Wage laws in Texas
Wages in Texas are subject to various state laws, but most are defined in the Texas Payday Law. We've compiled the essential requirements of the law to know below.
Minimum wage laws
Texas doesn’t have state-specific or local ordinances regarding minimum wage requirements. Therefore, they use the current federal minimum wage rate of $7.25 per hour. However, the Texas Minimum Wage Act allows employees to bargain with their employers for higher pay over the federal minimum wage rate.
If an employer has an employee that lives on the business premises, the employer doesn’t have to pay the worker for any on-call job duties performed in addition to their regular working hours. Additionally, employers may count tips and the cost of meals and lodging toward the minimum wage rate.
Pay for meetings or training
The U.S. Department of Labor considers compensable time as "all the time during which an employee is necessarily required to be on the employer's premises, on duty, or at a prescribed workplace."
Therefore, employees must be paid for all time worked, whether that time is spent in meetings, training, or doing regular work.
Overtime pay
Texas follows the federal law for overtime pay. Under the FLSA, federal employees must receive overtime pay if they work more than 40 hours in one workweek.
For every hour of overtime work, employees can be paid in one of two ways:
- Employees can be paid at a rate of 1.5 times their regular wages
- Employee can receive 1.5 hours of paid time off
Pay periods
Each exempt employee must be paid at least once a month. Non-exempt employees and other workers must be paid at least twice a month. Semi-monthly pay periods must be as evenly spaced within the month as possible. From there, employers can choose any paydays they want.
If an employer doesn’t designate paydays, paydays will be the first and 15th of each month.
Bonuses or wages paid on a commission basis are due according to the terms of the agreement between the employee and employer.
Pay statements
At the end of each pay period, employers must give each employee a written statement containing the following information:
- Employee's name
- Pay rate
- Total pay earned for the pay period
- Any deductions made and the purpose of the deductions
- Net pay after the deductions
- Total number of hours worked
Pay delivery
Unless an employee agrees in writing to accept part or all of their wages in another form, wages must be paid in cash, by a check that is negotiable for cash on demand at full-face value, or by direct deposit.
Wages must be delivered to the employee at their workplace during regular working hours, mailed, or electronically deposited no later than payday. Delivery can also be made to any person authorized by the employee in writing.
Final pay
Employees must be paid in full on the next payday if they quit, and terminated employees must be paid in full within six days. If an employee isn’t paid on a payday for any reason, the employer must pay the wages on a different business day of the employee’s choosing.
An employee may be entitled to unused wages for fringe benefits, like vacation, holiday, sick leave, parental leave, or severance pay, if the employer provides these benefits at their organization in a prior written agreement.
Severance pay
Employers aren’t required to pay severance pay to any employee unless a severance package has been promised through a written agreement during the hiring process.
Wage deductions
Under state law, wages may be withheld only when the employer:
- Is required to do so by state or federal law (i.e., IRS withholding)
- Is ordered to do so by a court (i.e., child support payments)
- The employee's written authorization for the deduction and the purpose is lawful (i.e., for health or retirement benefits).
- Written employee authorizations must meet certain requirements.
Unpaid wages
If an employee believes they’re due unpaid wages, they can submit a wage claim with the Texas Workforce Commission (TWC) no later than 180 days after the wages were due.
TWC investigates all claims to determine whether wages are owed to employees under the Texas Payday Law. If TWC determines that the employer must pay, the employer pays the TWC, and TWC pays the employees their wages. Both the person claiming unpaid wages and the employer have a right to appeal the determination.
If TWC determines that an employer acted in bad faith by not paying wages, the employer may be issued an administrative penalty equal to the wages claimed or $1,000—whichever is less. The same penalty can be issued against an employee who files a wage claim in bad faith.
