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Texas Payroll/Personnel Resource

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Salary Adjustments for State Agency Employees
Merit Increases and Payments (Reason Codes 025, 035)

Merit Salary Increase and One-Time Merit Payment (Reason Codes 025, 035)

State agencies are authorized to use two types of merit methods to reward employee performance:

  • A merit salary increase (reason code 025)
  • A one-time merit payment (reason code 035)

Note: The job classification may not change when an employee receives either of these merit awards.

Merit Salary Increase (Reason Code 025)

A merit salary increase is an addition to the base salary the employee receives each pay period.

For Schedule A employees, agencies must provide an increase of at least $30 per month. The increase in salary is limited to a salary at or below the maximum of the employee’s salary group and the agency budget.

For Schedule B employees, agencies may award employees an increase to any amount within their salary group. There is no specified minimum increase. However, the increase cannot cause the new rate to exceed the maximum of the employee’s salary group.

One-Time Merit Payment (Reason Code 035)

A one-time merit payment is a single payment to an employee that does not change the employee’s base salary.

Agencies are not limited by statute to a certain percentage or amount for a one-time merit payment.

This type of award is ideal for employees who are at or near the maximum rate for their salary group. As it is a one-time payment and not added to the employee’s base salary, the maximum of the salary group is not impacted.

Merit Salary and One-Time Payment Criteria/Eligibility

Agencies must use specific criteria and maintain documentation to support granting merit salary increases or one-time merit payments to their employees.

Texas Government Code specifies an employee’s performance expectations must relate to the goals in the agency’s strategic plan.

Additionally, the agency must apply merit increases throughout the range of salary groups within the agency, i.e., an agency with salary ranges from A6-B22 could not single out only employees in salary group B11 to receive a merit salary increase or one-time merit payment.

Texas Government Code authorizes state agencies to grant merit salary increases or make one-time merit payments to eligible employees whose job performance and productivity are consistently above the normal or expected levels.

The performance requirement is not the only criterion that needs to be met for an employee to receive a merit action.

The employee:

  • Must be an employee on Schedule A or B — employees on Schedule C are not eligible for merit salary increases; however, employees on schedules A, B and C are eligible for one-time merit payments.
  • The employee must have been employed by the agency for at least six continuous months.
  • Employees who recently received a promotion, enhanced compensation award, one-time merit payment, emergency one-time merit payment or a merit salary increase at the agency are not eligible to receive another merit salary increase unless six months have passed since that last action.

    Example: If an employee received a promotion on Jan. 15 and the agency wanted to grant a merit salary increase for the employee in the same year, the soonest it could be effective would be July 15.

  • Employees on temporary assignment or currently under a disciplinary reduction are not eligible to receive merit salary increases.

Employees Transferred Due to a Legislative Mandate

Employees transferred from one agency to another due to a legislative mandate do not lose their merit eligibility simply because of their transfer. The employee’s service at both agencies determines the service requirements for that employee.

Example: The Legislature mandates one agency must merge into another agency. An employee would have no choice in the move. This employee would transfer his or her service into the new agency. If the employee had a merit action two months before the move, the employee would be eligible for another merit action after four months at the newly combined agency.

General Exclusions/Conditions

  • Certain employees of the Texas Department of Criminal Justice who are eligible for salary level adjustments through a career ladder system are not eligible for a merit salary increase or a one-time merit payment.
  • Employees who have been on leave without pay for a full calendar month cannot count that time toward their six continuous months of service. An exception to this is military leave without pay, which would not affect an employee’s merit eligibility.
  • Employees who move from a line-item exempt position to a classified position must hold the classified position for six continuous months before becoming eligible.
  • Employees who move from an unclassified position to a classified position do not have to meet additional service requirements, providing they have six continuous months of service with the agency.

Sources

Texas Government Code, Sections 659.251-259, 2101.035 and 2101.037; General Appropriations Act, Article V, Rider 7 – Texas Department of Criminal Justice, Rider 21 – Texas Juvenile Justice Department, Article IX, Part 2, Article IX, Parts 3.01-3.04 and 3.07; Texas Administrative Code, Section 5.41.