Complete Overtime Guide for Texas Employers

Employers must navigate the overtime regulations to ensure compliance and foster a fair and productive workplace. It is essential to know when and how to calculate overtime, who qualifies, and the consequences of non-compliance. This detailed guide addresses frequently asked questions about overtime in Texas, offering valuable insights for employers.

This Guide Covers

What is Overtime Pay in Texas?

The Fair Labor Standards Act (FLSA) regulates overtime pay in Texas, which mandates that non-exempt employees receive additional compensation for hours worked over 40 in a workweek. Overtime rules apply uniformly across Texas as the state does not have additional overtime regulations beyond federal requirements.

Which Hours Count as Overtime in Texas?

In Texas, overtime hours are determined based on weekly thresholds, and any hours worked by non-exempt employees exceed 40. Employers must accurately track and report employees’ hours worked to comply with these overtime regulations and avoid legal issues with wage and hour violations.

How Much is Overtime Pay in Texas?

Overtime pay in Texas is calculated at one and one-half times the employee’s regular rate of pay for all hours worked over 40 in a workweek. For example, if an employee’s regular rate of pay is $20 per hour, their overtime rate would be $30 per hour. The minimum wage in Texas is $7.25 per hour, which means the minimum overtime wage is $10.88 per hour.

Who is Entitled to Overtime Pay in Texas?

Employees entitled to overtime pay in Texas are those classified as non-exempt under the FLSA. Non-exempt employees are hourly or salaried employees who do not meet the specific exempt criteria. To be considered exempt, employees must satisfy the criteria set forth by the FLSA.

Non-exempt employees must receive overtime pay at a rate of one and one-half times their regular rate of pay for all hours worked over 40 in a workweek.

Employers are advised to carefully assess each job duties and compensation to determine an employee’s eligibility for overtime pay. Misclassifying employees as exempt when not meeting the criteria can lead to significant legal and financial penalties.

Who is Exempt from Overtime Pay in Texas?

In Texas, employees who are exempt from overtime pay meet specific criteria outlined by the FLSA, which are evaluated through the following:

  • Salary Basis: Employees must receive a consistent salary regardless of the hours worked or the amount of work completed. This means the employees are classified as salaried employees.
  • Salary Test: The employee must earn at least $844 weekly ($43,888 annually).
  • Duties Test: The employee’s primary duties must focus on administrative, professional, or executive duties that require an employee’s discretion and independent judgment.

In addition, the following employees and occupations are considered exempt in Texas:

  • Airline employees
  • Babysitters
  • Commissioned sales employees
  • Computer professionals
  • Drivers and loaders
  • Live-in domestic employees
  • Farmworkers, fishermen
  • Federal criminal investigators
  • Fishermen
  • Outside sales employees
  • Railroad employees
  • Sales and mechanics
  • Switchboard operators

How Do You Calculate Overtime Pay in Texas?

Overtime pay in Texas is calculated at one and one-half times the employee’s regular rate of pay for all hours worked. To calculate an employee’s overtime pay in a workweek:

  • Determine the employee’s regular rate of pay: The regular rate of pay includes all compensation the employee receives. For hourly employees, use their hourly wage rate. For salaried employees, divide their weekly salary by the number of hours the salary is intended to compensate. This is usually 40 hours per week.
  • Calculate overtime hours: Overtime hours are those worked over 40 hours in a workweek. Hours that qualify for overtime pay do not include paid time off such as vacation, sick leave, or holidays unless the employee works during these times.
  • Compute overtime pay: Multiply the employee’s regular rate of pay by 1.5 for each hour worked over 40 in a workweek.

For example, if your employee is paid $20 per hour and worked 45 hours in a workweek, the overtime pay for 5 hours would be $150. Here’s a quick calculation:

  • Overtime rate = Hourly rate x 1.5 = $20 x 1.5 = $30
  • Overtime pay = Overtime rate x Overtime hours = $30 x 5 = $150

Learn more about Texas Overtime Laws in our detailed guide.

When Should Overtime Pay Be Given Out in Texas?

In Texas, overtime pay should be given out according to the regular payday schedule established by the employer for all wages earned during the pay period. This means that overtime pay should be included in the paycheck for the pay period in which the overtime hours were worked.

Texas employers must pay employees at least twice a month on designated paydays. If the employer does not establish a payment schedule, the paydays are automatically set on the first and fifteenth day of each month.

Are All Businesses in Texas Required to Pay Overtime?

Yes, all businesses in Texas must pay eligible employees overtime as mandated by the FLSA. The FLSA applies to businesses that engage in interstate commerce or have annual gross sales or business done at least $500,000.

The coverage under the FLSA states that even if a business does not meet the interstate commerce threshold, it may still be subject to the FLSA if it engages in the production of goods for interstate commerce or handles goods that have been moved in or produced for commerce.

The FLSA’s overtime provisions require non-exempt employees to receive overtime pay at a rate of one and one-half times their regular rate of pay for all hours worked over 40 in a workweek. This applies regardless of the business size or the industry in which it operates. Therefore, compliance with overtime pay requirements is mandatory for all covered businesses in Texas to avoid potential legal consequences and penalties.

Which Law Governs Overtime in Texas?

Overtime in Texas is primarily governed by the Fair Labor Standards Act (FLSA), which establishes the minimum wage, overtime pay, recordkeeping, and youth employment standards covering employees in the private and public sectors.

Key provisions of the FLSA regarding overtime pay include:

  • Non-exempt employees must receive overtime pay at a rate of one and a half times their regular rate of pay for hours worked over 40 in a workweek.
  • The regular rate of pay includes all compensation subject to the FLSA, such as hourly wages, salaries, commissions, and certain bonuses.
  • Employers are required to maintain accurate records of hours worked and wages paid to ensure compliance with overtime pay requirements.

Who Enforces Texas Overtime Laws?

In Texas, overtime laws are primarily enforced by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL). The WHD is responsible for administering and enforcing the federal FLSA, which sets the standards for minimum wage, overtime pay, recordkeeping, and youth employment.

The Texas Workforce Commission also oversees some aspects of state labor laws, including certain wage and hour provisions and enforcement of overtime pay, which primarily falls under federal jurisdiction through the WHD.

What is the Penalty for not Paying for Overtime in Texas?

Employers who intentionally or repeatedly violate the FLSA by failing to pay the correct amount of overtime may face penalties of up to $1,000 for each violation. Intentional violations can lead to criminal charges, with fines up to $10,000; for repeated violations, employers could face imprisonment. A deliberate violation includes any action taken purposefully or knowingly instead of accidentally or involuntarily.

In addition to these penalties and payment of unpaid wages, employers may be required to pay liquidated damages to the employee. Liquidated damages are equal to the amount of the employee’s unpaid wages, effectively doubling the total compensation for their original unpaid overtime wages.

How Can You Ensure Overtime Compliance?

Employers can ensure compliance with overtime regulations by accurately classifying employees as exempt or non-exempt based on the FLSA criteria. Employers should also use precise time tracking and attendance software to accurately track hours worked by non-exempt employees; correct calculation and timely overtime payment are crucial. In addition, employers should stay updated on any changes to federal overtime laws to ensure ongoing compliance.

Learn more about Texas Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.