Texas Employment Law Basics for Small Businesses
Running a small business in Katy comes with plenty of rewards, but it also means wearing multiple hats. Between managing operations, serving customers, and growing your company, employment law compliance might not top your daily priority list. Yet knowing Texas employment law basics is one of the most important things you can do to protect yourself and your company. One wrong move in hiring, paying, or terminating an employee can result in expensive lawsuits, government penalties, and damage to your business reputation that takes years to repair.
Texas has a reputation for being business-friendly, and in many ways, it is. The state follows the at-will employment doctrine, doesn’t require most private employers to carry workers’ compensation insurance, and generally imposes fewer regulations than many other states. But don’t let that fool you into thinking you can run your business without knowing the rules. Federal laws still apply to Texas employers, and the state has its own requirements that catch many business owners off guard. From the Texas Payday Law’s strict payment deadlines to recent changes in sexual harassment protections, there’s more to know than you might think. Whether you’re hiring your first employee or managing a growing team, getting these basics right from the start will save you headaches, money, and sleep down the road. This article breaks down what every Katy small business owner needs to know about Texas employment law in straightforward terms you can actually use.
TL;DR
- Texas follows at-will employment, meaning you can terminate employees for any lawful reason, but numerous federal and state exceptions protect workers from discrimination, retaliation, and wrongful discharge.
- The Texas Payday Law requires paying non-exempt employees at least twice monthly and exempt employees at least once monthly, with strict final paycheck deadlines.
- While workers’ compensation insurance is optional for most Texas private employers, not having it exposes your business to direct employee lawsuits without standard legal defenses.
- Recent Texas law changes expand sexual harassment protections to all employers (even those with just one employee) and require immediate corrective action when harassment is reported.
- Proper employee classification, accurate recordkeeping, and required workplace posters are non-negotiable compliance requirements that protect your business from penalties and claims.
What Does At-Will Employment Really Mean for Your Texas Business?
At-will employment is the foundation of Texas labor relations, but it’s also one of the most misunderstood concepts. Simply put, at-will employment means that either you or your employee can end the working relationship at any time, for any reason, or for no reason at all, without advance notice. Texas has followed this doctrine since 1888, and it remains the default rule unless you have a specific contract or agreement stating otherwise.
For small business owners, this sounds like total freedom. Need to let someone go? Just do it. But here’s where many get into trouble. At-will doesn’t mean you can fire someone for any reason whatsoever. It means you can fire them for any lawful reason. The difference is huge. You absolutely cannot terminate an employee because of their race, gender, age, religion, disability, national origin, or other protected characteristics. You can’t fire them for refusing to do something illegal. You can’t retaliate against them for filing a workers’ compensation claim or reporting workplace safety violations.
Think of at-will employment like driving. You’ve got the freedom to drive wherever you want, but you still have to follow traffic laws. You still need to stop at red lights. At-will employment gives you flexibility in managing your workforce, but within the boundaries of federal and state employment laws.
Here’s something that surprises many business owners. Even verbal promises can alter at-will employment. If you tell an employee during the interview that they’ll have a job “as long as they do good work,” you might’ve just created an implied contract that limits your ability to terminate them. Employee handbooks can also modify at-will status if they contain language suggesting employees can only be fired for cause or after progressive discipline. That’s why I usually recommend including a clear at-will disclaimer in your handbook and having new employees sign acknowledgment forms.
When Can’t You Terminate an Employee in Texas?
The exceptions to at-will employment are where most small businesses get tripped up. Both federal and Texas state laws carve out significant protections for employees, and violating these can result in lawsuits, government investigations, and five-figure settlements.
Federal law prohibits terminating employees based on protected characteristics. Title VII of the Civil Rights Act of 1964 makes it illegal to discriminate based on race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), or national origin. The Age Discrimination in Employment Act protects workers 40 and older. The Americans with Disabilities Act shields qualified individuals with disabilities. The Genetic Information Nondiscrimination Act prevents using genetic information in employment decisions. These federal laws generally apply to employers with 15 or more employees, though the age discrimination law kicks in at 20 employees.
