No matter what sort of business you operate in Texas, if you have full-time employees, you’ll probably encounter the state’s overtime regulations. By understanding these laws, you’ll be equipped to fairly compensate employees for additional work hours and remain compliant, avoiding financial or legal penalties.
This article provides a comprehensive breakdown of Texas overtime laws. We’ll explore everything from what these laws entail to key definitions, and how the state’s laws compare with federal overtime regulations. We’ll also offer practical tips for compliance and how you can avoid the snares of non-compliance.
Let’s jump right in.
Understanding Texas Overtime Laws
Overview of Texas Overtime Laws
Overtime pay, or “time-and-a-half” pay, refers to extra compensation employees receive for working more than 40 hours a week. Under Texas law, both salaried workers and those paid by the hour are entitled to this compensation.
Employees in Texas, including disabled employees, are entitled to overtime compensation under state and federal law.
However, Texas doesn’t have state-specific labor laws, which means the state follows regulations stipulated by the Fair Labor Standards Act (FLSA) of 1938. At the federal level, the FLSA covers the minimum wage, overtime regulations, and more.
Under the FLSA, all Texas employers must pay employees one-and-a-half times their usual pay for every hour after their 40th hour worked in a week, defined as seven consecutive days or 168 hours of work. Overtime only counts after the 40th hour in a work week.
Here’s a quick example…
Let’s say you have an employee who works a minimum-wage job for 50 hours a week. This means they’ll have worked 40 regular and 10 overtime hours weekly. Since the FLSA sets the minimum wage at \$7.25 per hour, here’s how we calculate the employee’s overtime pay:
Overtime per hour = $7.25 (regular rate) X 1.5 (overtime rate) = $10.88
Overtime pay = 10 X $10.88 = $108.8
Regular pay = 40 X $7.25 = $290
Total pay = $290 + $108.8 = $398.8
In this case, Texas law requires the employer to pay the employee $398.8 at the end of the work week. This compensation covers regular work and overtime hours.
It’s also worth noting that non-discretionary bonuses are included in the regular rate when calculating overtime. Discretionary bonuses, commissions, gifts, and payments for special occasions are not.
Non-discretionary bonuses are predetermined bonuses employers regularly pay employees. Examples include safety, attendance, and group production bonuses. Discretionary bonuses, conversely, are non-guaranteed bonuses awarded at the employer’s discretion. These can include:
- Bonuses for extraordinary achievements
- Employee-of-the-month bonuses
- Referral bonuses
- Severance bonuses
Who Is Exempt From Overtime Pay in Texas?
Overtime laws don’t apply to all Texas employees. Under the FLSA, some employees are exempt from overtime compensation. Exemptions aren’t based on job titles but on earnings, job-specific duties, and other factors.
The following employee types are exempt from overtime pay in Texas:
Executive Employees
Under the FLSA, employees must meet certain criteria to qualify as executives. To be listed as an executive, you must:
- Receive a salary of over $648 per week or $35,568 per year (only applies to salaried employees)
- Be primarily responsible for managing an entire enterprise or a major department or division in the enterprise
- Regularly oversee the work and responsibility of more than one employee
- Have considerable influence over the employment status of your subordinates, including hiring, firing, promotion, demotion, and advancement, and hold authority to hire and fire lower-ranking employees
Administrative Employees
To qualify as an administrative employee under the FLSA, employees must:
- Be salaried employees earning no less than $648 per week or $35,568 per year
- Have a primary responsibility of working non-manual or office work directly related to the core business operations and management activities of their employer or their customers
- Be primarily tasked with duties that involve using their discretion and independent judgment to decide on matters of significance
Professional Employees
FLSA also exempts professionals from overtime pay. Professionals fit into two categories – learned and creative professionals.
Learned professionals:
- Earn a salary of no less than $648 per week ($35,568 annually)
- Have primarily responsibilities or a line of work that requires advanced knowledge – particularly in an intellectual-oriented field – and consistent discretion and judgment
- Have advanced knowledge in a science or learning field, having acquired the knowledge over a prolonged program of specialized intellectual instruction
Creative professionals:
- Earn a salary of over $35,568 per year (or more than $648 per week)
- Hold jobs requiring talent, originality, invention, and imagination in notable artistic and creative fields
- Have advanced knowledge in a science or learning field, having acquired the knowledge over a prolonged program of specialized intellectual instruction
Computer Employees
As the name suggests, computer employees work in computer-related fields. According to the FLSA, computer employees:
- Earn a weekly salary or fee of $648, or receive hourly compensation of no less than $27.38
- Are computer programmers, software engineers, or computer systems analysts, or are equipped with relevant computer skills and knowledge
The FLSA also recognizes the primary responsibilities of computer employees involve:
- Utilizing systems analysis techniques and procedures, typically involving consultations with users to determine functional specifications of systems, software, and hardware components
- The design, creation, development, testing, and modification of programs and computer systems, usually involving prototypes relevant to or based on user or system design specifications
- The design, creation, testing, modification, and documentation of computer programs relating to machine operating systems
Some computer workers have one or two combinations of the same duties since they usually require the same skill level and knowledge.
