Texas Employer HR Compliance Guide

Priority Compliance Actions

• 1Send annual Earned Income Tax Credit notification to all employees by March 1 each year using TWC-approved methods.
• 2Audit job postings for any remote or multi-state roles and apply the pay transparency requirements of the applicable state (e.g., Colorado, California, New York).
• 3Review independent contractor agreements to ensure classification is defensible under both Texas common law and federal economic reality standards, especially for gig or freelance workers.
• 4Ensure non-compete agreements include adequate consideration, are tied to a legitimate business interest, and contain reasonable limitations on duration and geography to be enforceable under the Texas Covenants Not to Compete Act.
• 5Establish a compliant final pay policy: document procedures to issue final paychecks within 6 days of involuntary termination to avoid TWC wage claims.

Leave Laws

Federal FMLA applies to Texas employers with 50+ employees, providing up to 12 weeks of unpaid, job-protected leave. Texas has no state-mandated paid sick leave law — Austin and San Antonio passed local sick leave ordinances, but both were enjoined by courts and are currently unenforceable. There is no state family or parental leave law beyond federal requirements. Texas does require employers to provide unpaid leave for jury duty and certain military obligations.

Wage & Hour

Texas follows federal FLSA overtime rules — time-and-a-half for hours over 40 per week with no daily overtime requirement. The state tip credit mirrors the federal rate, allowing a tipped minimum wage of $2.13/hour provided tips bring total pay to at least $7.25/hour. Final paychecks for terminated employees are due within 6 days of discharge; for employees who resign, the next regular payday applies. Texas requires wages to be paid at least twice monthly (semi-monthly), and there is no state law mandating business expense reimbursement beyond federal FLSA minimum wage implications.

Worker Classification

Texas is an at-will employment state, allowing termination by either party for any lawful reason without notice. Texas applies a common law right-to-control test for independent contractor classification, though federal agencies (IRS, DOL) may apply different standards such as the economic reality test. Non-compete agreements are enforceable in Texas under the Covenants Not to Compete Act if ancillary to an otherwise enforceable agreement, supported by adequate consideration, and reasonable in scope, geography, and duration.

Hiring & Onboarding

Texas has no statewide ban-the-box law for private employers, though some cities like Austin have adopted local restrictions for municipal hiring. There is no state salary history ban, so employers may lawfully ask about prior compensation. Texas does not impose unusual state-level background check restrictions beyond federal Fair Credit Reporting Act (FCRA) requirements. New hire reporting is required within 20 days to the Texas Workforce Commission. Drug testing is permitted but not generally mandated; employers in safety-sensitive industries should maintain written policies.

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