Texas Overtime Laws: Everything Employers Need To Know
Take action: The previously announced increases to the minimum salary threshold for exempt employees have been canceled. This means the minimum salary for overtime exemptions reverts back to $684 per week, and the July 1, 2024 increase to $844 is nullified. The planned January 2025 increase is also canceled. If you already adjusted salaries to comply with the earlier changes, consult with legal counsel to discuss your options. Remember to stay informed about any further developments and ensure your payroll practices are in line with both federal and Texas overtime requirements.
Managing overtime is crucial to staying compliant with labor laws and ensuring your business operates smoothly. Like in many other states, overtime laws in Texas can be complex and challenging to navigate.
The importance of tracking employee hours accurately cannot be overstated. Time-tracking software, such as Timeero, can significantly prevent costly errors and ensure compliance with all relevant laws.
This article will provide a comprehensive understanding of Texas overtime laws and the problems employers face. It will also cover the crucial role of time-tracking software in addressing these issues.
Understanding Texas Overtime Laws
Operating a business in Texas requires you to know state and federal rules and regulations. These laws are designed to uphold workers’ rights and provide a fair and safe work environment.
It also applies to Texas overtime laws since breaking them can result in hefty penalties and legal issues. Employers in Texas are obligated to compensate non-exempt employees who work more than 40 hours in a single workweek.
This is according to the Fair Labor Standards Act (FLSA), a law regulating child labor, minimum wage, overtime compensation, and recordkeeping in Texas. The law also requires that every overtime hour be paid at least 1.5 times the employee’s regular pay rate.
Seven consecutive 24-hour periods constitute a workweek, per the U.S. Department of Labor. Stated otherwise, it is a 168-hour period that occurs regularly. It is important to note that a workweek does not need to align with a calendar week. Any day of the week can mark the start of a workweek.
In most cases, overtime earned during a workweek is paid on the usual payday for the pay period that the overtime was earned. When an employee works up to 40 hours and receives their regular hourly wage, it is referred to as straight time.
What about overtime pay for working on weekends?
In Texas, employers aren’t obligated to pay overtime to workers who work on weekends or holidays, nor are they required to observe any holidays. On the other hand, if an employee works overtime and their workweek falls on a weekend or holiday, you should compensate them adequately and pay for their overtime.
Nevertheless, many companies opt to offer employees who work on weekends and public holidays incentives. They do this by paying them more than the minimum wage required.
How Much Is Overtime Pay in Texas?
Overtime pay in Texas is typically 1.5 times the employee’s regular rate. To calculate overtime pay, multiply an employee’s standard hourly wage by 1.5. For example, if an employee’s regular hourly wage is $10, their overtime pay rate would be $15 per hour.
How Is Overtime Calculated in Texas?
You now understand Texas overtime laws, but your next question might be, ‘How is overtime calculated in Texas?’
Suppose your hourly employee puts in an hour of overtime, and their regular wage rate is $12.50 per hour. To compensate for the overtime, use this formula:
Hourly rate x 1.5 = overtime rate
$12.50 X 1.5 = $18.75
Therefore, you would have to pay them at least $18.75 for that hour. That said, you can pay your staff more than 1.5 times their regular hourly rate; this is just the minimum they are entitled to.
If the employee worked five overtime hours in a work week, their overtime pay will be as follows:
Overtime rate x overtime hours = overtime pay
$18.75 x 5 = $93.75
For salaried employees, determining their regular pay rate is the first step in calculating overtime pay. You can divide the worker’s weekly compensation by the hours worked throughout the week. Here is the formula:
Weekly pay ÷ 40 = regular rate
You can then calculate overtime pay the same way you would an hourly rate employee.
Texas does not limit the number of hours an employee can work in a single day to get overtime compensation, in contrast to certain other states.
The minimum overtime wage is $10.88 per hour, as the Texas minimum wage is $7.25 per hour, and overtime compensation is one-half times an employee’s regular hourly rate.
The Role of Time-Tracking Software
One of the keys to ensuring compliance with overtime laws is precise and efficient time tracking. Manually managing time records and overtime calculations can be a time-consuming task.
Time-tracking software offers the necessary tools to automate this process, ensuring accuracy.
