Compliance Watch:

What are my rights as a salaried employee in Texas?

According to the Fair Labor Standards Act (FLSA), a federal statute set by the Department of Labor, a salaried employee is an individual who receives regular and predetermined compensation at the end of a weekly or other less frequent pay period. A salaried employee’s compensation does not fluctuate with changes in the quality or quantity of their work or the number of hours worked during the pay period.  

In Texas, salaried employees are either exempt or nonexempt. An employee’s classification under either of the two categories is based on the nature of their work, their eligibility for overtime, their compensation, and how they are paid.

Here are some important points to note about salaried employees according to Texas labor and employment laws:

• According to the Texas Workforce Commission, the FLSA regulates labor laws in the state.
• Minimum wage is set at the current federal minimum legal wage of $7.25 per hour as per Texas labor laws. It applies to all employees within the state except live-in domestic employees, inmates, employees who provide domestic services outside of their employer’s home, people employed by their family members, and employees of select recreational and amusement businesses. 
• All non-exempt employees are entitled to overtime pay at a rate of 1.5 times their regular hourly wage.
• All employers must keep accurate records of their employees’ hours and the corresponding wages.
• As per the FLSA, employers must offer equal pay to employees working in similar positions with the same duties, responsibilities, and skills and putting in the same level of effort.
• In Texas, employment is “at-will”. An employer can terminate an employee at any time as long as the reason for termination is legal and in the employer’s best interest. 
• Texas is a right-to-work state in which membership in a labor union is an inalienable employee right.
• Employers cannot make payroll deductions unless authorized by a court of law, state or federal laws, or by the employee in writing. 
• Employers must adhere to workplace safety guidelines as stipulated by the Occupational Safety and Health Administration (OSHA).

Yes, while most salaried employees in Texas are exempt from overtime pay, it is important to note that there are some exceptions as per the FLSA. Here are the three categories of exempt salaried employees and the specific circumstances under which they qualify for overtime pay in the state as per Texas overtime laws:

1. Executives: Executive employees who earn less than $844 weekly (or $43,888 a year) and have limited input in personnel matters are eligible for overtime pay. However, executive employees with advanced knowledge and extensive expertise and the authority to hire, fire, promote, and assign duties to other employees are exempt. Specifically, employees in managerial or executive positions are ineligible for overtime pay if they have direct influence over the management of the company, are in charge of two or more employees on a regular basis, and have the authority to fire or hire other employees. 
2. Professionals: Professionals are learned employees with expertise in their respective fields. They have advanced degrees in their fields or any other form of advanced education that puts them at a similar level of expertise as people with advanced degrees. They include lawyers, teachers, registered nurses, doctors, actuaries, engineers, and accountants. These professionals are exempt from overtime pay unless they do not require advanced education to carry out their duties, their duties require imagination or artistic talent, or they make less than $844 a week (or $43,888 a year).
3. Employees in Administrative Positions: Employees in administrative roles provide support to other employees in the organization. They are eligible for overtime pay if they earn less than $844 a week (or $43,888 a year), are not involved in the direct management of the organization, and do not exercise independent judgment over significant matters in the business.

Texas employers are bound by the provisions of the FLSA. They can deduct wages from salaried employees under the following circumstances:

• If an employee works less than 40 hours in their first or last week of employment, the employer is only required to pay for the actual hours worked.
• If an employee does not put in any work in a day, the employer is allowed to deduct the equivalent of a full day’s salary from the employee’s wages. However, employers cannot make partial deductions if an employee puts in any amount of work in a day.  
• When an employee takes unpaid leave under the FMLA, the employer can deduct the time off from the employee’s wages.
• If an employer has a bona fide paid leave program and an employee takes time off work before meeting the threshold for eligibility for the program or after exhausting their paid leave days, the employer can deduct a full or partial day’s wage from the employee’s pay.
• If an employee faces disciplinary suspension for a workplace code violation other than low-quality work or attendance, the employer can deduct an employee’s wages in accordance with a prior agreed upon and written disciplinary policy.
• An employer may deduct an employee’s full or partial day wage if the employee violates safety protocols relating to the prevention of serious danger to fellow employees or the business premises.
  

