Texas Overtime Laws

November 15th 2024

In Texas, companies are required to compensate workers for hours worked in excess of 40 in a week.

Texas Labor Laws actually abide by the federal laws since Texas has not enacted any of its own, unlike several other states.

This article will provide you with the information to successfully navigate Texas’ overtime regulations, whether you’re an employer aiming for compliance or an employee defending your rights.

This article covers:

Texas Overtime Rates

The majority of hourly employees in Texas have the right to an overtime pay rate. The Fair Labor Standards Act (FLSA) determines this as a rate mandated to employees who work over a total of 40 hours a week.

Overtime in Texas is set at 1.5 times the regular hourly rate for workers who exceed 40 hours a week. 

Since the regular Texas minimum wage is $7.25 per hour, that makes Texas’ overtime minimum wage $10.88 per hour (1.5 times the minimum wage).

Overtime Entitlement in Texas

In Texas, overtime pay is required for all non-exempt employees. 

The only employees that are not entitled to overtime are those classified as exempt such as executives, administrative, and others.

Read more about Overtime Exceptions and Exemptions in Texas.

Refusing to Work Overtime in Texas

There are no protections in Texas for those who choose to refuse to work overtime. You may have to face disciplinary action for your refusal which may lead to terminating your employment.

How much power you have to resist being forced to work overtime depends on your employment classification. This means whether you are an exempt or non-exempt employee.

“Compensatory time” in Texas

In Texas, only governmental agencies (public employers) are allowed to provide compensatory time, or “comp time,” to non-exempt employees instead of cash compensation. Comp times are given on a time-and-a-half basis with the following exceptions:

  • After receiving 240 hours of comp time, an employee has to be compensated in cash for any overtime.
  • There is a limit of only 480 hours of comp time for public safety personnel (such as police officers or firefighters). After that, they must be compensated in cash.

It is important to note that employers in the private sector aren’t allowed to provide comp time as it will be a violation of the Texas overtime law. They must always provide their non-exempt employees with cash compensation for the overtime hours worked.

Overtime for Tipped Employees in Texas

A tipped employee in Texas is entitled to overtime compensation. However, their minimum wage is lower than the standard state minimum wage.

Before we continue, it is important to understand what a tip credit is. 

A tip credit is a system that enables employers to pay tipped employees a lower minimum wage. Simply take the standard state minimum wage minus what the tipped employee is paid. 

In this case, the Texas minimum wage is $7.25, and the minimum tipped employee wage is $2.13, which makes the tip credit $5.12. 

A tipped employee’s overtime rate will be calculated based on the full minimum wage and not the lower wage that they are being paid.

The employer is not permitted to take a higher tip credit for an employee’s overtime hours as they do with regular hours.

Overtime for Salaried Employees in Texas 

In Texas, all employees (salaried or not) must be given overtime pay unless they are getting a salary of more than $844 weekly ($43,888 annually) and take on tasks that are recognized as exempt from overtime.

Just because you receive a salary doesn’t mean you are not entitled to overtime compensation. Several other factors in federal law make an employee ineligible for overtime pay.

Calculating Overtime with Commission in Texas

Texas overtime laws state that employees who receive commission are also entitled to overtime pay just as any other non-exempt employee would be. Commissions must be included when calculating an employee’s wage. However, they will only be given half of that rate for every overtime hour.

For example, let’s say an employee works 45 hours a week at a rate of $10/hour and receives $100 in commissions for that week. We need to first calculate the new regular hourly rate.

To do so:

(Total hours x Hourly Rate) + Commission

= (45 x 10) + 100

= $550

Then, divide that by the total hours worked in the week.

= 550 / 45

=$12.22

To determine the overtime rate for the commissioned employees, we need to take that new regular hourly rate and halve it.

$12.22 / 2

= $6.11

Since the employee worked an extra 5 hours in the week, that makes his overtime compensation $30.56 ($6.11 x 5 hours).

The amount will vary according to your hours worked, hourly rate, and commission earned.

Overtime Exceptions and Exemptions in Texas 

In Texas, certain employees are exempt from receiving overtime pay, despite the regulations stating that non-exempt employees are eligible for overtime compensation. These exempt employees include those who are:

  • Piece rate pay (paid by unit produced instead of time basis) employees that fall under certain criteria
  • Retail or service establishment employees who earn more than half of their income from commissions and whose regular rates are at least one and one-half (1.5) times the minimum wage
  • Local electric railway, trolley, or bus carrier employees
  • Public agency employees who receive paid time off for working extra hours
  • Certain rail and air carrier employees
  • Outside buyers of poultry, eggs, cream, or milk in their natural state
  • Seamen on any vessel
  • Agricultural employees
  • Employees who process maple into non-refined sugar or syrup
  • Taxicab company drivers
  • Motion picture theater employees

Registered nurses paid on an hourly basis are entitled to overtime under federal law. However, hospitals may not demand that nurses work mandatory overtime, and nurses may refuse to work extra hours.