Texas has its own anti-discrimination law called the Texas Commission on Human Rights Act. The TCHRA mirrors federal protections and covers race, color, religion, sex, national origin, age, disability, and genetic information. Like federal law, it traditionally applied to employers with 15 or more employees. But here’s an important 2021 change you need to know about. For sexual harassment claims, the TCHRA now applies to all Texas employers, even if you have just one employee. This means even the smallest Katy business can face state law sexual harassment claims.
The TCHRA also prohibits retaliation against employees who oppose discriminatory practices or participate in investigations. If an employee complains about harassment and you fire them shortly after, you’re likely facing a retaliation claim even if the original harassment complaint had no merit.
Texas recognizes one narrow common law exception to at-will employment, established in the Sabine Pilot case. You cannot fire an employee solely because they refused to perform an illegal act that would expose them to criminal penalties. For example, if you ask an employee to falsify tax documents and they refuse, firing them for that refusal violates the Sabine Pilot exception. However, this protection is quite limited. It doesn’t protect private-sector whistleblowers who report illegal activity (though public employees have separate whistleblower protections).
Other statutory exceptions protect employees called to jury duty, military members called to active duty during emergencies, workers who file workers’ compensation claims, and employees who report workplace safety violations to OSHA.
How Often Must You Pay Your Employees Under Texas Law?
The Texas Payday Law governs when and how you must compensate your workers, and it’s stricter than many business owners realize. Get this wrong, and you’re facing wage claims with the Texas Workforce Commission, potential penalties, and even requirements to post surety bonds.
Payment frequency depends on whether your employees are exempt or non-exempt under the Fair Labor Standards Act. Non-exempt employees (those entitled to overtime) must be paid at least twice per month. Exempt employees (salaried workers not eligible for overtime) must be paid at least once per month. Each pay period for bi-monthly payments should contain roughly equal numbers of days.
You need to designate specific paydays and communicate them to your employees. Many employers choose the 1st and 15th of each month, or every other Friday. If you don’t designate paydays, Texas law automatically makes them the 1st and 15th. Once you set paydays, wages must be paid in full on those dates. If an employee doesn’t receive their paycheck on payday for any reason (including if they’re absent that day), you must pay them on another business day at their request.
Final paychecks have their own strict deadlines. If you terminate or discharge an employee, their final wages are due within six calendar days after their last day of work. If an employee quits or resigns, final wages are due on the next regularly scheduled payday. Note that if an employee gives notice they’re leaving, you’re not required to let them work through the notice period or pay them for time they don’t actually work.
What about commissions and bonuses? These are due according to whatever agreement you have with the employee. If you don’t have a written agreement specifying when commissions or bonuses are paid, they must be paid in a timely manner just like regular wages.
Deductions from paychecks are another area where employers often stumble. You can only deduct from wages if a court orders it (like child support), state or federal law authorizes it (like tax withholding), or the employee authorizes it in writing for a lawful purpose. You cannot automatically deduct the cost of uniforms, cash register shortages, or damaged equipment unless the employee has signed a specific written authorization. Even then, some deductions may not be permissible under federal law.
If an employee still has company property when they leave, you generally cannot withhold their final paycheck unless you have written authorization from the employee or a court orders it. You’ll need to pursue other legal remedies to recover your property.
The Texas Workforce Commission takes Payday Law violations seriously. Employees can file wage claims up to 180 days after wages were due. If the TWC determines you owe wages, you could face administrative penalties on top of the wages owed. Repeated violations can result in requirements to post expensive surety bonds.
What Are the Minimum Wage and Overtime Requirements in Texas?
Texas follows the federal minimum wage, which is currently $7.25 per hour. Unlike some states, Texas hasn’t enacted a higher state minimum wage. While some Texas cities have discussed local minimum wage ordinances for certain industries, these haven’t been widely implemented. For now, you need to ensure all non-exempt employees earn at least the federal minimum.
There are limited exceptions to minimum wage requirements. Tipped employees can be paid a base rate of $2.13 per hour if their tips bring their total hourly earnings to at least $7.25. If tips fall short, you must make up the difference. Full-time students working in retail or service establishments may be paid 85% of minimum wage under certain circumstances, with a certificate from the Department of Labor. Some workers with disabilities may be paid less under special certificates.