Although QuickBooks Time and similar software have been available for a while, both past and current users have reported that the quality of their services has dropped. This has necessitated an improved solution. Timeero, an employee time tracking app, tops the list of all the alternatives to QuickBooks Time.
Timeero streamlines the time-tracking process, saving employers valuable time and reducing the administrative burden associated with overtime compliance. It guarantees that every minute worked is accounted for, reducing disputes and errors.
In addition to recording the time at clock-in or clock-out, the software also records employee locations when they punch in. Every punch automatically generates an entry into the timesheet. This ensures that the hours worked by your staff are always up-to-date.
Timeero’s GPS time clock periodically collects employees’ GPS traces once they clock in and updates them as they work. As soon as an employee clocks out, tracking ends.
Employers can also set a radius around a work location where workers must clock in and out using geofencing. To ensure your workers are held responsible for their whereabouts and hours spent on the job, the app will inform you if they clock in or out from anywhere outside the geofence.
Furthermore, with geofencing, employees will automatically get alerts to clock in or out upon arrival or departure from the job location.
If flagging is insufficient, Timeero allows you to block users who try to clock in before they are inside the geofence. An employee, therefore, cannot record overtime if they are outside the location they are supposed to be in.
This ensures that you have a precise record of their working hours and can pinpoint whether hours recorded as overtime were actually hours worked. It also prevents overbilling.
Accurate recordkeeping is the backbone of overtime compliance. It is essential to provide a clear and transparent account of employee work hours. With Timeero, you can easily capture essential information, including clock-in and clock-out times, break durations, overtime hours, and employee identification.
What’s more, the nature of this time-tracking software ensures that records are readily accessible for audits, dispute resolution, and employee transparency. Not only does Timeero streamline your time tracking and recording process, but it also makes payroll easy for you when compensating for overtime.
Timeero integrates several robust payroll software, including Zapier, Gusto, Xero, Paychex, ADP, Paylocity and QuickBooks. This feature makes payroll administration more effective by enabling users to export their timesheets easily.
You don’t have to waste time manually entering timesheet changes to accommodate overtime because they are synchronized with the accounting software.
Specific Overtime Features on Timeero
Timeero provides convenient features to help you ensure compliance with overtime laws in Texas.
First and foremost, it allows you to define an overtime threshold. This will alert managers, admins, and employees when users reach that hour. You can enable it under Company Settings in your account.
If you have employees who aren’t eligible for overtime, you can set a threshold where they will be automatically clocked out after reaching certain hours. The employee will then be clocked out at that hour, and a flag will appear on their timesheet.
Timeero has a premium feature called Multiple Overtime Rules that makes overtime handling a breeze. With Multiple Overtime Rules, you can customize the overtime restrictions for individuals or groups within a single Timeero account.
This configuration will enhance your reporting process if you have staff across many states or provinces. It allows you to set up rules such as overtime and pay rates in just a few seconds and add employees to them.
If your pay week does not run from Monday to Friday, you can customize this on the software. When you add new employees, they will automatically be assigned to the default payroll.
Another Timeero feature that ensures accurate overtime recording is “Split time at midnight.” Turning this feature on automatically triggers a new timesheet whenever a new work day begins.
Time tracking software records all working hours as Monday by default if a worker clocks in on Monday and then clocks out on Tuesday. However, when tracking time for users whose work spans many days, it would be best to have two timesheets to calculate overtime accurately.
Timeero’s “Split time at midnight” feature makes this possible when a user is clocked in for consecutive days. This means that in the example above, a separate timesheet for Monday and another one for Tuesday. Please note that if a user clocks in or out from a time zone different from the company time zone, their timesheets will be split in the user’s time zone.
Rules for Exempt and Non-Exempt Employees
There are various factors you might use to evaluate if your employees are eligible for overtime compensation. Employees are classified as exempt or non-exempt under the FLSA.
Non-exempt employees in Texas are not salaried; they are considered hourly workers and are entitled to at least the federal minimum wage. Categorizing employees correctly is crucial, as failing to compensate non-exempt employees adequately for their overtime work would be a violation of Texas overtime laws.
Exempt employees are not eligible for overtime pay. To qualify for this category, individuals must earn more than $684 per week ($35,568 annually) and execute one of the following FLSA overtime exemption duties.
