Employers may find it difficult to navigate the complexities of wage legislation, especially in states like Texas where overtime compensation is governed by federal regulations and there is no state minimum wage. Employers must be aware of Texas’ minimum wage regulations in order to maintain compliance with labor laws and promote just and equitable working conditions.
This comprehensive reference offers a detailed review of the Texas minimum wage law, together with its exclusions and special provisions, to assure compliance in this area and to shield your company from potential legal ramifications. To keep you informed and guarantee fair labor practices at work, we will also look at other pay rules in The Lone Star State.
- US Minimum Wage Tiers: Federal, State, and Municipal Laws
- Current Texas Minimum Wage Rates
- Texas Minimum Wage Exemptions
- Compliance and Enforcement
- Additional Texas Wage Laws
- How to Ensure Compliance with Texas Wage Laws
- The Role of Technology in Texas Wage Law Compliance
- How Factorial Can Help You Comply With Texas Wage Laws
- FAQ About Texas Minimum Wage
- Integrate payroll with your HR software ✅
US Minimum Wage Tiers: Federal, State, and Municipal Laws
The minimum wage in the US is determined by a convoluted method. This is so that each state can establish its own minimum wage as long as it is greater than the federal minimum wage, even though the federal government establishes a baseline minimum wage in accordance with the Fair Labor Standards Act (FLSA). This means that there are varying minimum wages in different sections of the country.
State minimum wage regulations frequently consider regional variations, economic situations, and the cost of living. Because they understand that workers must be paid enough to cover local living expenses, several states have set minimum wages higher than the federal minimum wage. In order to reflect the particular economic conditions of their local communities, several localities within states also have minimum wage laws of their own. This intricate set of regulations is intended to ensure that American workers receive fair compensation while accounting for the unique expenses and difficulties that each region presents.
Texas minimum wage regulations must be understood and adhered to by employers, but they should also think about how raising the minimum pay may affect their capacity to draw in and keep talent. This is significant because workers are increasingly searching for jobs who will pay them enough to live on while the cost of living keeps rising. Employers can increase their company’s appeal to workers and cultivate a devoted and robust workforce by proactively boosting the minimum wage.
Current Texas Minimum Wage Rates
The minimum wage that a non-exempt worker in the state of Texas is legally entitled to receive per hour is currently $7.25. The federal minimum wage is comparable to this amount.
Texas has not raised its state minimum wage since 2009, when it was raised $0.70 from $6.55 to $7.25. Texas is one of the states that has not enacted legislation to raise the minimum wage from the federal base of $7.25, despite the fact that 23 states in the US are getting hikes in 2025. Nonetheless, a few Texas localities have made an effort to raise base salaries locally. This includes Houston, which has pledged to raise the minimum wage to $15 per hour by 2025 (in accordance with the Raise the Wage Act of 2021), and Austin, which will pay $21.63 per hour for the fiscal year 2024–2025. It’s crucial to remember that Texas municipalities that have higher wage rates only give these higher wages to state employees. With a few exceptions, the usual federal wage ($7.25) is paid to all other employees.
The fact that Texas has two distinct minimum wage rates—one for tipped employees and one for non-tipped employees—should also be noted. Non-tipped workers must receive at least $7.25 per hour from their employers. In addition to tips, they have to pay tipped workers at least $2.13 per hour in cash. For tipped employees, employers are able to claim a tip credit of up to $5.12 per hour. This implies that when cash pay and tips are added together, tipped workers must earn at least $7.25 per hour.
The aforementioned Texas minimum wage rates do not apply in a number of situations. See the following section for more details.
Texas Minimum Wage Exemptions
The Texas minimum wage law has a number of exemptions, just like the majority of state minimum wage statutes. Employers are permitted to pay some employee categories less than the minimum wage under these exemptions.
The following are exceptions to the Texas minimum wage law:
- Federal employees. The Texas minimum wage statute does not apply to federal employers covered by the FLSA.
- employees of small businesses. As long as they are not categorized as “high-volume retailers,” employers with less than 25 workers are free from the Texas minimum wage law. A retail company that generates more than $2 million in gross yearly sales is considered a high-volume store.
- workers in agriculture. Employers who work largely in agriculture are not subject to the minimum wage requirement in Texas. Employees who work on farms or for companies that process or sell agricultural products are both covered by this exemption.
employees of domestic services. The Texas minimum wage legislation does not apply to employers who hire domestic service providers, such as nannies and housekeepers. - Students. The Texas minimum wage statute does not apply to employers who hire students as long as the students are engaged in an official vocational education program.
- trainee employees. As long as the trainees have signed up for an established training program, employers are exempt from the Texas minimum wage statute.
Employers may be permitted to pay their workers less than the Texas minimum wage in a number of additional circumstances in addition to these particular exemptions. For instance, if an employee is under 16 or disabled, their employer may pay them less than the minimum wage.
