Texas Labor Laws 2025: Wages, Overtime, Breaks & Compliance Guide

State minimum wage: $7.25 per hour for covered, non-exempt employees (tied to federal FLSA minimum).

Local preemption: Texas law prohibits cities and counties from imposing higher minimum wages for private-sector employers. Only the state or federal government can set minimum wage rates.

Youth minimum wage: Federal law allows employers to pay $4.25/hour to employees under 20 years old during their first 90 consecutive calendar days of employment.

Coverage requirements: Employers must be covered under FLSA, which applies to businesses with $500,000+ in annual gross volume or engaged in interstate commerce.

Highest rate applies: When federal and state laws differ, the law that provides greater benefit to employees applies.

Government contracts: Federal contractors must pay the prevailing wage rate as determined by the Department of Labor, which may be higher than minimum wage.

No training wage: Texas does not have a separate training wage beyond the federal youth wage provision.

Texas Wage and Hour – Texas Workforce Commission

Tipped cash wage: $2.13 per hour direct cash wage for tipped employees who regularly receive more than $30 per month in tips.

Tip credit: Employers may take a tip credit of up to $5.12 per hour (difference between $7.25 and $2.13) to meet minimum wage requirements.

Make-whole requirement: If tips + cash wage do not reach $7.25/hour calculated on a workweek basis, employers must make up the difference.

Tip ownership: All tips belong to employees. Employers cannot retain any portion of tips, except for valid tip pooling arrangements.

Tip pooling: Permitted among customarily tipped employees (servers, bartenders, bussers). Managers and supervisors cannot participate in tip pools or keep any portion of tips.

Service charges: Mandatory service charges added to bills are not considered tips and must be treated as employer revenue unless distributed to employees as wages.

Notice requirement: Employers must inform tipped employees about the tip credit system and maintain accurate records of tips received.

Dual jobs: If a tipped employee performs non-tipped work for substantial time, the tip credit may not apply to those hours.

Wage and Hour Information – TWC

Overtime rate: 1.5× the regular rate of pay for all hours worked over 40 in a workweek for non-exempt employees.

Workweek definition: A fixed, regularly recurring period of 168 hours (seven consecutive 24-hour periods). Can begin on any day and time as designated by employer.

Regular rate calculation: Includes hourly wages, salaries, commissions, non-discretionary bonuses, and shift differentials. Excludes discretionary bonuses, gifts, reimbursements, and certain other payments.

No daily overtime: Texas/federal law does not require daily overtime pay. Only weekly hours over 40 trigger overtime requirements.

No double-time requirement: No requirement for double-time pay on holidays, weekends, or any other circumstances unless specified by employer policy.

Exempt classifications: Executive, administrative, professional, computer employees, outside sales, and highly compensated employees may be exempt if they meet salary and duties tests.

Salary threshold (2025): Generally $844 per week ($43,888 annually) for most exempt classifications. Some exemptions have different thresholds.

Recordkeeping: Employers must maintain accurate records of hours worked, wages paid, and overtime calculations for at least 3 years.

Fair Labor Standards Act – U.S. Department of Labor

No state requirement: Texas law does not require employers to provide meal periods or rest breaks to employees age 18 or older.

Federal break guidelines: Short breaks of 5-20 minutes are generally considered compensable work time and must be paid.

Meal periods: Bona fide meal periods of 30 minutes or more where employees are completely relieved of duties may be unpaid.

"Completely relieved" standard: Employees must be free from all work duties and able to leave the work area. If required to remain on-call or perform any work, the time is paid.

Nursing mothers: Federal law requires reasonable break time and a private space (not a bathroom) for expressing breast milk for up to one year following childbirth.

Break policy enforcement: If employers provide breaks, they must apply policies consistently and cannot discriminate in break allowances.

Written policies: Employers should document break policies clearly in employee handbooks to avoid disputes and ensure consistent application.

Breaks and Meal Periods – U.S. DOL

Vacation leave: Not required by state law. If offered, terms follow employer policy or employment contract. Texas allows "use-it-or-lose-it" policies if clearly stated and lawfully applied.

Paid sick leave: No statewide requirement for private employers. Some public employers and federal contractors may have different requirements.

Holiday pay: Not required by state law. Holiday work is treated as regular hours unless employer policy provides premium pay.

Family Medical Leave Act (FMLA): Employers with 50+ employees must provide up to 12 weeks unpaid, job-protected leave (26 weeks for military caregiver) to eligible employees annually.

FMLA eligibility: Employee must have worked 1,250+ hours in past 12 months and work at location with 50+ employees within 75 miles.

FMLA qualifying reasons: Birth/adoption, serious health condition, military family leave, or qualifying exigency for military families.

Jury duty: Employers cannot discharge employees for jury service but are not required to pay wages during service.

Voting leave: No state requirement for paid time off to vote. Employers should allow reasonable time if polls are not accessible outside work hours.

