Introduction to employment laws in Texas
Overview
Texas features a business-friendly employment landscape with relatively flexible regulations. Nevertheless, if you’re looking to recruit in the Lone Star State, it’s critical to stay well-informed about Texas employment laws and HR compliance considerations.
In this guide, we’ll help keep you compliant as you onboard and manage workers in Texas.
Employing in Texas: Key employment laws and practices
Standard work hours
In the state of Texas, full-time employment is generally considered to be between 30 and 40 hours per week, but this is not codified in state law. However, this can vary based on the type of work or the sector in which a company operates.
For salaried employees, the regulations around work hours and overtime are primarily governed by the federal Fair Labor Standards Act (FLSA) and the Texas Labor Code.
According to these laws, salaried employees are generally exempt from overtime if they earn more than the state or federal exemption threshold and perform executive, managerial, or professional roles. In Texas, the salary threshold for exemption is currently $684 per week.
Contracts usually outline the working hours and payment terms of contract workers and self-employed professionals. It’s crucial that these contracts comply with all relevant state and federal laws to ensure the fair treatment of these workers.
Minimum wage and overtime
The current minimum wage in Texas aligns with the federal minimum wage, which is $7.25 per hour. However, there are certain exceptions. For instance, the youth minimum wage is $4.25 per hour, while the minimum cash wage stands at $2.13 per hour.
As for overtime, non-exempt employees in Texas who work more than 40 hours in a week are entitled to overtime pay of 1.5x their regular pay rate as per the FLSA. The criteria for exemption include earning above a specified threshold and performing certain job roles.
Insurance and benefits
In Texas, employers contribute to their employees’ FICA Social Security and Medicare as part of their payroll contributions.
Employers are mandated to provide unemployment insurance at varying rates depending on factors such as the size of their workforce and their industry. Most employers in Texas need not carry workers’ compensation insurance. Should they elect not to do so, however, these so-called “nonsubscribers” must file an annual notice indicating so with the Texas Department of Insurance.
Employer contribution | Rate |
Unemployment insurance | 0.25% – 6.25% |
FICA Social Security | 6.20% |
FICA Medicare | 1.45% |
FUTA tax | 0.60% – 6.00% |
Multiplier makes it easy to manage benefits for Texas employees.
Meal and rest periods
When it comes to breaks and meal periods in Texas, the state doesn’t have any specific regulations mandating the provision of rest or meal breaks for employees, with one exception related to breastfeeding mothers. Texas law requires employers to provide reasonable break time for an employee to express breast milk, each time such employee has a need to express the milk, for one year after the child’s birth. Employers are also required to provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public.
Beyond this, employers should be aware of the federal Fair Labor Standards Act (FLSA), which does not require employers to provide breaks or meal periods to employees but does have stipulations for when these are offered.
Anti-discrimination laws
Texas employment laws include robust protections against workplace discrimination. The Texas Labor Code Chapter 21 (The Texas Commission on Human Rights Act) prevents employers from discriminating against employees based on race, color, disability, religion, sex, national origin, or age (40 or over).
The law extends these protections to cover pregnancy status as well as genetic information. It’s also worth noting that while sexual orientation and gender identity are not explicitly mentioned in state laws, some municipalities within Texas have their own ordinances that offer protection in these areas.
Texas law prohibits retaliation against employees who file a complaint of discrimination or participate in a discrimination investigation or lawsuit.
Leave policies
The matter of leave policies in Texas is largely dictated by federal regulations and employer discretion as Texas does not have any state-specific laws regulating vacation or sick leave. Employers typically provide paid or unpaid vacation leave as part of their employment package.
Sick leave also generally falls under the federal Family and Medical Leave Act (FMLA), which provides up to 12 weeks of unpaid, job-protected leave per year for certain medical and family reasons.
Special attention must be given to maternal, paternal, and parental leave policies as these are governed by both state regulations and FMLA. Maternity leave under FMLA allows a mother up to 12 working weeks of leave in any one year for a child’s birth and to care for the newborn child within one year of birth. Paternity leave under FMLA also allows fathers up to 12 working weeks of leave in any one year for a child’s birth and to care for the newborn child within one year of birth.
In addition to the Family and Medical Leave Act (FMLA) and the Pregnancy Discrimination Act, Texas has the following additional law regarding Maternity and Paternity Leave (Pregnancy Disability Leave), Texas’s law against discrimination.
