Legal Issues Related to Payroll

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1 Legal Issues Related to Payroll Declining Salary Payments Texas Local Government Code County Payroll Officer may not issue paychecks and shall stop payment on already issued paychecks if county officer files affidavit electing not to be paid County Payroll Officer shall make entry in payroll records each pay period of non-payment and seek to recover taxes paid. 1

2 No Pay if Debt Exists l Texas Local Government Code (Population of 190,000 or less) and (Population over 190,000) l When notified of debt to state or county, cannot pay salary until employee is notified of debt and debt is paid. l See Op. AG GA-0518 (2007). Debt can be established by final judgment, statute, contract or other lawful means. Oath Requirement Texas Local Government Code (Population over 190,000) May not pay salary for services performed before oath is taken (if oath is required) and filed with county clerk and county auditor 2

3 Electronic Funds Transfer Texas Local Government Code Chapter 156 Authorizes the establishment of an electronic funds transfer system and tasks the County Auditor with establishing procedures for its use. Treasurer v. Auditor The receipt and disbursement of county funds are core functions of the County Treasurer. Payroll preparation duties, however, are not core functions of the County Treasurer, and can be assigned by commissioners court to the County Auditor. See Commissioners Court of Titus v. Agan, 940 S.W.2d 77 (Tex Sup.Ct. 1997) and Op. AG DM-440 (1997). 3

4 Signed and Sworn Payroll Texas Local Government Code (Population of 500,000 or more) l Auditor shall prescribe forms and systems necessary to ensure county officers and department heads file signed and sworn payroll. l Auditor must withhold payment of salaries if the county officer or department head fails to file required documents. Timesheet Requirements Texas Local Government Code (Population of 500,000 or more) l Name of employee l Dates and hours of work l Rate of compensation l Amount due for current pay period l Additional requirements for employees engaged in road, field or construction work 4

5 FLSA Records Requirements 29 CFR and All Employees l Full name and ID # l Home address including zip code l DoB if under 19 l Gender and occupation l Time of day and day of week work period begins l Total wages paid each pay period l Date of payment and covered dates FLSA Records Requirements 29 CFR Non-exempt employees l Regular hourly rate with explanation for any week in which overtime is due l Hours worked each workday and each work week l Total daily or weekly straight-time earnings l Total premium pay for overtime hours l Total additions to, or deductions from wages 5

6 FLSA Records Requirements 29 CFR Exempt employees Employer must keep records reflecting the basis on which exempt employees are paid. These records must contain sufficient detail to permit calculation, for each pay period, of the employee s total compensation, including fringe benefits. FLSA Records Retention 29 CFR Payroll records must be maintained for a minimum of three (3) years. 6

7 FLSA Overtime Rules l Basic rule Non-exempt employees are entitled to one and one-half times their regular rate of pay for every hour worked over forty in a seven day work period l FLSA does not require employers to pay a premium rate for weekends, holidays or nightshifts, nor does it require payment of overtime for working more than eight hours in one day FLSA Overtime Rules Hours worked does not include leave time such as sick leave, vacation leave or holidays. The work week is a seven calendar day regularly recurring period that can start on any day of the week and at any time during the day. Regular rate includes all remuneration for employment with some exceptions. 7

8 Compensatory Time l Public employers may provide compensatory time off in lieu of overtime l Calculated the same way as overtime l May accrue up to 240 hours, unless in public safety, emergency response, or seasonal activity where cap is 480 hours l Once cap is reached, overtime hours must be paid 207k Provision l Authorizes public employers to expand work period of fire protection and law enforcement employees l Work period may be from 7 to 28 days l DOL table lists exactly how many hours must be worked before overtime rates begin 8

9 FMLA The federal Family and Medical Leave Act entitles employees to up to 12 weeks of unpaid leave a year (26 weeks if acting as a military caregiver) for certain qualifying events. To be eligible, the employee must have worked for the agency for at least 12 months and have worked at least 1250 hours during the previous 12 months. FMLA Payroll Issues l FMLA leave must be designated as such on the timesheet and payroll records. This is to ensure proper notice is given to the employee and to ensure that the employer does not use that leave as the basis of any negative employment action. 9

10 FMLA Payroll Issues l Employees out on unpaid FMLA are still entitled to maintain health insurance. Thus, arrangements need to be made to allow them a method other than payroll deduction to pay their share of the premiums. l The employee can request and the employer can require any accrued paid leave (vacation, sick or personal) to run concurrent with FMLA. Paid Military Leave l Texas Government Code requires agencies to grant up to 15 days of paid leave to employees in Texas military forces or a reserve component of the armed forces called up for duty or training. l Any unused days must be carried forward to future fiscal years not to exceed a 45 day accrued balance. 10

11 Military Reemployment Rights l Texas Government Code prohibits termination of a member of a state military force because the employee is called to training or duty. l Texas Government Code Chapter 613 guarantees reemployment rights to employees entering military service. USERRA l The federal Uniformed Services Employment and Reemployment Rights Act requires employers to reemploy employees after military service. l Generally USERRA grants greater reemployment rights than state law. 11

12 USERRA l Entitled to reemployment to a position he would have occupied if there had been no break in employment. l Entitled to reinstatement of any accrued leave balances. l Entitled to maintain health insurance. l Seniority status as if never left the agency. l Contributions to retirement account. 12