Texas Labor Laws for Business Owners
Texas generally has a business-friendly environment. It does not have a state income tax. The labor laws in the state of Texas are amongst the most liberal and business friendly in the entire United States.
Minimum Wage
$7.25
Overtime Wage
$1.5x Regular Wages
Meal Breaks
Not mandated
Rest Breaks
Paid if 20 minutes or less
The federal minimum wage is applicable in Texas, as the state does not have its own minimum wage law. The mandated minimum wage in Texas is $7.25 per hour, applicable to all employers irrespective of their business size.
The state of Texas does not have specific regulations pertaining to overtime pay, therefore federal overtime laws are applicable. As per the Fair Labor Standards Act, it is mandatory for non-exempt employees to be compensated at a rate of 1.5 times their regular pay for any hours worked beyond 40 in a workweek.
Under federal overtime laws, there are certain salary thresholds for exemptions in administrative, professional, and executive roles. The minimum salary requirement is currently set at $684 per week, equivalent to $35,568 per year.
Unlike some other states, Texas does not have regulations that mandate employers to offer rest breaks or meal periods to employees.
However, it’s important to note that federal law, specifically the Fair Labor Standards Act (FLSA), doesn’t mandate breaks either. The FLSA leaves the decision to provide breaks up to the discretion of the employer.
Despite the absence of specific legal requirements, many employers choose to provide breaks or meal periods as part of their employment policies. When breaks are provided, employers typically determine the duration and frequency of breaks. If breaks are paid or unpaid, it should be clearly communicated to employees.
If you provide a break (typically less than 20 minutes), it must be compensated. However, if an employee is granted a meal or lunch break lasting 30 minutes or more and is allowed to leave the workplace and relieved of all job-related responsibilities, it is not required to be paid.
For certain workers, especially minors, there are federal and state laws regulating work hours, breaks, and rest periods. It’s essential for employers in the retail sector or any other industry to be aware of and comply with these regulations.
Retail employers are required by the Texas Department of Labor to provide employees who have worked more than 30 hours in a week with a minimum of 24 consecutive hours off within each seven-day period. Furthermore, employers must accommodate an employee’s request for time off to attend worship services once a week, unless it would cause an undue burden on the business.
Texas does not have specific state laws that mandate paid time off (PTO) for employees in the private sector.
The responsibility for regulating PTO, including vacation and sick leave, is generally left to employers’ discretion. Therefore, employers in Texas are not legally obligated to provide paid time off to their employees.
However, many employers choose to include PTO as part of their employment policies in order to attract and retain skilled workers. The specific terms and conditions of PTO, such as how it is accrued, the policies for using it, and the criteria for eligibility, are typically determined by individual employers and outlined in employment contracts or company policies.
The classification of employees as exempt or non-exempt in Texas is determined by federal law, specifically the Fair Labor Standards Act (FLSA). The FLSA establishes guidelines for minimum wage, eligibility for overtime pay, recordkeeping, and child labor standards. Below is a summary of the distinctions between exempt and non-exempt classifications in Texas.
Exempt Employees:
Employees falling under the exempt status are generally exempted from the obligations pertaining to minimum wage and overtime compensation. To qualify as an exempt employee, certain criteria must typically be met:
Salary Basis Assessment:
Exempt personnel receive compensation on a salaried basis rather than an hourly wage. The salary amount should surpass the minimum threshold established by the Department of Labor (DOL).
Salary Level Evaluation:
The salary level examination establishes a minimum earnings requirement for exempt professionals. The minimum salary level stands at $684 per week.
Job Duties Scrutiny:
Exempt employees are obliged to carry out tasks classified as exempt, such as executive, administrative, professional, or specific computer-related responsibilities. Each category encompasses distinct criteria for exemption.
Illustrations of exempt personnel encompass managerial staff, professionals, and certain administrative personnel.
Non-exempt Employees:
Non-exempt employees are entitled to receive at least the federal minimum wage for all hours rendered and additional compensation for any work exceeding 40 hours in a workweek. Non-exempt employees typically receive compensation on an hourly basis.
Employers must maintain meticulous records of non-exempt employees’ work hours, encompassing regular hours as well as any overtime rendered.