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

In addition to these exempt employees’ pay deductions under the FLSA, the state of Texas allows employers to make deductions from their employees’ wages under the following three circumstances:

• If ordered to do so by a court of law: Courts may require employers to make mandatory deductions for child support, alimony, and defaulted loans. 
• If authorized by the employee in writing: An employee can authorize their employer to make any lawful deductions including contributions to retirement savings or as repayment for loans advanced to them by the organization.
• If authorized by state or federal law: This includes deductions to meet obligations to the government such as taxes. 

It is important to note that an employer who has made improper pay deductions on an employee’s salary can rectify the error in the following three ways:

• Reimbursing the affected employee within a reasonable period.
• Establishing a policy to prevent improper deductions in the future.
• Committing to comply with the FLSA.

Some states have strict laws requiring employers to provide meal or rest breaks to their employees. However, in Texas, the employer is at liberty to decide whether to allow breaks during the workday or not. Even so, if an employer chooses to allow breaks, they must adhere to the Department of Labor’s guidelines as follows:

• Employees must receive compensation for meal or rest breaks that last up to 20 minutes.
• Uninterrupted breaks that last 30 minutes or more can be unpaid but the employee must be relieved of their duties entirely for the entire duration of the break.

Similarly, Texas labor laws do not require employees in the private sector to provide any paid or unpaid leave to employees. However, employers in the state are bound by the FMLA, which requires employers who have 50 or more employees to provide up to 12 weeks of unpaid leave to employees who:

• Have given birth, adopted a child or had a foster child placed in their care.
• Took care of a member of their immediate family who has been diagnosed with a serious condition.
• Has been diagnosed with a serious condition.

Employers are not required to compensate employees for these hours but they are under a legal obligation to guarantee temporary job security for employees on unpaid leave.

A flexible work arrangement is any work schedule that deviates from the traditional 40-hour week. Since Texas labor laws defer to the FLSA, which does not make provisions for flexible working arrangements, employees in the state are not bound to 9 to 5 work schedules. As such, an employee and their employer can come to an arrangement on a flexible work schedule. They can consider a compressed work week and allow employees to work for fewer days as long as they hit 40 hours every week. Similarly, they can consider flex-time, whereby employees are free to set their own schedule as long as they work for 40 hours every week.

Exempt status refers to ineligibility for overtime pay. An exempt employee is not entitled to overtime pay for working for more than forty hours a week. Since Texas follows the exemption categories set by the FLSA, an employee’s level of compensation, type of compensation, and the type of duties assigned to them determine whether they are exempt or non-exempt. 

An employee is considered exempt if they meet the following criteria:

• Level of Compensation: A salaried worker earning more than $844 per week or $43,888 annually qualifies for exempt status. The salary threshold for exempt status in Texas is lower for teachers, who should earn a minimum of $455 a week or $23,660 a year to qualify. It is important to note that although exempt salaried employees are not eligible for overtime pay, they can receive bonuses and stipends.
• Type of Compensation: In order for an employee to qualify as exempt, they must receive the same regular pay consistently within a set pay period. 
• Job Duties: The four categories of employees in Texas who qualify for exemption from overtime pay are executives or employees at the management level, administrators, learned professionals, and teachers who are employed in educational establishments within the state.

