HBA-EVB, MPA, ATS H.B. 2842 76(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 2842
By: Brimer
Business & Industry
6/16/1999
Enrolled



BACKGROUND AND PURPOSE 

The Labor Code entitles an employee to temporary income benefits that
replace a substantial part of lost wages if the employee has a disability
and has not attained maximum medical improvement. Temporary income benefits
continue until the employee reaches maximum medical improvement. These
benefits are calculated using a statutory formula.  The amount of a
temporary income benefit is equal to 70 percent of the amount computed by
subtracting the employee's weekly earnings after the injury from the
employee's average weekly wage, or, for the first 26 weeks, 75 percent of
the amount computed by subtracting the employee's weekly earnings after the
injury from the employee's average weekly wage if the employee earns less
than $8.50 an hour.  The weekly temporary income benefit is tax-free. 

Injured employees who do not receive temporary income benefits under the
Labor Code because they are covered by a company provided benefit, known as
salary continuance, receive their salary subject to taxes.  Although these
payments are subject to income tax, employees who receive continuance
payments actually receive more in after-tax earnings than if they had not
been injured and continued to work.  This is because employees are entitled
to a rebate of the tax withheld on the portion of their salary continuation
benefits that would have otherwise been paid to the employee in the form of
taxfree temporary income benefits under the Labor Code. 

H.B. 2842 requires that salary continuation payments be considered payment
of income benefits for purposes of determining the accrual date of any
subsequent income benefits under the Texas Workers' Compensation Act.
Under this bill, an employer is not eligible for reimbursement if the
employer is obligated to make salary continuation payments under a contract
with an employee or a group of employees. 

In addition, this bill authorizes an employer to continue to pay the salary
of an employee who sustains a compensable injury under a contractual
obligation between the employer and the employee in lieu of payment of
temporary income benefits.  The salary continuation may include wage
supplementation if employer reimbursement is not sought from the carrier,
and the supplementation does not affect the employee's eligibility for
future income benefits. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 408.003, Labor Code, by amending the title, as
follows: 

Sec. 408.003.  New Title: REIMBURSABLE EMPLOYER PAYMENTS; SALARY
CONTINUATION; OFFSET AGAINST INCOME BENEFITS; LIMITS.  Adds "Salary
Continuation; Offset Against Income Benefits; Limits." 

SECTION 2.  Amends Section 408.003, Labor Code, by adding Subsections (f),
(g), and (h), as follows: 

 (f) Requires that salary continuation payments be considered payment of
income benefits for purposes of determining the accrual date of any
subsequent income benefits under the Texas Workers' Compensation Act. 

(g) Provides that an employer is not eligible for reimbursement if the
employer is obligated to make salary continuation payments under a contract
with an employee or a group of employees.  

(h) Provides that payments made as salary continuation or salary
supplementation do not affect the exclusive remedy provisions of Section
408.001 (Exclusive Remedy; Exemplary Damages), Labor Code. 

SECTION 3.  Amends Subchapter F, Chapter 408, Labor Code, by adding Section
408.105, as follows: 

Sec. 408.105. SALARY CONTINUATION IN LIEU OF TEMPORARY INCOME BENEFITS.
(a) Authorizes an employer to continue to pay the salary of an employee who
sustains a compensable injury under a contractual obligation between the
employer and the employee in lieu of payment of temporary income benefits. 

(b) Authorizes salary continuation to include wage supplementation if
employer reimbursement is not sought from the carrier, and the
supplementation does not affect the employee's eligibility for future
income benefits. 

SECTION 4.  Effective date: September 1999. 
  Makes application of this Act prospective.

SECTION 5.  Emergency clause.