Technicians working on electrical components of computer systems (circuit boards, transistors, etc.) also qualify for overtime if they don’t exceed the FLSA salary threshold.
Outside Sales Exemptions
Some employees working in sales don’t qualify for overtime pay. They include:
- Employees primarily tasked with making sales or getting orders and contracts for the use of facilities, or rendering services to receive payment from customers or clients
- Are detached from their employer's premises or place of business
Highly Compensated Employee
Under the FLSA, employees exceeding a certain salary threshold are exempt from overtime pay. For example, employees earning over $107,432 annually do not receive overtime. The same goes for those who earn more than $648 weekly on a salaried or fee basis, particularly if they perform executive, administrative, professional, or computer-related duties.
The FLSA’s exemption regulations don’t apply to certain categories of workers regardless of whether they exceed the salary threshold and their duties. Non-exempt categories include:
- BLUE-COLLAR WORKERS: All blue-collar workers qualify for overtime pay under the FLSA. Blue-collar workers use physical energy, skill, and their hands to perform their duties. They include carpenters, plumbers, electricians, factory workers, and many more.
- LOCAL AUTHORITIES AND FIRST RESPONDERS: Local authorities and law enforcement workers qualify for overtime compensation even if they exceed the FLSA earnings threshold. This category includes police officers, detectives, state troopers, deputy sheriffs, other law enforcement agents, firefighters, paramedics, rescue workers, ambulance workers, and first responders.
- COMMISSION-ONLY EMPLOYEES: The FLSA requires employers to pay overtime to employees who only earn commissions, regardless of how much they earn. The only exception is commission-only employees who regularly travel away from their place of work or business.
- INDEPENDENT CONTRACTORS: Independent contractors or freelancers are self-employed individuals who perform duties for a business or individual under the terms specified in a contract or written agreement. Independent contractors qualify as employees under the FLSA since they're at an employer's beck and call and under their instruction. As such, contractors qualify for overtime compensation like regular employees.
Comparison With Federal Overtime Laws
As mentioned, Texas labor laws don’t extend to overtime pay, so overtime law is mainly governed by federal laws (FLSA). This explains why Texas overtime laws are broadly similar to those enacted by the federal government. These similarities include:
- OVERTIME RATE: The overtime rate in Texas is 1.5 times the regular hourly rate for every hour exceeding 40 work hours in a week. Under the FLSA, employers must pay their employees 1.5 times the standard rate for hours worked over 40 hours weekly.
- MINIMUM SALARY THRESHOLD: The FLSA stipulates a minimum salary threshold for employees to qualify for overtime compensation. Under the FLSA, employees must earn no more than $648 per week to be eligible for overtime pay, except in certain categories. Texas labor laws also exempt employees earning more than \$648 weekly from overtime compensation, except those in non-exempt categories defined by the FLSA.
- OVERTIME CALCULATION PERIOD: The standard calculation period for overtime is the same for Texas and the federal government. Under the FLSA (and in Texas), a regular work week is capped at 40 hours. Hours exceeding the 40th work hour is overtime.
- Texas and federal overtime laws differ in only one aspect: the agencies enforcing these laws. The U.S. Department of Labor (DOL) enforces federal overtime laws, while the Texas Workforce Commission enforces overtime laws in Texas. However, obligations and responsibilities are pretty much the same for both departments.
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Common Misconceptions and Pitfalls
Labor law is complicated, and overtime laws in Texas are no exception. Misconceptions about overtime regulations further add to the confusion, putting many employers in not-so-pleasant situations.
Here are some misconceptions about overtime laws in Texas that you should be aware of:
Receiving a Salary Disqualifies Employees From Overtime Pay
This is among the most prevalent misconceptions concerning overtime in Texas. Some employers believe overtime applies only to hourly employees, so employees earning a salary or fixed fee don’t qualify for overtime.
Salaried employees receive a fixed salary amount weekly, bi-weekly, or monthly. Paying them overtime would seem counter-intuitive, given their remuneration model.
However, under the FLSA, all employees are eligible for overtime apart from specifically exempted roles. Salaried employees can qualify for overtime like hourly employees.
Employees Can Waive Overtime in Writing
According to the FLSA, overtime payment is mandatory.
Employees cannot write a written statement requesting to waive their overtime pay, regardless of how much they love their work or employer.
The Texas Workforce Commission doesn’t recognize written letters, emails, or memos from employees requesting to waive overtime pay.
