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Helpful Hints about the Texas Payday Law

The Texas Payday Law, Chapter 61 of the Texas Labor Code, governs how workers are paid in Texas.  The law applies to all private employers, and is enforced by the Texas Workforce Commission.

Payment of Wages:

Wages must be paid at least twice per month to employees who are non-exempt under the Fair Labor Standards Act (i.e. those employees who are eligible for overtime pay).  Exempt-level employees must be paid at least once per month.

Deductions from Pay:

An employer can deduct money from an employee’s paycheck under very limited circumstances.  The law requires that certain deductions be made, such as withholding for taxes, or for court-ordered child support.  Otherwise deductions cannot be made without a written authorization signed by the employee.

For example, if the cost of uniforms is to be deducted from an employee’s wages, the employee needs to sign a specific written authorization.  Otherwise the deduction violates state law.

Even if the deduction is authorized, federal law requires that the employee be paid at least minimum wage for all hours worked.  If you have low-wage workers who are signing pay deduction authorizations for the cost of uniforms, tools, drug tests or anything else, put a system in place to make sure the deductions do not drop anyone’s paycheck below minimum wage.

Final Pay:

If an employee is fired or laid off, final payment must be made within six calendar days.  If an employee quits, final payment is to be made on the next regularly scheduled payday.

Employers sometimes try to use the final paycheck as a bargaining chip.  For example, an employer might refuse to release a final paycheck until the employee returns certain company property.  This is unlawful: payment has to be made within the time frames described above.

Commissions, Bonuses and Fringe Benefits:

The Payday Law requires employers to follow their own written policies and agreements regarding commissions, bonuses and fringe benefits (such as paid time off).

Since you probably do not want to give extra money to employees who have quit or have been fired, you should check the wording in your policies and agreements.

A good practice is to have a policy stating that accrued paid time off (which some employers refer to as vacation and/or sick pay), is not vested and will not be paid when employment ends.

The same idea applies to commissions and bonuses.  Commission and bonus policies should provide specific payment dates, and should state that commissions and bonuses are forfeited and will not be paid if the person is no longer employed by the company on the payment date.

For more information on the Texas Payday Law, go to the Texas Workforce Commission web site.

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