Overtime Pay and Overtime Exemptions in Texas

Posted by Employer Flexible on February 24, 2020
Employer Flexible

As an employer in Texas, it is important that you understand overtime pay and overtime exemptions. If you fail to properly pay your employees, you could be violating federal law and state law. You may face fines and may have to pay your employees what they were legally owed plus penalties and interest. Unfortunately, not every employer fully understands overtime pay and overtime exemptions in the state of Texas, and the laws regarding exemptions recently changed at the start of 2020. Here is more information about overtime pay and overtime exemptions in Texas. 

What is Overtime Pay in Texas? 

In the state of Texas, any hourly workers or non-exempted workers who work over 40 hours in a designated work week are entitled to overtime pay. Overtime pay must equal at least 1.5 times the employees normally hourly rate. For example, if any employee is earns $10.00 per hour, you would need to pay them at least $15.00 per hour for every hour they work over 40 hours in a work week. A work week does not have to be Sunday through Saturday. As an employer, you can set up any work week period that works best for you, Such as Monday through Sunday, but it has to be known by the employees and adhered to. You cannot change it from pay period to pay period to avoid overtime pay. 

Who Qualifies For Overtime Exemptions in Texas? 

In the state of Texas, salaried employees are exempt from overtime. However, one of the major changes in this exemption that started in January 2020 is that a salaried employee must earn at least $684, up from $455, per week, in order to be exempt from overtime pay. The Department of Labor classifies who is an exempt employee and what types of professions are exempt. Some of the types of employees who are exempt include teachers, flight attendants and pilots, executives and those who are in commission-based positions. However, job title alone is not the only factor that is looked at when determining if someone is exempt or not. The Department of Labor has certain classifications and guidelines that have to be met for an employee to be exempt. 

Can An Employer Offer Comp Time in Lieu Of Money? 

A common misconception about overtime pay is that you, as the employer, can offer your employees comp time in lieu of actual cash for overtime. The government is allowed to offer employees who accept it up to 240 hours of comp time at a rate of 1.5 comp hours per hour of overtime worked. However, private businesses are not allowed to offer comp time in lieu of money. As an employer, you may make a decision to offer your employees one comp hour per hour worked, plus time and a half for overtime if you are desperate or need help badly. However, you must always pay at least an hour and a half of wages for overtime paid, and not straight comp time to be compliant with Texas state overtime laws. 

It is important that you fully understand overtime pay and overtime exemptions. Here at Employer Flexible, we are a PEO company who can help you streamline your human resources needs, including handling payroll for your company. If you are looking to learn more about overtime pay and exemptions, or you just want help processing your payroll, we can help. Reach out to us today to learn more. 

Topics: compliance, Human Resources