Texas employers and insurance carriers who write in Texas are often confronted with child support orders directing them to withhold earnings from an employee’s income. But what happens when that employee is still employed but receiving workers’ compensation benefits instead of wages?
Workers’ compensation payments are not regarded as “income” for purposes of federal income taxes. However, they are regarded as “income” for purposes of calculating an employee’s child support obligations in Texas.
As an employer, it is important not to disregard such an order. If an employee is receiving workers’ compensation benefits and not receiving wages, unless the employer is self-insured, the employer must send a copy of the order to the workers compensation insurance carrier with whom the claim has been filed. If the employee is not expected to be returning to work, the employer must notify the court and obligee of the termination of employment within seven days and provide the employee’s last known address, and the name and address of the new employer, if known. [TFC §158.206 and §158.213]. If the employee returns to work after receiving income benefits for lost time, the employer should resume income withholding according to the order.
Relevant statutes that employers and workers compensation insurance carriers should consult when a child support order hits your desk are as follows:
Texas Family Code – Section 158.206
§ 158.206. LIABILITY AND OBLIGATION OF EMPLOYER;
WORKERS’ COMPENSATION CLAIMS.
(a) An employer receiving an order or a writ of withholding under this chapter, including an order or writ directing that health insurance be provided to a child, who complies with the order or writ is not liable to the obligor for the amount of income withheld and paid as required by the order or writ.
(b) An employer receiving an order or writ of withholding who does not comply with the order or writ is liable:
(1) to the obligee for the amount not paid in compliance with the order or writ, including the amount the obligor is required to pay for health insurance under Chapter 154;
(2) to the obligor for:
(A) the amount withheld and not paid as required by the order or writ; and
(B) an amount equal to the interest that accrues under Section 157.265 on the amount withheld and not paid; and
(3) for reasonable attorney’s fees and court costs.
(c) If an obligor has filed a claim for workers’ compensation, the obligor’s employer shall send a copy of the income withholding order or writ to the insurance carrier with whom the claim has been filed in order to continue the ordered withholding of income.
Texas Family Code – Section 158.213
§ 158.213. WITHHOLDING FROM WORKERS’ COMPENSATION BENEFITS.
(a) An insurance carrier that receives an order or writ of withholding under Section 158.206 for workers’ compensation benefits payable to an obligor shall withhold an amount not to exceed the maximum amount allowed to be withheld from income under Section 158.009 regardless of whether the benefits payable to the obligor for lost income are paid as lump sum amounts or as periodic payments.
(b) An insurance carrier subject to this section shall send the amount withheld for child support to the place of payment designated in the order or writ of withholding.
Texas Family Code – Section 158.009
§ 158.009. MAXIMUM AMOUNT WITHHELD FROM EARNINGS. An order or writ of withholding shall direct that any employer of the obligor withhold from the obligor’s disposable earnings the amount specified up to a maximum amount of 50 percent of the obligor’s disposable earnings.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.