What are the overtime laws in Texas?

overtime laws

Overtime pay in Texas follows the federal law of the Fair Labor Standards Act (FLSA) of 1938, 29 U.S.C. § 201. The FLSA and state law of the Texas Payday Act (codified at Chapter 61 of the Texas Labor Code) require that employers pay covered, non-exempt employees 1.5 times their regular rate of compensation for any hours worked in excess of 40 hours per week. The Supreme Court has stated that employees subject to the FLSA must be paid for all the time spent in “physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer of his business.” An employee is covered under the FLSA if:

  • Their employer makes at least $500,000 in gross sales volume per year;
  • They work at a healthcare facility or educational institution;
  • They work for a public agency; or
  • They are a domestic service worker who earns at least $1,700 in a year from one employer or they work more than eight hours per week for an employer or employers.

Each of the preceding examples are individuals that would be considered covered employees under the FLSA, and therefore should be entitled to receive minimum wage. States can set a higher wage than the federal minimum wage standard of $7.25 per hour, but Texas sets their minimum wage at the federal standard through the Texas Payday Act. A staff worker who makes a living on tips (e.g. servers, bartenders, valets, etc.) must likewise receive at least the minimum wage for their hours worked, but they often receive their wages in a different manner. These tipped employees may be paid a standard of at least $2.13 per hour by their employer as a cash wage. However, such employees must receive at least $7.25 per hour with the addition of tips via a tip pool or individual tips earned. If the tips received plus $2.13 per hour do not equal the minimum wage equivalent of $7.25 per hour, then the employer is obligated to pay the difference.

Some individuals who do not meet the criteria listed in the bullet-points above may also qualify for minimum wage under the FLSA if they engage in interstate commerce or other certain related activities. Beyond just being a “covered” employee under the FLSA, an employee must also be classified as “non-exempt” to be subject to overtime laws. The rules for exemption from overtime requirements under the FLSA are narrowly defined, so employers must be careful when categorizing employees to maintain current legal standards. Employees that may be accurately classified as “exempt” must satisfy the FLSA’s tests for salary level, salary basis, and job duties. Failure to meet the FLSA’s standards under any one of these tests will mean that the employee at issue should be classified as non-exempt in accordance with federal and Texas state law.

Examples of non-exempt positions include those involving ordinary inspection work with established techniques and procedures. Examiners and graders who perform work involving comparison of products with established standards should also be classified as non-exempt, along with comparison shoppers who merely report prices at a competitor’s store. Public sector inspectors or investigators must be classified as non-exempt as well. An exempt employee, on the other hand, must not only meet the salary level test of being compensated at least $684 per week ($35,568 per year) and the salary basis test of being paid a fixed weekly salary fee or fee that does not fluctuate week-to-week, they must also meet the job duties test of an executive, administrator, professional, outside sales representative or computer professional most commonly.

When considering the job duties exemptions, the employer must establish these by assessing the nature of work performed by the employee pursuant to the FLSA’s standards; the title of their position is mostly immaterial here. If the three main tests for an exempt employee are not satisfied, then the employee in question should be classified as non-exempt and receive at least $10.88 (minimum wage of $7.25 times 1.5) for any hours they work exceeding 40 hours per week. Seemingly simple employment law statutes like the FLSA can be exceedingly complex, so employers that ignore the law’s requirements by using subversive tactics such as reducing payroll costs or preventing employees from pursuing wage and hour claims do so at their own peril. According to the Economic Policy Institute, employers who do not pay minimum wage or overtime in accordance with the law underpay workers an estimated $15 billion a year.

Yet, often employers will cross the clearly defined lines of overtime rules by adhering to common myths and assumptions. One such misconception is the belief that salaried employees do not have to be paid overtime by virtue of their compensation structure alone. This is not true, as any salaried employee that does not fully satisfy the aforementioned salary level, salary basis, and job duties tests must be classified as non-exempt, and thus be subject to overtime rules. Another frequent falsehood is that an employer must approve an employee’s request to work overtime hours in order for it to be payable. While an employer may perhaps take disciplinary action against an employee that fails to comply with a written policy that requires overtime requests to be approved of in advance by management, the employer must still pay overtime if it indeed has reason to know that the employee at issue worked more than 40 hours in the workweek, whether overtime hours were approved of by management beforehand or not.

It’s important to understand that while some employees may be exempt from overtime pay provisions, these exemptions are narrowly defined under the FLSA. An employer failing to classify their employees correctly or simply telling them that they are exempt from overtime pay doesn’t render it true, whether this is done with a keen knowledge of the intricacies of the FLSA or a total lack thereof. In addition to the FLSA, the Texas Payday Act lays out state law requirements with respect to the payment of wages to employees. If an employee is not paid overtime wages or not paid such wages properly, for example, the Payday Act allows them to file a wage claim with the Texas Workforce Commission and use their procedural framework for the prosecution of these claims. Knowing your employment rights will empower you to have the best working experience possible, so contact an attorney if you want to learn more.