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.