Overtime is governed by the Fair Labor Standards Act, not state law. Non-exempt employees must receive overtime pay at one and a half times their regular rate for all hours worked beyond 40 in a workweek. Notice it’s 40 hours in a workweek, not 8 hours in a day. Texas doesn’t require daily overtime as some states do. Working weekends or holidays doesn’t automatically trigger overtime unless it pushes the employee over 40 hours for the week.
The key question is often whether an employee is exempt from overtime requirements. To be exempt, employees generally must meet both a salary basis test and a duties test. As of late 2024, the federal salary threshold for most exemptions is $684 per week ($35,568 annually), though this has been subject to legal challenges and changes. Common exemptions include executive, administrative, professional, outside sales, and certain computer employees.
Many small business owners incorrectly assume that paying someone a salary automatically makes them exempt from overtime. It doesn’t. A receptionist paid $40,000 per year is still entitled to overtime if they work more than 40 hours in a week because they don’t meet the duties test for an exemption. Getting classifications wrong exposes you to back pay claims, liquidated damages, and attorneys’ fees.
When calculating overtime rates, you need to include more than just base hourly pay. Non-discretionary bonuses, shift differentials, and certain other payments must be factored into the regular rate used to calculate overtime. This is one area where even well-meaning employers often miscalculate.
Workplace Discrimination Protections in Texas
Texas small businesses need to know both federal and state anti-discrimination laws. As I mentioned earlier, the Texas Commission on Human Rights Act is the state equivalent of federal civil rights protections, and it applies to employers with 15 or more employees for most types of discrimination claims.
Protected classes under Texas law include race, color, religion, sex (including pregnancy), national origin, age (40 and older), disability, and genetic information. Sex discrimination includes sexual harassment, which creates hostile work environments or involves quid pro quo situations where employment benefits are conditioned on sexual favors.
The 2021 amendments to the TCHRA made significant changes to sexual harassment protections. First, all Texas employers, regardless of size, can now face state law sexual harassment claims. Even if you’re a solo entrepreneur with one part-time employee, the TCHRA applies to sexual harassment issues. Second, the amendments extend the deadline to file sexual harassment claims from 180 days to 300 days after the alleged harassment occurred. Third, and perhaps most importantly, employers must now take “immediate and appropriate corrective action” when they know or should have known that sexual harassment was occurring.
What does “immediate” mean? The statute doesn’t define it, but it sets a higher bar than the previous requirement for “prompt” action. When you receive a harassment complaint, you need to act fast. Investigate promptly, take interim measures to separate the parties if needed, and implement corrective action as soon as your investigation warrants it. Delaying for weeks while you figure out what to do is likely not “immediate.”
The amendments also clarify that individual supervisors and managers can be held personally liable if they have actual or constructive knowledge of sexual harassment and fail to act. This means your managers could be named as defendants alongside your company. It’s another reason why training supervisors on recognizing and responding to harassment complaints isn’t optional.
The Texas Workforce Commission Civil Rights Division handles discrimination complaints under the TCHRA. Employees must file a charge with the TWC before they can sue in court. This administrative exhaustion requirement gives you an opportunity to resolve complaints before they become lawsuits. The TWC investigates charges, attempts mediation, and issues right-to-sue letters if cases aren’t resolved administratively.
Remember that federal anti-discrimination laws also apply if you have enough employees to meet the thresholds. The Equal Employment Opportunity Commission handles federal charges. Because the TWC is a deferral agency, charges are often dual-filed with both agencies simultaneously.
Preventing discrimination claims starts with clear policies prohibiting discrimination and harassment, multiple reporting channels for complaints, prompt investigations, and appropriate discipline when violations occur. Document everything. Many discrimination cases come down to whose version of events the jury believes, and contemporaneous documentation of performance issues, policy violations, and disciplinary actions is often the difference between winning and losing.
Is Workers’ Compensation Insurance Required for Your Texas Business?
Here’s where Texas really stands out. Most states mandate workers’ compensation insurance, but Texas doesn’t for most private employers. You’ve got a choice. You can subscribe to the workers’ compensation system by purchasing insurance, or you can be a “non-subscriber” and go without coverage.
