 13;

(B) deductions required by levies imposed by the Internal Revenue Service;

(C) deductions required by payroll deduction agreements between the Internal Revenue Service and state employees if the agreements are legally binding on employing state agencies;

(D) federal income tax withholding;

(E) deductions required by the Federal Insurance Contributions Act, which includes social security and Medicare withholding;

(F) income tax deductions required by states other than Texas or by local governments outside Texas in which state employees live and work;

(G) contributions to the Employees Retirement System of Texas, the Teacher Retirement System of Texas, the optional retirement program, the Judicial Retirement System of Texas Plan One, or the Judicial Retirement System of Texas Plan Two;

(H) fees charged to state employees by their employing state agencies for complying with court-ordered child support deductions from the employees' compensation;

(I) court-ordered child support deductions;

(J) extra federal income tax withholding;

(K) deferrals to and repayments of loans from the qualified deferred compensation plan;

(L) deductions required by a valid assignment, transfer, or pledge of compensation as security for an indebtedness under Education Code, §51.934;

(M) health benefits plan deductions, cafeteria plan deductions, and other deductions authorized by Insurance Code, Chapter 1551, Texas Employees Group Insurance Benefits Act;

(N) health benefits plan deductions, cafeteria plan deductions, and other deductions authorized by Insurance Code, Chapter 1551, Texas State College and University Employees Uniform Insurance Benefits Act;

(O) deductions for goods and services provided to employees by the institutional division of the Department of Criminal Justice;

(P) deductions for services provided to state employees of agencies as authorized in statute or the GAA;

(Q) deferrals to the deferred compensation plans governed by Internal Revenue Code of 1986, §457;

(R) contributions by employees of the Texas Higher Education Coordinating Board, the Texas Education Agency, the Department of Assistive and Rehabilitative Services, the Department of State Health Services, the Texas Juvenile Justice Department, and the governing boards of state-supported institutions of higher education to any investment authorized under Internal Revenue Code of 1986, §403(b);

(S) deductions to pay membership fees to certified state employee organizations;

(T) service purchase installment deductions for contributing members of the Employees Retirement System of Texas, the Judicial Retirement System of Texas Plan I, or the Judicial Retirement System of Texas Plan II;

(U) deductions from the compensation paid to certain faculty members who take English proficiency courses under Education Code, §51.917;

(V) deductions for contributions to eligible charitable organizations;

(W) deductions for payments to credit unions;

(X) deductions required by federal law for the repayment of guaranteed student loans;

(Y) deductions for savings bond purchases;

(Z) deductions for supplemental optional benefit programs approved by the Employees Retirement System of Texas under Government Code, §659.102;

(AA) deductions to make payments under a prepaid tuition contract; and

(BB) deductions for contributions to a qualified football coaches plan.

(s) Garnishments.

(1) Delivery of garnishment notices. A notice to garnish the compensation of a state employee must be delivered directly to the employing state agency.

(2) Garnishment notices for terminated employees. If a state agency receives a garnishment notice for a person no longer employed by the agency, then the agency must:

(A) return the notice to the entity that issued the notice;

(B) inform the entity that the person is no longer employed; and

(C) identify to the entity the retirement system that the entity should contact to seek information about the person's retirement contribution balance.

(3) Compliance with garnishment notices. Upon receipt of a valid garnishment notice, the receiving state agency must:

(A) inform the affected state employee about the notice and the procedures the agency will follow to comply with the notice;

(B) establish a mail code on the comptroller's Texas payee information system for the recipient of the garnishment proceeds unless a payee number has already been designated for all state agencies to use; and

(C) show the garnishment as a miscellaneous deduction on the affected state employee's payroll record.

(4) Effective date of garnishment notices. A garnishment notice takes effect with the first payroll document submitted to the comptroller after the notice is received. Therefore, if a state agency receives a garnishment notice after the agency has submitted a payroll document to the comptroller, the notice does not apply to that document.

(t) Refunds of deductions. A state agency may refund amounts previously deducted in error only by using credit amounts in the appropriate deduction column on a payroll document.

Source Note: The provisions of this §5.41 adopted to be effective November 19, 1996, 21 TexReg 10988; amended to be effective March 11, 2013, 38 TexReg 1694; amended to be effective May 19, 2019, 44 TexReg 2362