Military leave: Protected under federal USERRA. Employees must be reemployed after military service with accrued seniority and benefits.

Final vacation payout: Required only if employer policy specifically provides for payout upon termination. Otherwise, "use-it-or-lose-it" is permissible.

Family and Medical Leave Act – U.S. DOL

Under 14: Employment generally prohibited except for limited exceptions: casual yard work, newspaper delivery, work for parent's non-hazardous business, entertainment with proper permits, school-supervised work programs.

Ages 14-15 (Texas limits): Maximum 8 hours per day and 48 hours per week; cannot work before 5 AM or after 10 PM on school nights; no later than midnight on non-school nights.

Ages 14-15 (Federal limits - apply when stricter): Outside school hours only; maximum 3 hours on school days, 18 hours in school weeks; 8 hours on non-school days, 40 hours in non-school weeks; 7 AM-7 PM (9 PM June 1-Labor Day).

Ages 16-17: Fewer hour restrictions but cannot work in hazardous occupations designated by federal law until age 18.

Prohibited occupations (all minors under 18): Manufacturing, mining, logging, power-driven machinery operation, roofing, excavation, certain driving jobs, meat processing, and other hazardous work.

Work permits: Not required by Texas law, but employers must verify age with acceptable documentation before hiring minors.

Break requirements for minors: Texas does not mandate breaks specifically for minors, though federal guidelines recommend breaks for younger workers.

Employer verification: Must maintain proof of age (birth certificate, driver's license, or other acceptable document) for all employees under 18.

Penalties: Violations can result in fines up to $10,000 per minor per violation. More severe for hazardous work violations.

Reporting: Parents or employees can file child labor complaints with Texas Workforce Commission online or by phone.

Child Labor – Texas Workforce Commission

YouthRules! – U.S. Department of Labor

Pay frequency: Employers must pay employees at least twice per month (semi-monthly) for most positions. Exempt employees may be paid monthly.

Designated paydays: Employers must designate paydays and pay employees on or before the designated date. Paydays should be posted or included in written policies.

Final paycheck: Must be paid by the next regularly scheduled payday following separation, regardless of whether termination was voluntary or involuntary.

Vacation/PTO payout: Required only if employer policy specifically provides for payout. Texas allows forfeiture policies if clearly documented.

Payment methods: Wages must be delivered at workplace, by registered mail, or via direct deposit with employee consent.

Pay statements required: Employers must provide itemized earnings statements showing: employee name, pay rate, total pay, deductions and purposes, net pay, and pay period dates.

Electronic statements: Permitted only if employees have reasonable ability to print or save the records.

Allowed deductions: Federal/state taxes, court-ordered garnishments, employee-authorized deductions (insurance, retirement), wage advances, and legally required deductions.

Written authorization required: Deductions for cash shortages, breakage, uniforms, equipment, or other business expenses require specific written authorization and cannot reduce wages below minimum wage.

Wage garnishment limits: Lesser of 25% of disposable earnings or amount exceeding 30× federal minimum wage per week ($217.50 in 2025).

Recordkeeping: Must maintain payroll records for at least 3 years including employee information, hours worked, wages paid, and all deductions.

Filing wage claims: Employees can file claims with Texas Workforce Commission within 180 days of when wages were due.

Texas Payday Law – TWC

At-will employment: Either party may terminate employment at any time for any lawful reason or no reason, unless modified by contract, collective bargaining agreement, or specific statute.

Federal anti-discrimination: Title VII, ADA, ADEA, and other federal laws prohibit discrimination based on race, color, religion, sex (including pregnancy, sexual orientation, gender identity), national origin, age (40+), disability, and genetic information.

Texas Commission on Human Rights Act (TCHRA): State law prohibits same bases as federal law, applies to employers with 15+ employees (age discrimination applies at 20+ employees).

Retaliation prohibited: Cannot take adverse action against employees for reporting discrimination, filing workers' comp claims, serving on jury duty, reporting safety violations, or engaging in other protected activities.

Background checks: Must comply with Fair Credit Reporting Act (FCRA). Requires written authorization, pre-adverse action notice, and adverse action notice if taking action based on report.

Criminal history: No state "ban the box" law for private employers. Some federal contractors and specific industries have restrictions.

Credit reports: No state restrictions on employment credit checks, but FCRA compliance required.

Drug testing: Permitted for applicants and employees. Should have clear written policy and apply consistently. Some limitations for certain substances.

Wrongful termination: Termination illegal if based on protected characteristics, in retaliation for protected activity, in violation of public policy, or breach of implied contract.

WARN Act: Federal law requires 60 days notice for mass layoffs (50+ employees) or plant closures affecting 50+ employees at single site.

Documentation: Maintain consistent policies, document performance issues, preserve evidence of business decisions, and apply rules uniformly.