However, there are exceptions. If you contract with government entities (city, county, state, or federal agencies), you must provide workers’ compensation coverage for employees working on those projects. This requirement often extends to subcontractors as well. If you’re bidding on government work, expect to show proof of coverage.
Being a non-subscriber sounds cost-effective, but it comes with serious risks. Without workers’ compensation insurance, injured employees can sue you directly in civil court for work-related injuries. And here’s the catch. Non-subscriber employers lose most of the common law defenses that would normally be available in injury lawsuits. You generally can’t argue that the employee was negligent or assumed the risk of the job. Your legal defenses are severely limited.
One workplace injury lawsuit can devastate a small business. Medical bills for serious injuries easily run into six figures. Lost wages add up. Pain and suffering damages can be substantial. Jury verdicts against non-subscriber employers often exceed what the injured worker would’ve received through workers’ compensation.
If you choose to be a non-subscriber, you’ve got legal obligations. You must file a notice with the Division of Workers’ Compensation each year reporting your non-coverage status. You must post notices in English and Spanish (and other languages if applicable) in conspicuous locations informing employees that they’re not covered by workers’ compensation. You must provide written notice to new employees at hiring. Failing to meet these notice requirements can result in penalties.
Many small businesses find that carrying workers’ compensation insurance makes financial sense despite the premiums. The coverage provides a predictable cost structure and legal protection. Injured employees receive medical care and wage replacement benefits through the insurance system, and except in rare cases involving gross negligence leading to death, they can’t sue you. The insurance company also provides legal defense if claims are contested.
Workers’ compensation rates vary based on your industry, payroll, and claims history. Office workers have lower rates than construction workers. Your experience modification rate affects your premiums once your policy reaches certain size thresholds. Implementing strong safety programs can help keep your rates down and, more importantly, keep your employees safe.
What Workplace Posters and Notices Do You Need to Display?
Both federal and Texas law require employers to display certain posters and notices where employees can see them. These aren’t suggestions. They’re legal requirements, and failing to comply can result in fines during government audits or investigations.
Federal poster requirements apply to virtually all employers. You need to display the Fair Labor Standards Act poster explaining minimum wage and overtime rights. The Occupational Safety and Health Administration poster informs employees about workplace safety rights. The Equal Employment Opportunity Commission poster covers discrimination protections. Additional federal posters cover family and medical leave (if you have 50 or more employees), polygraph testing restrictions, and employee rights under the National Labor Relations Act.
Texas has its own required posters. The Texas Payday Law poster informs employees about wage payment rights and how to file claims. The Texas Workers’ Compensation poster tells employees whether you carry coverage. If you don’t have coverage, you must post the Notice to Employees explaining their rights. A relatively new requirement, effective January 2024, mandates posting information about the Texas Department of Licensing and Regulation’s hotline for reporting workplace violence.
Some posters need to be in multiple languages. If you have Spanish-speaking employees or employees who speak other languages, you may need posters in those languages. The workplace violence hotline notice, for example, should be posted in English and Spanish.
Where should you post these notices? They need to be in conspicuous locations where employees can actually see them. Common locations include break rooms, near time clocks, in areas where paychecks are distributed, and in personnel offices. “Conspicuous” means visible and accessible. Putting them in a manager’s office where employees rarely go doesn’t cut it.
Poster requirements change when laws are updated. The Texas Workforce Commission and federal agencies update posters periodically. Using outdated versions can still get you cited for non-compliance. Many businesses purchase updated poster sets annually or subscribe to services that automatically provide new posters when required.
You can download many required posters free from government websites. The TWC provides Texas posters at no charge. The Department of Labor website offers federal posters. Some companies sell all-in-one poster sets that combine multiple notices on laminated sheets. While convenient, make sure any commercial posters include all required information and are current.
How Do You Properly Classify Workers as Employees or Independent Contractors?
Worker classification is a minefield for small businesses. Misclassifying employees as independent contractors can result in back taxes, penalties, unpaid overtime, benefit claims, and workers’ compensation issues. Yet many business owners don’t fully grasp the distinction or try to classify workers based on what’s financially convenient rather than what’s legally accurate.