Overtime Pay Doesn’t Apply to Unauthorized Work
Employees are entitled to overtime pay even if they perform unauthorized work. It might seem unfair, but work done is work done. Any unauthorized work by your employees, especially under your supervision, is still eligible for overtime compensation.
Working Over Lunch Isn’t Overtime
The FLSA considers any time you spend working as compensable. Employees who work through their lunch breaks are therefore eligible for overtime compensation.
However, employees who work during weekends and holidays will not receive overtime pay – the FLSA considers compensation for holiday and weekend work to be part of employees’ holiday pay.
Overtime Hours are Averaged Across a Two-Week Work Period
Don’t be misled into averaging your employees’ overtime hours over a multi-week period. This is illegal and will likely result in hefty penalties.
Here’s a quick example of how “averaging” can hinder an employee’s eligibility for overtime pay…
Let’s say an employee works 20 hours in one week and 60 in the next week. Under the FLSA guidelines, this should equal payment for 0 overtime hours in the first week and 20 in the second.
Averaging, on the other hand, would combine both overtime totals—typically due to employers following biweekly pay schedules—and divide the total of 20 hours over two weeks. This means the employee will only receive overtime for 10 hours, which is unfair and illegal.
The FLSA stipulates employees must be paid for ALL work hours exceeding the 40th hour worked in a week. As mentioned earlier in this article, a “work week” is defined as seven consecutive days (168 consecutive hours), with overtime tallies resetting at the start of each subsequent seven-day period. The employee above is therefore entitled to 20 hours of overtime pay, not 10.
Training Sessions and Meetings Aren’t Overtime Compensable
Meetings and training sessions are easily dismissed as non-compensable for overtime since employees don’t perform work duties.
However, under the FLSA, meetings and training sessions, including safety training, still count as overtime if they occur outside regular work hours.
Employers Don’t Receive Overtime for Work Done at Home
It’s not uncommon for employee duties to extend beyond regular work hours. Employees may choose to finish up their remaining work at home. However, it’s a common misconception that work hours at home aren’t compensable for overtime.
Refusing to pay employees because they should’ve completed their tasks within normal hours violates Texas overtime laws.
The FLSA requires employers to pay employees working overtime at home the same amount if they worked at the office. You must pay overtime if you require your employees to complete unfinished work at home outside of work hours.
In fact, if a non-exempt employee happens to work more than 40 hours from home in a week, they’re eligible for overtime pay for every hour over 40 they’ve worked, regardless of whether they did some, most, or all their work at home.
Disabled Employees Aren’t Overtime Compensable
The rationale behind this misconception is that disabled employees take longer to accomplish duties than their abled counterparts.
However, the FLSA makes overtime payments mandatory for all employees. This means disabled employees qualify for overtime compensation for every hour worked after the 40th in a week, with the overtime rate at one-and-a-half times the standard hourly rate.
Best Practices for Compliance
Employers are responsible for observing overtime regulations and staying up-to-date with the latest developments in this legal realm. Noncompliance can lead to hefty fines, the revocation of your business license, and negative publicity (likely leading to reduced sales) for your business.
Here are a couple of tips for ensuring compliance…
Familiarize Yourself With Overtime Regulations
You should know overtime regulations like the back of your hand. You (or a specialist employee such as an HR executive or general counsel) should understand what overtime regulations apply to your industry.
Exemptions, overtime rates, and how to calculate overtime are key areas to note.
Classify Employees Accurately
One of the greatest challenges in overtime compliance is employee misclassification. Employers must classify their employees correctly to determine who’s exempt and non-exempt from overtime compensation.
Wrongly classifying employees could lead to legal issues and financial penalties.
Implement and Communicate a Transparent Overtime Policy
Create a clear overtime policy that meets FLSA overtime regulations. The policy should include details on how the company determines overtime, to whom it applies, and how it’s calculated.
Remember to communicate this policy to your workforce and establish channels for employees to ask questions and air their complaints.
Maintain Accurate and Clear Timekeeping Records
Timekeeping is the core of proper overtime law compliance. Accurate timekeeping records allow you to track your employees’ hours worked and the overtime pay they qualify for.
Most modern, profitable, and successfully compliant businesses – in Texas and elsewhere in the United States – use employee time-tracking and recordkeeping software to ensure peak payroll accuracy.
Such software helps you automate time-tracking, and many apps include built-in features to calculate overtime payments in real time automatically
Embrace Fair Scheduling Practices
Distribute work hours equally among your employees to avoid overburdening or underworking some employees.
Communicate your expectations so you and your employees’ schedules can align.
Make proper arrangements for PTOs and make clear distinctions between overtime and comparable time off.
Consider fairness, employee availability, and skills when scheduling to optimize for compliance and productivity.