Compliance and Enforcement
Texas’s minimum wage law, which is now $7.25 per hour, must be followed by employers. This implies that non-exempt workers must receive at least $7.25 per hour from their employers. In addition to tips, tipped workers must be paid at least $2.13 per hour in cash.
The state’s minimum wage statute is enforced by the Texas Workforce Commission (TWC). Workers have the option to complain to the TWC if they think their employer is underpaying them. When the TWC receives a complaint about minimum wage violations, it looks into the issue thoroughly. The TWC will take appropriate action against the employer if the investigation finds non-compliance. This may involve compelling the employer to pay back wages to impacted employees, imposing liquidated damages as compensation for breaking the law, and potentially initiating legal action in severe circumstances.
Additionally, workers are entitled to sue their employer in state court. The employee may be entitled to liquidated damages, back pay, and legal fees if they prevail. In order to guarantee adherence to the Texas minimum wage statute, the court may also mandate that the company modify its payroll procedures.
Additional Texas Wage Laws
The Lone Star State has a number of pay regulations that firms must follow in addition to the minimum wage. These laws address a number of topics related to worker rights, working conditions, and compensation.
Here is a summary of other wage laws in Texas that employers should be aware of. Employers can guarantee equitable treatment of their staff, shield themselves from lawsuits, and preserve a favorable reputation in the workplace by being aware of and abiding by these rules.
Overtime Pay
Overtime pay requirements are not expressly required by the Texas minimum wage statute. Nonetheless, Texas workers are subject to the federal Fair Labor Standards Act (FLSA), which sets forth particular guidelines for overtime compensation. Employers are required under the FLSA to pay workers 1.5 times their regular hourly rate for any hours above 40 in a workweek. The majority of Texas’s non-exempt workers are subject to this overtime pay mandate, which guarantees them extra money for putting in more hours.
The FLSA’s overtime pay regulations are essential for safeguarding Texas workers’ rights and guaranteeing just remuneration for their labor.
Equal Pay
The goal of Texas legislation is to protect workers from discrimination on the basis of protected characteristics in order to create a fair and equal workplace. Employers are specifically prohibited from paying workers differently on the basis of their sex, race, color, religion, national origin, or disability.
This regulation complies with the Equal Pay Act of 1963, a federal law that forbids gender-based wage discrimination. According to the Act, businesses must provide equal compensation for equal effort (pay parity) to men and women who do the same jobs under comparable working conditions. This historic law has been essential to the advancement of pay transparency and gender equality in the workplace.
Learn about the most significant employment regulations in Texas by reading this article.
Employees have the right to file a complaint if they believe their employer has discriminated against them. Such claims may be looked at by the U.S. Equal Employment Opportunity Commission (EEOC) and the Texas Equal Employment Opportunity Commission (TEOC). These organizations are essential to maintaining the values of equal opportunity and safeguarding workers’ rights.
Meal and Rest Breaks
Although food and rest breaks are not required by Texas law for non-exempt workers, many firms opt to offer them as part of their collective bargaining agreements with unions or as a matter of policy. Employees can take advantage of these pauses to eat, relax, and refuel. They also serve as protections for their productivity, safety, and well-being.
Usually lasting at least half an hour, meal breaks must to be provided without compensation. This gives workers adequate time to take a break from their work and eat a healthy lunch. Contrarily, rest periods are brief, usually lasting no more than fifteen minutes. They ought to offer short rest intervals throughout a long workday.
Numerous factors can affect how frequently and how long these gaps occur. Employer policies, industry standards, and the nature of the work are all included in this.
Payment of Wages
Lastly, Texas law requires employers to pay their workers at least twice a month on certain paydays that the employer designates. The Texas Labor Code’s Section 61.011 mandates that these payouts take place on a regular basis. The first and fifteenth of every month are the default paycheck dates if an employer does not specify them.
Wages must be paid by employers on schedule and in full. Penalties, such as back wages, liquidated damages, and legal fees, may follow noncompliance. Workers can complain to the Texas Workforce Commission (TWC) if they feel their employer has not paid them in full or on time. The TWC is empowered to look into complaints and take appropriate legal action against law-breaking employers.
Maintaining a fair and legal workplace requires making sure that wages are paid on time and accurately. Texas wage rules are something that employers should become aware with. They should also have policies in place to guarantee compliance, safeguarding their company’s interests as well as the rights of their workers.
How to Ensure Compliance with Texas Wage Laws
By adopting proactive measures to assure compliance, employers can prevent wage infractions. Employers can avoid legal repercussions and preserve their company’s reputation for moral labor practices by doing this.
In particular, by adhering to these best practices, firms can continue to comply with Texas wage laws:
- being aware of the minimum wage and other wage regulations in Texas. Employers need to be fully aware of the minimum wage rates that apply to their sector as well as any applicable exemptions.