Executive Employees
Executives manage two or more full-time employees or a comparable equivalent. So, if someone is in charge of one full-time and two half-time employees, their employment is considered an executive position.
Furthermore, executive employees should spend at most 20% of their time executing other activities, or 40% in retail. Their position must be salaried.
Administrative Employees
Administrative staff are responsible for non-manual office duties such as dealing with management policies or business operations. Administrative staff should not spend more than 20% of their time performing other duties or 40% of their time in retail work. Their position must also be salaried.
Professional Positions
An employee must have expert knowledge and considerable training in their industry to be deemed a professional and fall into this category.
Certified teachers, artists, and experienced IT specialists are some examples of professional workers. Professionals should not spend more than 20% of their time performing other activities and must have salaried positions.
Outside Sales Employees
This role refers to salespeople who make sales and work outside of their employer’s workplace. Their earnings usually are commission-based, but they cannot spend more than 20% of their time on tasks other than sales.
Employees in Texas who satisfy these requirements are not eligible for overtime compensation.
Thus, they are expected to complete their work regardless of the required time. They will not receive overtime compensation even if they work more than 40 hours weekly.
Further Considerations
Texas overtime regulations are complex, which means you should be aware of specific extra considerations. Exempt employees, for example, may still be entitled to overtime compensation under the following circumstances:
- Their pay is less than the FLSA minimum.
- They are a manager or assistant manager but do not have many managing responsibilities.
- They receive tips.
As a disclaimer, as per Texas state law, nurses are generally protected from being forced to work mandatory overtime in hospitals, except in declared state of emergency cases. Under normal circumstances, nurses can choose to work overtime but have the right to decline such requests.
It’s important to note that even independent contractors, temporary workers, and commissioned employees are entitled to overtime pay under Texas overtime laws. Additionally, Texas overtime law requires that employees are paid for the time spent putting on protective gear or uniforms, but only if it’s essential for performing their primary job duties.
For instance, if an employee’s role involves working in a chemical plant and cannot perform their duties without protective gear, the time spent putting it on and taking it off is considered part of their working hours and should be compensated.
However, this rule doesn’t apply to gear like hard helmets, boots, or earplugs, which are not integral to an employee’s principal activities.
It’s worth noting that neither Texas employment or labor laws nor federal laws mandate employers to provide meal or rest breaks. However, many employers choose to offer breaks voluntarily. They recognize the benefits of giving employees time off during the workday for improved productivity and well-being.
Overtime vs. Compensatory Time in Texas
In the state of Texas, public-sector employers are permitted to provide compensatory time to non-exempt employees instead of overtime compensation. This compensatory time is also referred to as paid time off.
It is worth noting that companies in the private sector cannot do this, which means that non-exempt workers must get payment in cash for any overtime they work.
In summary, you will violate Texas overtime laws if you are a small business owner and attempt to offer an employee compensatory time rather than pay them overtime wages.
However, the FLSA permits employers in the private sector to provide compensatory time to exempt workers; the decision to do so is entirely up to the employer.
Some workers would want to get paid time off in exchange for their overtime compensation. However, be careful to follow Texas overtime regulations and pay non-exempt workers in cash for overtime they put in to prevent future lawsuits and heavy fines.
Use Timeero to Stay Compliant With Texas Overtime Laws
Accurate records and compliance with labor and employment laws will protect your business from legal issues. It will also foster a positive work environment for your employees. It’s a win-win for everyone involved.
By using Timeero, you can simplify the time tracking and overtime calculation process. Implement the software to reduce errors and save valuable time and labor costs for your business. To learn more about it, read this comprehensive Timeero review.
Texas Overtime Law: FAQs
Is Overtime Pay Mandatory in Texas?
Texas labor laws require employers to compensate eligible employees for overtime work. Non-exempt employees must be paid at a rate of 1.5 times their regular rate of pay for every hour worked beyond 40 hours in a workweek or 8 hours in a workday.
Is Overtime After 8 Hours or 40 Hours in Texas?
In Texas, the standard practice for overtime pay is based on hours worked in a workweek. Overtime is due for hours worked beyond 40 in a single workweek. Texas does not have daily overtime regulations, unlike some states that require overtime pay after 8 hours of work in a single workday.
