The Texas Payday Law has been a part of the state's labor code for many years. Its formal name is the Texas Payment of Wages Act, initially passed in 1993.
The law sets up basic requirements for private employers when paying their employees. Employers can be penalized and forced to pay their workers if they violate the Texas Payday Law. An employer who willfully refuses to pay a worker can even be charged with a felony. Let's take a closer look at the rights and obligations of employers and employees under the Texas Payday Law.
Employer Obligations Under the Texas Payday Law
The Texas Payday Law requires employers to designate paydays each month and post that information in a visible location in the workplace. If there are no designated paydays, it is assumed that paydays will fall on the 1st and 15th of each month.
Key Employer Responsibilities:
- Frequency of Payment:
- Exempt employees must be paid at least once a month.
- Non-exempt employees must be paid twice a month.
- Independent contractors and public employees are exempt from these requirements.
- Final Paychecks:
- If an employee quits, they must be paid in full by the next scheduled payday.
- If an employee is terminated, employers have up to six days to issue the final paycheck.
- Payment Methods:
- Employers must pay workers via direct deposit, check, or cash, unless the employee agrees in writing to another method. Employers can mandate direct deposit, but they must provide at least 60 days' notice.
- Record-Keeping:
- Employers are required to maintain accurate records of pay and withholdings.
- Employers are required to maintain accurate records of pay and withholdings.
Employee Rights Under the Texas Payday Law
Texas employees have the right to be paid their wages on their designated paydays. If an employer misses a payday, they must pay the worker their wages in full by the next business day. If payment is not made by the next business day, the employer is in violation of the Act.
It is a violation of Texas wage law for an employer to withhold a worker's pay. Texas employee rights allow a worker to sue the employer in court or to pursue an administrative claim with the Texas Workforce Commission (TWC) under the Act.
An employee has up to 180 days from their most recent payday to file a claim under the Act. Seeking an administrative claim under the TWC is often much faster than relying on the courts, although employees have the right to sue before they have exhausted their administrative options.
The TWC will investigate the worker's claim and issue a preliminary wage order. Both sides then have 21 days to contest the order. If no party contests the ruling, the employer has 30 days to pay the employee's wages directly to the TWC, which then disburses the wages to them.
Enforcement and Penalties for Non-Compliance
The TWC has jurisdiction over Texas wage payment compliance. The state legislature has given the commission some powerful tools to enforce the Texas payday law when employers don't comply with it. For example, if an employer acts in bad faith by not paying wages, the TWC can impose an administrative fine against them on top of forcing the employer to pay the wages. The fine can be up to $1,000 or the amount of money the employee is owed -- whichever amount is lower.
If an employer does not pay unpaid wages after receiving a wage order from the TWC, the commission can file a lien or bank levy against them. After that, the violation gets bumped up to a third-degree felony. If an employer repeatedly fails to pay their employees, the Texas Attorney General's office will eventually step in and seek injunctive relief.
Best Practices for Staying Compliant with Texas Payday Law
Non-compliance with Texas payroll laws can lead to serious consequences, including hefty fines and criminal charges. Employers can avoid these risks by adopting the following best practices:
- Conduct Regular Payroll Audits: Ensure you’re paying employees accurately and on time.
- Create Transparent Wage Policies: Make sure employees understand when and how they’ll be paid.
- Automate Payroll Compliance: Consider partnering with a payroll service provider to automate compliance with Texas and federal wage laws.
Understanding Your Obligations and Protecting Your Rights
The Texas Payday Law is mainly about protecting the rights of workers in the state. Employers are obligated to pay employees the full amount of wages that they are owed and to pay them on time. Workers can seek administrative or court relief if their pay is withheld. Employers have the right to contest claims from employees if they believe a claim is frivolous or inaccurate.
Need help ensuring your payroll complies with the Texas Payday Law? Contact Affiliated HR & Payroll for tailored solutions that keep your business on track and compliant.