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


Office of House Bill AnalysisH.B. 2842
By: Brimer
Business & Industry
3/26/1999
Introduced



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.  

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 401.011, Labor Code, by adding Subsection (39),
to define "salary continuation" to mean that an employer may continue to
pay the employee's salary as a replacement for temporary income benefits. 

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

Sec. 408.003.  New title: REIMBURSABLE EMPLOYER PAYMENTS; SALARY
CONTINUATION; OFFSET AGAINST INCOME BENEFITS; LIMITS. 
 
(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 payments made as salary continuation or supplementation
do not affect the exclusive remedy provisions of Section 408.001 (Exclusive
Remedy; Exemplary Damages). 

 SECTION 3.  Effective date: September 1999.  Sets forth that the
provisions of this Act do not change the rights of parties in effect prior
to the effective date of this Act. 

SECTION 4.  Emergency clause.