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Texas Payroll/Personnel Resource

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Overpayments
Special Circumstances, Legal Advice and Inquiries

Overpayments for Optional Holidays

State employees who take a paid day off from work on an optional holiday must work on a state holiday to make up those hours. If the employee becomes ineligible for a paid day off on the state holiday due to termination or leave without pay or is unable to work the state holiday, they are overpaid if they are paid for the state holiday.

Terminations or Interagency Transfers of State Employees

If a state employee terminates employment before the agency has fully recouped an overpayment of compensation to the employee, the agency may deduct the outstanding amount of the overpayment from any lump-sum payment of accrued vacation or sick leave by the agency to the employee or the employee’s successor.

The deduction may not continue after the employee transfers to a different state agency. The amount of overpaid compensation that remains outstanding after the transfer may not be recouped through this type of deduction. The agency that overpaid the compensation should consider starting a new collection action or procedure to recoup the remaining amount by alternative means.

Legal Advice

State agencies should consult internal legal counsel, the attorney general or other appropriate legal counsel for legal advice on:

  • Notice requirements.
  • Due process or other constitutional or statutory protections that must be accommodated before a collection action may begin.
    – or –
  • If this deduction would violate any applicable law or rule of the state of Texas or the United States.

Inquiry Requests to the Comptroller’s Office

The Comptroller is prohibited from investigating if a state agency provided a state employee or the employee’s successor the opportunity to exercise due process or other constitutional or statutory protections before the agency requested the Comptroller to make the deduction. Therefore, if the Comptroller receives an inquiry from the employee or the successor about this subject, the Comptroller will immediately refer the employee or successor to the agency. As authorized by law, the Comptroller intends to rely on the state agency’s determination that the deduction would not violate any applicable law or rule.

Sources

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