As an employer in Texas, it is important to adhere to all labor laws to avoid fines and/or penalties. All settlements cut into a company’s profitability and can have a negative effect on morale. Some violations are significant enough to cause true damage to the health or safety of the employee, which is both unethical and illegal. While bottom-line results may cause an employer to take certain actions, labor law adherence is critical. Here are the most important Texas labor laws to be aware of to avoid the most common reasons for fines.
This article is for informational purposes only and does not contain or constitute tax or legal advice. You should not act on this information without seeking tax or legal professional counsel.
Paying Employee Final Wages
How quickly final wages must be paid is dependent on the nature of the separation. Involuntary terminations such as lay-offs or firing, requires final pay to be direct deposited or sent by certified mail within six calendar days after termination. Final pay is due on the next payday for those employees who quit or retire.
Employees who fail to turn in company issued property or required paperwork, still must be paid final wages. Furthermore, there is no requirement that Texas employers maintain employment for a staff who resigns. For example, if an employee gives a two-week notice, the employers can choose to terminate their employment rather than retain them for the full time.
Pay for time off benefits such as vacation, holiday or sick pay, may only be required to be paid if part of an employee agreement – there is no Texas State law requiring you to do so.
Minimum Wage Compliance
All states, including Texas have minimum wage laws that protect workers from earning less than a pre-set wage. The 2018 Texas minimum wage is $7.25 per hour, until overtime applies, then overtime rates and rules need to be adhered to. There are a few exceptions to this rule including tipped employees, student workers, or apprentices.
Employees must be paid for ALL hours worked, unless they are salaried (see also classification of employees), but don’t forget to ensure you apply correct OT rules to salary workers. Employees should not work while off the clock, whether per employer request or at the employee’s own volition.
Not Paying Overtime
…”a Minnesota sheetrock company was sentenced to two years in jail and a potential fine of $3.3 million for intentionally underpaying employee overtime and union pension and benefit contributions.” Source: Accounting Web
Failure to pay overtime is usually due to poor accounting of time (intentionally or unintentionally) and misclassification. And this type of error could haunt you. Employees can file overtime claim lawsuits for 2-3 years for willful violations and 180 days in other cases. These lawsuits can require employees to get compensated one-and-a-half times their wages, and potentially also legal fees.
The Importance of Labor Optimization
With all these regulations in place, it may seem difficult to run a profitable business. This is where labor optimization comes into place to maximize employee productivity and profit while also maintaining legal compliance.
Labor optimization allows employers to look at customer demand and properly schedule to maximize each customer engagement. It also takes into consideration how to maximize staffing to meet labor laws without unnecessarily overpaying employees.