You can determine which category of employees you fall under in Texas by applying the following fundamental tests as established by the FLSA:

• The Salary Basis Test: An employee can only be exempt from overtime pay if they are paid on a salary basis. 
• The Salary Level Test: Employees who pass the salary basis test must earn at least $844 a week ($43,888 a year) to be exempt from overtime rules. 
• The Duties Test: Employees who pass the salary basis and salary level test must pass a third test based on their duties to be exempt from overtime rules. Executive employees are exempt from overtime laws if they are in charge of an organization or a division of an organization, are in charge of directing the work of at least two employees, and have the authority to hire, fire, or promote other employees. If you are in an administrative role and have passed the salary basis and level tests, you qualify for exemption if your duties include the direct management of your employer’s business or its customers and you exercise judgment in significant matters in the business. Similarly, a professional worker is exempt if their work is intellectual in nature and requires insight gained through advanced or specialized education.

The minimum wage in Texas is the federal minimum wage of $7.25 per hour. The rate has remained stagnant since it was last reviewed upwards from $6.55 in 2008. For salaried employees, the minimum weekly pay as set by the FLSA is $844 per week, which adds up to $17.1 per hour when divided by 40 hours.

All salaried employees who are not exempted from overtime should receive compensation for time worked above 40 hours in a single work week at a rate of 1.5 times their usual rate.

Download U.S. Minimum Wage 2024 Poster now.

The FLSA prohibits employers from making any deductions from their employees’ salaries. An employer can only make deductions from an employee’s salary under the following circumstances:

• If the deduction is required or authorized by state or federal laws.
• If a court of law orders the employer to effect a deduction on an employee’s salary.
• If an employee authorizes the employer in writing to deduct their salary for a legal reason.

In addition to these guidelines by the FLSA, Texas labor laws protect salaried employees from wage deductions as follows:

• An employer cannot recover previous wage overpayments from an employee’s current salary without written authorization.
• An employer cannot make partial-day wage deductions if an employee does not work for a full 8 hours a day.
• An employer cannot deduct the cost of uniforms and any other job-related supplies without written authorization from the employee. 

However, some deductions are permissible in some special circumstances as follows:

• If an employee does not put in any work in a day, the employer can deduct the equivalent of a full day’s salary from the employee’s wages. However, partial deductions are not allowed if an employee puts in any amount of work in a day.  
• If an employer has a bona fide paid leave program and an employee takes time off work before meeting the threshold for eligibility for the program or after exhausting their paid leave days, the employer can deduct a full or partial day’s wage from the employee’s pay.
• If an employee faces disciplinary suspension for a workplace code violation other than low-quality work or attendance, the employer can deduct an employee’s wages in accordance with a prior agreed upon and written disciplinary policy.
• Finally, an employer may deduct an employee’s full or partial day wage if the employee violates safety protocols relating to the prevention of serious danger to fellow employees or the business premises.

Texas laws offer various protections and benefits to employees including but not limited to:

• The Texas Labor Code protects all employees from discrimination based on race, color, nationality, religion, gender, sexual orientation, gender identity, pregnancy, disability, age, citizenship status, and genetic traits.
• Texas labor laws forbid employers from making unauthorized deductions from employees’ salaries.
• Employers are required to provide a safe working environment as per the guidelines of the Occupational Safety and Health Administration.
• The state of Texas protects employees who choose to join and participate in labor unions from threats, coercion, and intimidation by their employers.
• The Texas Labor Code protects employees from retaliation discrimination, allowing employees to file or participate in discrimination complaints without fear of adverse actions including termination, threats, promotion denial and unjustified surveillance.

Employers in Texas can violate state and federal labor laws through unlawful or unauthorized wage deductions, discrimination and prejudicial treatment, failure to provide a safe work environment, deliberately misclassifying employees to avoid paying overtime, and unpaid wages.

Employees in Texas can report wage-related labor law violations by submitting a wage claim to the Texas Workplace Commission  or filing a dispute directly with the Wage and Hour division of the Department of Labor. An employee in the state can raise a workplace safety concern by filling out an intake packet with the Office of Injured Employee Counsel.  

Finally, all charges of workplace discrimination are initiated by filing a discrimination charge with the U.S. Equal Employment Opportunity Commission.