Consult Legal Professionals
Legal professionals are your best bet for complete compliance with Texas overtime laws. They understand the ins and outs of labor laws and will put you on the right path. Qualified attorneys, particularly those specialized in Texas employment law, can provide industry-specific advice for compliance, help with scheduling, and review your current payroll records for previously unseen violations.
Leverage Compliance Software to Your Advantage
Compliance software keeps tabs on all the latest labor regulations and ensures full compliance. These tools are designed to help businesses adhere to regulations. They include features like:
- Automated compliance workflows
- Analytics and reporting
- Regulatory monitoring
- Document monitoring
- Employee time tracking
Moreover, compliance software is a more affordable option for hiring a labor attorney. These software apps are also compatible with smartphones, making them a flexible option for employers on the go.
Advice for Employees on Protecting Their Rights
Employees must remain vigilant to ensure their employers don’t infringe upon their rights. Employees can protect their rights by:
Maintaining Accurate Records
Your employer is less likely to deny overtime if you keep accurate records of your work hours. Therefore, you must maintain a clear record of your regular work hours, overtime, and any hours worked at home.
Ensure these records align with your employer’s and report any irregularities to the Texas Workforce Commission.
Reviewing Your Employment Policies
Some companies may have unfavorable overtime policies
For instance, some companies don’t accommodate overtime and will have tight schedules, allowing 40-hour work weeks max. Review these policies and recommend changes or complaints in case of unfair overtime policies.
Joining Forces With Fellow Employees
Employees can consider joining forces if an employer’s overtime policies violate state overtime regulations. Employers and management will more likely take employees’ grievances if they come together and address the problem collectively.
If internal deliberations fail, consider taking the matter to the Texas Workforce Commission.
Communicating With Employers
Some employers are oblivious to their employment law violations and have no ill intent. Employees could communicate with their employers about these overtime violations and find a proper solution. Employees must be courteous but firm when discussing overtime issues. Remember, overtime pay is a right protected by state and federal law.
Employees scared of their employers can write anonymous letters or simply drop a note on their employer’s desk. Employees’ rights to overtime and fair treatment are stipulated under the FLSA. Employers cannot deny them these rights, regardless of their industries or occupations.
Hiring Employment Attorneys
Employees’ grievances may sometimes be ignored. If the issues persist, employees may have no option but to hire employment attorneys.
These attorneys specialize in employment law and can advise employees on the best course of action. If everything else fails, they can represent employees in court. Many employment lawyers work on contingencies and will only request payment if the case goes in the employees’ direction.
Keep Yourself Updated on Texas Overtime Laws
Texas overtime laws aren’t that complicated, after all. All you have to do is keep an eye on the clock and correctly classify employees, and you’ll be good to go.
But with all the responsibilities of a business owner, doing so is easier said than done. That’s why you should consider enlisting the services of a reputable employment attorney to ensure you never fall out of line.
For many businesses, the only real solution to compliance challenges is great software. The right business management software tends to come with built-in compliance and recordkeeping rules, regardless of your industry, how many employees you have, what they do, or how widely they’re dispersed across the state (or country).
If you operate a construction or field services company, we humbly suggest trying Workyard for your compliance needs.
Workyard is built around the industry’s most accurate GPS tracking and geofencing technology, which ensures payroll accuracy across your workforce, no matter which job site you send them to or when you need them to work there. Workyard’s timesheet tracking system also comes with built-in federal and state overtime rules, as well as adjustable break rules you can customize at the employee level.
Workyard’s intuitive scheduling dashboard makes it easy to direct your workforce to the jobs you need to do based on their skill sets, locations, availability, and (of course) their weekly time worked – so you can avoid unnecessary overtime payments and reduce reimbursable travel expenses.
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FAQS
Yes, bonuses and commissions are included when calculating overtime, but only non-discretionary bonuses are included in the calculator. Discretionary bonuses from achievements or special occasions are excluded from overtime calculations.
No, a bonus or any other form of payment is not an alternative to overtime pay. While some employers may offer bonuses or other incentives for employees working extra hours, they shouldn’t replace overtime pay. Replacing overtime with “bonuses” is illegal and violates overtime regulations. The employers may, however, offer these bonuses as a discretionary bonus paid separately from overtime compensation.
Yes, child workers are employers and, as such, qualify for overtime pay. However, Texas labor laws restrict the number of hours a minor can work in a week. Children aged 14 and 15 can only work a maximum of 40 hours a week. However, minors aged 16 and above can work as long as they want and qualify for overtime.
No, employees exempt from overtime pay under FLSA cannot appeal their status. The FLSA is a legal statute and is final. Exempt employees remain exempt until they change occupations and qualify for a non-exempt status.
No, the law bars employers from taking any retaliatory action on employees who report them for gross misconduct, including violation of overtime and other employment regulations. Employees fired as retaliation for reporting their employers can report this to the human rights division of the Texas Workforce Commission or Equal Employment Opportunity Commission (EEOC).
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