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Texas Payroll/Personnel Resource

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Recruitment and Retention Bonuses
Recruitment Bonus

Agencies, excluding institutions of higher education, may pay employees a one-time bonus of no more than $5000 for a recruitment bonus.

A recruitment bonus does not constitute compensation for purposes of retirement, so:

  • Member retirement contributions may not be deducted from the bonus.
    – and –
  • The bonus may not be considered when determining the amount of the state’s contribution to the Employees Retirement System.

A recruitment bonus is not considered to be “salary and wages,” so:

  • Member retirement contributions may not be deducted from the bonus.
    – and –
  • The bonus may not be considered when determining the amount of the state’s contribution to the Teacher Retirement System or the optional retirement program (ORP).

Condition of Full Refund

If the employee discontinues employment for any reason less than three months after the date of receiving a bonus, the employee must refund the full amount of the bonus to the agency.

Condition of Prorated Refund

If the employee terminates employment for any reason within at least three months but less than 12 months after receiving the bonus, the employee must refund to the state agency a prorated amount, calculated by:

  1. Subtracting from 12 months the number of complete calendar months the employee worked after the date of receiving the recruitment payment.
  2. Dividing the number of months remaining by 12 months.
  3. Multiplying the result of Step 2 by the amount of the recruitment payment.

Examples (based on gross bonus amount):

Example 1:

A network specialist hired on Dec. 15, 2021, is offered a $2000 recruitment bonus contract. The network specialist agrees to the bonus and signs the contract. The employee terminates on Feb. 28, 2022, completing two complete calendar months of continuous service after receiving the bonus.

The employee must pay back the entire $2000 bonus.

Example 2:

A systems analyst hired on Nov. 1, 2021, is offered a $2000 recruitment bonus contract. The systems analyst agrees to the bonus and signs the contract. The employee terminates on March 31, 2022, completing five months of continuous service.

The refund the employee must pay is calculated as follows:

  1. 12 - 5 = 7 months remaining
  2. Divide the number of months remaining by 12 months: 7/12 = .5833
  3. Multiply the result in Step 2 by the amount of the recruitment payment: .5833 x $2000 = $1166.67

The employee must refund the state agency $1166.67.

Source

Texas Government Code, Section 659.262.