Under federal law, employees who earn a fixed salary are typically exempt from receiving overtime pay. However, the Fluctuating Workweek Method (FWW) provides an exception to this rule, allowing certain salaried employees to receive overtime compensation at a rate of one-half (½) times their regular hourly rate. Eligible employees must have a fluctuating workweek to qualify for overtime pay under the FWW, meaning they sometimes work more or fewer than 40 hours a week. Additionally, their minimum hourly wage must equal $7.25 per hour.

Download the U.S. FLSA Exemption Salary Threshold 2024 Poster now.

Statute of Limitations For Unpaid Overtime Claims in Texas

The statute of limitation for filing an overtime claims lawsuit is 2 years. The deadline can sometimes be extended if an employer’s violation was done knowingly.

Since Texas does not have its own overtime laws, this statute of limitations follows the FLSA.

Penalties for Not Providing Overtime Pay to Employees in Texas

Under the federal law, which applies in Texas, employers who do not provide proper payment for an employee’s overtime hours can be liable for up to 2 times the amount of unpaid overtime compensation and also the cost of filing a lawsuit against the employer (including the fee to hire an attorney).

It is advisable to consult with an attorney regarding overtime violations, as penalties may vary based on the severity of the case.

Legal Cases Relating to Overtime Compensation in Texas

Below, we present law cases relating to fair overtime compensation for employees in Texas: 

1. Employee Seeks Overtime Compensation From Transportation Company Despite Being Exempt

In the case of White v. US Corrections, filed in 2021, Dana White works as an extradition officer for US Corrections, which is a company providing transportation for prisoners. White claims the company had violated the FLSA by not compensating her for her overtime work.

According to the Motor Carrier Act (MCA), any employee who works for these types of companies, whether their work is directly or indirectly related to transporting goods, will be exempt from overtime pay. In this case, US Corrections is a motor carrier company doing interstate transportation which means that White is exempt from receiving overtime compensation.

The Texas Workforce Commission (TWC), an agency that enforces labor law in Texas, further confirmed that MCA also applies to employees who coordinate transportation for passengers. 

In the end, the court dismissed Dana White’s claims and argument that she should not be classified under the MCA. The MCA is very broad and can apply to various types of transportation jobs so such employees need to consult an attorney beforehand in regards to overtime violations.

Key lessons from this case:
  • Texas law generally follows the federal law when it comes to overtime claims
  • Although not explicitly a driver, the MCA can still apply to any transportation-related jobs. Therefore, it is important to know where your employment lies in the category of exempt or not exempt from overtime pay.

2. Misclassification of Workers Causes a Drilling Service Company to Pay $363,422 in Unpaid Overtime.

In the case of Parrish v. Premier Directional Drilling, LP, initiated in 2019, several workers had claimed that Premier Directional Drilling, a company providing drilling services, violated the FLSA for misclassifying them as independent contractors so that they wouldn’t have to provide overtime compensation. 

The workers argued that they were, in fact, employees as they were required to work specific hours and days of work, follow Premier’s supervision and guidance, use Premier’s tools, be paid a flat rate per day regardless of hours worked, and were not allowed to be employed by other employers. 

The court decided to favor the workers, as they were considered to be employees under the FLSA. The workers were awarded a cumulative total of $363,422, $181,711 in compensation, and $181,711 in liquidated damages.

Key lessons from this case:
  • The term “employee” can be broad and may include those who are under an employer’s control and direction. It is important to know your rights as an employee if that is the case.
  • Misclassified employees are fully entitled to any unpaid overtime wages (and other damages) that have been neglected by the employer.
  • The line can be blurry between being an independent contractor or an employee. Thus, it is important to familiarize yourself with the contract and clarify your entitlement beforehand.

3. Former Consultant for Oil and Gas Company Wrongfully Assumes Overtime Entitlement

In the case of Faludi v. U.S. Shale Solutions, LLC., filed in 2020, Jeff Faludi, a consultant who formerly worked for U.S Shale Solutions (an oil and gas company), claimed that he was entitled to overtime pay for all hours that he had worked exceeding the 40-hour weekly minimum. 

Faludi was given a fixed monthly pay, regardless of how many hours he put in. That said, he could set his own time and work from anywhere he wanted to. It was clarified in the case that Faludi was not subjected to the same level of supervision, guidance, or control that other U.S. Shale Solutions employees were.

With all that considered, the Fifth Circuit court decided that Faludi was an independent contractor and was not entitled to overtime.

Key lessons from this case:
  • Overtime pay applies to employees only. Those identified as “independent contractors” are excluded from receiving overtime.
  • Employers who hire independent contractors must ensure that their contract clearly states the worker’s employment status.

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.