It is of utmost importance for employers to conduct thorough evaluations of job roles to ascertain the appropriate classification, as misclassifying employees can result in legal ramifications. The classification of exempt versus non-exempt is contingent upon job duties, salary level, and salary basis, and employers should regularly undertake reviews and updates to ensure compliance.
Texas does not have an independent equal pay law that mirrors the federal Equal Pay Act. The federal Equal Pay Act serves as a nationwide legislation that prohibits the unjust treatment of employees based on gender in terms of their wages, provided they engage in substantially similar work within the same establishment.
The federal Equal Pay Act necessitates employers to ensure equal remuneration for employees of the opposite sex who undertake roles demanding a comparable level of skill, effort, and responsibility, under comparable working conditions.
It is crucial to note that although Texas lacks a specific equal pay law at the state level, federal laws such as the Equal Pay Act and Title VII of the Civil Rights Act of 1964 are applicable within the state. Title VII prohibits employment discrimination on the grounds of race, color, religion, sex, or national origin.
Furthermore, the Lilly Ledbetter Fair Pay Act, enacted in 2009, amended the Civil Rights Act of 1964, explicitly stating that the 180-day time limit for initiating a lawsuit concerning pay discrimination resets with each subsequent paycheck influenced by the discriminatory conduct.
Employers in Texas should remain cognizant of federal anti-discrimination laws and ensure their adherence to them. It is also advisable to remain well-informed about any modifications or revisions to labor laws, both at the federal and state levels, as legislation can evolve over time. Seeking guidance from legal professionals can provide specific recommendations based on the most up-to-date information available.
In the state of Texas, the principle of employment-at-will is upheld, wherein the employer or employee holds the right to terminate the employment relationship without cause or restriction, except in cases where the reason for termination is illegal. It is important to consider the following key aspects when it comes to hiring and firing employees in Texas
Hiring Rules:
- Adherence to Anti-Discrimination Laws: Employers must ensure compliance with federal anti-discrimination laws, including Title VII of the Civil Rights Act, which prohibits discrimination based on race, color, religion, sex, or national origin. The Age Discrimination in Employment Act (ADEA) also prohibits age discrimination.
- Background Checks: Background checks can be conducted by employers, but they must comply with the Fair Credit Reporting Act (FCRA) and obtain the employee’s consent. There may be specific limitations on the utilization of criminal history information.
- Verification of Work Eligibility: Employers are obliged to verify the work eligibility of employees by completing Form I-9, as stipulated by federal immigration laws.
- Proper Employee Classification: Employees must be accurately classified as exempt or non-exempt, in accordance with federal wage and hour laws, such as the Fair Labor Standards Act (FLSA).
Firing rules:
- Employment-at-Will Doctrine: Texas recognizes and follows the employment-at-will doctrine, granting employers the authority to terminate employees at any time and for any reason, unless the reason violates legal statutes, such as discrimination or retaliation.
- Notice Periods: Termination notice periods may be outlined in employment contracts; however, in the absence of a contract specifying otherwise, formal notice is typically not mandatory.
- Issuing Final Paychecks: Texas law necessitates employers to provide a final paycheck to terminated employees. The timing of this final payment may differ depending on whether the termination was voluntary or involuntary.
- Severance Agreements: Employers have the option to offer severance agreements to departing employees, which may encompass provisions such as severance pay and a release of claims.
- Avoidance of Discrimination and Retaliation: Employers should exercise caution in terminating employees based on protected characteristics, such as race, gender, religion, or age. Retaliatory measures against employees engaging in protected activities are strictly prohibited.
- Unemployment Benefits: Terminated employees may be eligible to receive unemployment benefits. Employers should be cognizant of the potential implications on unemployment claims.
- Navigating the intricacies of the recruitment and separation processes requires a thorough understanding of federal, state, and local employment laws. Seeking legal advice or consulting with an HR professional can provide tailored guidance based on your specific circumstances and jurisdiction.
Remember, these laws are subject to change, so staying informed is key to compliance. We recommend consulting with legal professionals to ensure your business aligns with the latest Texas labor regulations. Don’t hesitate to reach out for assistance in navigating these labor laws and ensuring a smooth business operation.