Employment Discrimination – TWC

Optional coverage: Texas is the only state where private employers can choose whether to carry workers' compensation insurance. About 60% of Texas employers maintain coverage.

Government contract exception: Private employers contracting with government entities must provide workers' compensation coverage for employees working on those projects.

Subscribers vs. non-subscribers: "Subscribers" carry workers' comp insurance and receive immunity from most employee lawsuits. "Non-subscribers" don't carry coverage and can be sued for workplace injuries.

Benefits of coverage: Medical care, income benefits (temporary and permanent disability), death benefits, and burial expenses for work-related injuries.

Income benefits types: Temporary income benefits (TIBs), impairment income benefits (IIBs), supplemental income benefits (SIBs), lifetime income benefits (LIBs), and death benefits.

Benefit amounts: Generally 70% of average weekly wage for income benefits. Maximum weekly benefit changes annually (approximately $1,231 in 2025).

Coverage options: Purchase from licensed insurance companies, self-insure (if meet financial requirements), or join certified self-insurance group.

Non-subscriber requirements: Must file annual Form DWC-005 with Division of Workers' Compensation, post Notice 6 (in English, Spanish, and other appropriate languages), and provide written notice to new hires.

Employee reporting: Employees have 30 days to notify employer of work injury and one year to file formal claim.

Employer reporting: Subscribers must report injuries causing more than one day lost time to insurance carrier within 8 days. Non-subscribers report same to DWC.

Dispute resolution: Administered by Division of Workers' Compensation. Includes benefit review conferences, contested case hearings, and appeals to district court.

Average costs: Texas employers pay approximately $0.55 per $100 of covered wages (varies significantly by industry and safety record).

Workers' Compensation for Employers – Texas Department of Insurance

Workers' Compensation for Employees – TDI

Administering agency: Texas Workforce Commission (TWC) manages the state unemployment compensation program in partnership with U.S. Department of Labor.

Employer requirements: Register with TWC, file quarterly wage reports, pay unemployment taxes, respond to claims within 14 days, maintain records for 4+ years.

Tax rates (2025): New employers pay 2.7% on first $9,000 per employee. Experienced employers pay 0.23% to 6.23% based on benefit charge history.

Employee eligibility: Must have worked at least two quarters during base period, earned minimum wages, be unemployed through no fault of own, able and available for work, actively seeking employment.

Base period: First four of the last five completed calendar quarters before filing claim. Alternate base period available if don't qualify.

Benefit amounts: Approximately 50% of wages during highest paid quarter of base period. Minimum $73/week, maximum $600/week (2025).

Benefit duration: Up to 26 weeks of benefits. May be extended during periods of high unemployment through federal programs.

Disqualifications: Fired for misconduct, quit without good cause connected to work, refused suitable work, involved in labor dispute.

Work search requirements: Must make minimum three work search contacts per week and register for work. Document all job search activities.

Filing claims: File online at unemployment.texas.gov or by phone. Must file weekly claims to continue receiving benefits.

Employer protests: Employers have 14 days from claim notice to protest and provide separation information. Failure to respond may result in benefit charges.

Appeals process: Can appeal determinations to Appeal Tribunal within 14 days, then to Commission, and finally to state court if necessary.

Unemployment Benefits – Texas Workforce Commission

File Unemployment Claim Online

Texas Commission on Human Rights Act (TCHRA): Prohibits employment discrimination based on race, color, disability, religion, sex, national origin, age (40+), or genetic information.

Employer coverage: Applies to employers with 15+ employees (20+ for age discrimination). Smaller employers may still be covered under federal law.

Sexual harassment: Considered sex discrimination. Includes quid pro quo and hostile work environment. Employers liable for supervisor harassment.

Filing discrimination complaints: File with TWC Civil Rights Division within 180 days of discrimination (300 days for sexual harassment/sex discrimination).

Federal complaints: Can also file with Equal Employment Opportunity Commission (EEOC) within 300 days. Dual filing common.

Workplace safety: Private employers covered by federal OSHA. Must provide safe workplace, maintain injury/illness logs (if 11+ employees), report serious incidents.

Whistleblower protection: Texas Whistleblower Act protects public employees. Private employees protected under various federal laws for reporting specific violations.

Retaliation prohibited: Cannot retaliate against employees for filing discrimination charges, workers' comp claims, safety complaints, or participating in investigations.

Right to organize: National Labor Relations Act protects private employees' rights to organize, join unions, and engage in collective bargaining.

Reasonable accommodations: Employers must provide reasonable accommodations for disabilities and religious practices unless it causes undue hardship.

Equal pay: Federal Equal Pay Act and Title VII require equal pay for equal work regardless of sex. Pay differentials must be based on legitimate factors.

Pregnancy discrimination: Pregnant employees entitled to same treatment as other employees with similar ability/inability to work.

Employment Law – Texas Workforce Commission

U.S. Equal Employment Opportunity Commission