Overpayments

Background

When a state employee (an officer or employee of a state agency) has received an excess payment of compensation, repayment may be necessary. The amount of an overpayment of compensation may be recouped by deducting that amount from future payments of compensation to the employee or the employee’s successor. These future payments specifically include base salary or wages, longevity or hazardous duty pay, benefit replacement pay, lump-sum payment for the balance of accrued vacation or sick leave or both, and an emolument provided in lieu of base salary or wages.

The Comptroller’s office believes “compensation” impliedly includes all types of bonuses and performance rewards. However, the Comptroller’s office also believes workers’ compensation payments do not constitute compensation for the purposes of this deduction.

Agency Responsibility

Due Process

If an agency determines the employee must repay an overpayment, the agency must go through proper due process. A state agency is defined as a board, commission, council, committee, department, office, agency or other government entity in the executive, legislative or judicial branch of state government. The term specifically includes the Texas Guaranteed Student Loan Corporation and any institution of higher education, other than a public junior or community college, as defined by Texas Education Code, Section 61.003. To go through proper due process, the agency must:

• Provide the employee with an opportunity to exercise any due process or other constitutional or statutory protection that must be accommodated before a collection action may begin.
• Determine the deduction would not violate any applicable law or rule of the state of Texas or the United States.

Notice provided by a state agency to a state employee or their successor is considered proper due process if the notice:

• Is given in a manner reasonably calculated to give actual notice to the employee or successor.
• States the amount of the overpayment of compensation and the name of the indebted employee.
• Specifies the date by which the overpayment of compensation must be refunded.
  – and –
• Informs the employee or successor that, unless the overpayment of compensation is refunded on or before the date specified, the overpayment amount may be deducted from any amount of compensation the agency owes the employee or successor.

Employee Repayment Options

Following proper due process, these options are available for employees to repay an overpayment of compensation to the agency:

• Employee can repay directly:
  • Refund by cash.
  • Refund by check.
• Employee can have leave reduced:
  • Reduction of leave (for overpayment of holiday).
• Repayment can be made through payroll:
  • A payroll deduction from future payroll payments.
    – or –
  • A reduction of future gross by overpayment amount.

Agencies must determine the repayment option with the employee.

Comptroller Notification

State agencies must notify the Comptroller’s office of any overpayment of compensation or debt to the state. Agencies report the debt using the procedures in Online Data Entry Screens in TexPayment Resource.

A state agency’s request to the Comptroller to make a deduction (by submitting a payroll file with the action) will constitute the agency’s certification to the Comptroller that all provisions required for providing notice to the employee, allowing for due process and verifying that no laws were violated, have been met.

Sources

Texas Government Code, Sections 666.001–666.003, 666.005, 666.007; Texas Administrative Code 5.40.