Leave type | Duration | Paid/Unpaid | Conditions |
Vacation leave | Discretionary | Discretionary | Determined by employer |
Sick leave | Up to 12 weeks (FMLA) | Unpaid | The employee must have worked for the employer for at least one year and completed at least 1,250 hours over the past year |
Maternal/Paternal leave | Up to 12 weeks (FMLA) | Unpaid | For a child’s birth and to care for the newborn child within one year of birth, additional provisions via Texas Pregnancy Discrimination Act |
Parental leave | Up to 12 weeks (FMLA) | Unpaid | For adoption or foster care of a child within one year of placement |
Bereavement leave | Discretionary | Discretionary | Determined by the employer |
Easily onboard employees in Texas?
Termination laws
Texas operates under an “at-will employment” doctrine, which means that either the employer or the employee can terminate the employment relationship at any time, for any reason, as long as the reason is not illegal. There are exceptions to this, like public-sector employees who have certain due process rights and employees under contract who can only be terminated for reasons defined in the contract.
While there is no mandatory notice period for terminations in Texas, it is common practice for employers to provide two weeks’ notice. In the case of mass dismissals, employers must comply with the federal Worker Adjustment and Retraining Notification Act (WARN), which requires 60 days’ notice.
Texas law does not mandate severance pay unless it is stipulated in an individual’s employment contract or a collective bargaining agreement. However, it is common for employers to offer severance packages based on an employee’s length of service.
Safety and health
In Texas, all employers have a legal obligation to provide a safe and healthy workplace. This responsibility is mandated by the federal Occupational Safety and Health Act (OSHA), and reinforced by Texas state laws.
Employers must follow safety regulations relevant to their specific industry, including providing necessary training and personal protective equipment (PPE). They are also required to maintain records of workplace injuries and illnesses, and report serious incidents to OSHA.
Taxes in Texas
For taxes related to employment in Texas, both employers and employees have specific responsibilities. Employers are responsible for withholding federal income tax from employees’ wages in accordance with IRS guidelines. They also need to contribute towards FICA (Federal Insurance Contributions Act), Social Security, and Medicare taxes.
The state of Texas does not have a state income tax but there are other state-specific employment taxes that need to be considered. These include unemployment insurance taxes which are funded by employers’ taxes under the Texas Unemployment Compensation Act.
Tax type | Employer contribution | Employee contribution |
Federal income tax | N/A | Depends on income bracket |
FICA Social Security | 6.20% (up to $160,200 annually) | 6.20% (up to $160,200 annually) |
FICA Medicare | 1.45% | 1.45%, plus an additional 0.9% for high-income earners |
Texas unemployment insurance | 0.25% – 6.25% (on salary up to $9,000 annually) | N/A |
Managing Texas employees with an Employer of Record (EOR)
Employing in Texas requires businesses to understand and comply with a host of federal and state laws. These include regulations on payroll, benefits, working hours, overtime, and more.
This is where Multiplier comes in, as your partner for navigating these regulatory nuances. Leveraging our comprehensive Employer of Record (EOR) solution, you can legally employ full-time workers in Texas without setting up local entities.
With our Global Payroll platform, you can pay your employees on time while taking care of local taxes, contributions, and withholdings. What’s more, you can also administer globally compliant benefits through our all-in-one platform.
Book a demo to see how Multiplier makes it easy to hire, onboard, and manage employees in Texas.
FAQs
Full-time employment in Texas is generally considered to be between 30 and 40 hours per week, as per the Texas Labor Code. It’s vital to note that this varies across industries and individual employers, so it’s important to clarify this during recruitment for legal compliance.
The Fair Labor Standards Act (FLSA) governs overtime pay in Texas. Non-exempt employees are those earning less than the state or federal exemption threshold of $684 per week, they are entitled to time-and-a-half their regular pay rate for over 40 hours worked in a week.
The minimum wage in Texas is the same as the federal minimum wage, which is $7.25 per hour. However, there are other requirements such as youth minimum wage ($4.25 per hour), minimum cash wage ($2.13 per hour), and maximum tip credit ($5.12 per hour).
In Texas, most employees are employed at will, meaning either the employer or the employee can end the relationship without notice or reason, provided it’s not discriminatory or illegal. However, in mass dismissal cases, employers must follow the Worker Adjustment and Retraining Notification Act (WARN) and give a 60-day notice to the affected employees. Severance pay isn’t mandatory unless stipulated in an employment contract or collective bargaining agreement.
The Family and Medical Leave Act (FMLA) provides up to 12 weeks of unpaid, job-protected leave per year for eligible employees for certain family and medical reasons including serious illnesses, maternity leave, or care for a spouse or child. To be eligible, employees must have worked for their employer for at least one year, completed a minimum of 1,250 hours over the past year, and worked at a location where the company employs 50 or more employees within 75 miles.