- accurate documentation. Keep thorough records of the hours, wages, and pay rates of your employees. These documents are necessary to answer FDOL questions and confirm compliance.
- prompt payment. Make sure you accurately and promptly pay your staff, including overtime compensation, commissions, and incentives.
- Education of employees. Employees should be made aware of their rights under Texas wage legislation.
The Role of Technology in Texas Wage Law Compliance
Employers can comply with pay laws more easily and efficiently thanks in large part to technology. Specifically, payroll software can offer a number of advantages:
- computations that are automated. Remove manual computations and lower the possibility of human error to guarantee correct wage disbursements and adherence to minimum wage regulations.
- centralized administration of data. Keep a consolidated database of payroll information for employees so that records can be easily retrieved for audits or investigations.
- monitoring of compliance in real time. Keep an eye on payroll procedures in real time to spot possible compliance problems and act quickly to address them.
- Updates on regulations. To guarantee continued compliance, keep up with modifications to wage laws and regulations and update payroll systems automatically.
- less work for the administration. Reduce administrative workloads and free up time for other activities by automating payroll procedures.
How Factorial Can Help You Comply with Texas Wage Laws
For employers, navigating the nuances of Texas wage rules can be a difficult undertaking. Payroll management in compliance with Texas wage legislation regulations can be facilitated using Factorial, a complete payroll software.
By automating computations, Factorial, for instance, streamlines payroll processing and guarantees that your employees receive accurate and on-time payments, including overtime compensation. Additionally, the software manages pay increases, guaranteeing that your staff members get their updated compensation on time and correctly.
Additionally, Factorial simplifies the process of creating your payroll reports and tax forms during tax season by removing the need for manual computations and lowering the possibility of mistakes. Additionally, the software informs you on the most recent changes to Texas’ labor and pay laws.
Factorial assists you in efficiently managing Texas state holidays in addition to conventional payroll administration. It guarantees that your workers are paid appropriately for their vacation time at the conclusion of each pay cycle and computes holiday pay with accuracy. This tool helps you maintain a great employee experience while removing the possibility of underpayment.
Last but not least, Factorial’s strong payroll security safeguards protect the private payroll information of your business. Sensitive employee data is protected by using industry-standard encryption technologies and access restrictions to stop unwanted access.
All things considered, Factorial is a useful tool that helps Texas firms handle payroll effectively, adhere to wage regulations, and safeguard sensitive information. Factorial enables you to concentrate on your main business while adhering to Texas minimum wage regulations by expediting payroll procedures and offering smooth QuickBooks connection.
FAQ About Texas Minimum Wage
1. What is the minimum wage in the United States?
The Fair Labor Standards Act (FLSA) established the federal minimum wage as part of the US minimum wage system, while each state is free to determine its own minimum pay.
2. Are states allowed to determine their own minimum wage?
As long as their minimum pay is greater than the federal minimum wage, states are free to establish their own.
3. What causes the disparities in minimum salaries across the United States?
The cost of living, the state of the economy, and geographical considerations all affect state minimum salaries.
4. How long has the minimum wage in Texas existed?
Texas passed its first minimum wage law in 1961, and it has since made a number of adjustments, frequently in line with changes at the federal level. A measure that would raise it progressively to $15 per hour by 2025 was passed in 2022.
5. What is Texas’s minimum wage right now?
The Texas minimum pay for non-exempt workers is $7.25 per hour as of 2024, which is the same as the federal minimum wage.
6. What intentions do you have regarding the minimum wage in Texas?
Texas intends to raise the minimum wage every year until it hits $15 per hour in 2026.
7. Do tipped and non-tipped employees in Texas pay different rates?
Indeed, tipped employees must earn at least $2.13 per hour in cash pay plus tips, while non-tipped employees must receive at least $7.25 per hour.
8. What are the Texas minimum wage law’s exclusions?
Federal employees, small enterprises with less than 25 workers, domestic service workers, agricultural laborers, trainee workers, and students are all exempt.
9. Who is responsible for enforcing Texas’ minimum wage law?
The minimum wage law in the state is enforced by the Texas Workforce Commission (TWC).
10. What other Texas wage regulations are applicable?
In terms of overtime compensation and gender-based pay discrimination, Texas complies with federal legislation such as the Equal Pay Act and the Fair Labor Standards Act. Schedules for wage payments and food and rest breaks are governed by state laws.
11. How can companies be sure that Texas wage regulations are being followed?
By being aware of the law, maintaining correct records, paying workers on schedule, and informing them of their rights, employers can stay in compliance.
12. How does technology help ensure that Texas wage standards are followed?
Payroll software is one example of technology that centralizes data, automates computations, tracks compliance in real time, and keeps up with regulatory changes.
13. How may Factorial assist in complying with Texas wage law?
Factorial helps firms comply with Texas wage rules by streamlining payroll processes, handling state holidays, creating tax forms, and protecting data.