The Texas Workforce Commission uses a “common law” test similar to the IRS approach when determining worker classification for unemployment and other purposes. The key issue is control. Who controls the manner and means of the work being performed? If you control when, where, and how the person works, they’re likely an employee. If the worker has independence in deciding how to accomplish the work, they may be an independent contractor.
Factors pointing toward employee status include working set hours at your location, using your equipment and supplies, receiving training from you, being supervised by your managers, having their work integrated into your business operations, and having an ongoing relationship rather than project-based work. Factors suggesting independent contractor status include working for multiple clients, setting their own schedules, using their own tools, having skills you don’t typically train for, marketing their services to others, and the opportunity for profit or loss based on their business decisions.
Here’s what doesn’t determine classification. You can’t make someone an independent contractor just by calling them one or having them sign an agreement saying they’re a contractor. The actual working relationship controls, not labels. Paying someone by the project instead of hourly doesn’t automatically make them a contractor. Neither does issuing a 1099 instead of a W-2.
Why does this matter? Misclassified workers may be entitled to minimum wage, overtime, unemployment benefits, and workers’ compensation coverage they weren’t receiving. You could owe back employment taxes that should’ve been withheld. The IRS, TWC, and Department of Labor all investigate classification issues, and their penalties can be severe.
The TWC issued updated guidance on worker classification in 2025, emphasizing that misclassification harms workers and creates unfair competition for compliant businesses. Enforcement has increased, particularly in industries with high rates of misclassification like construction, trucking, and home healthcare.
When in doubt, err on the side of treating workers as employees. Yes, it costs more in taxes and benefits, but it’s far cheaper than the consequences of getting it wrong. If you’ve got workers whose classification seems unclear, get advice from an employment attorney who can evaluate your specific situation.
What Records Must You Keep and For How Long?
Texas law and federal regulations impose recordkeeping requirements that protect both you and your employees. Maintaining accurate, complete records is your best defense if disputes arise about pay, hours worked, or employment actions.
Under the Texas Payday Law, you must keep payroll records for at least three years. These records should include each employee’s name, address, Social Security number, rate of pay, amount paid each pay period, dates of payment, and hours worked by non-exempt employees. For exempt employees, document their salary basis and duties that justify their exempt status.
The Fair Labor Standards Act requires keeping records of hours worked, wages paid, deductions, and overtime for at least three years. Time cards, schedules, and records showing daily and weekly hours worked by non-exempt employees need to be kept for at least two years.
Personnel files should contain hiring documents (applications, resumes, background checks if applicable), performance evaluations, disciplinary records, promotion and pay change documentation, training records, and termination paperwork. Keep these for at least four years after employment ends to cover the statute of limitations for most employment claims.
Some documents have longer retention requirements. Equal Employment Opportunity Commission regulations require keeping hiring records, including applications from candidates you didn’t hire, for one year. If you receive an EEOC charge, you must preserve all relevant records until the charge is resolved. I-9 forms verifying employment eligibility must be kept for three years after hiring or one year after termination, whichever is later.
Medical information must be kept confidential in separate files from general personnel records. This includes disability accommodation requests, FMLA certifications, workers’ compensation claims, and drug test results. These files have heightened privacy protections under various laws.
Good recordkeeping isn’t just about compliance. It’s about protecting your business. When an employee claims they worked 60 hours in a week but you only paid them for 40, accurate time records prove what actually happened. When someone claims they were fired for discriminatory reasons, documentation showing performance problems and policy violations demonstrates the legitimate basis for your decision.
Many small businesses don’t maintain adequate records until they face their first lawsuit or government audit. By then, it’s too late. Implement systems now for tracking hours, documenting performance issues, recording policy violations, and maintaining required forms. Whether you use payroll software, time clock systems, or paper records, consistency and accuracy are what matter.
Building Your Compliance Foundation
So what should a Katy small business owner actually do with all this information? Start with the fundamentals and build from there.
First, establish clear policies in writing. You need an employee handbook that covers at-will employment (with appropriate disclaimers), anti-discrimination and anti-harassment policies, complaint procedures, pay practices, attendance expectations, and workplace conduct rules. Have employees acknowledge in writing that they received the handbook. Update it periodically as laws change.
Second, train your managers and supervisors. They’re your first line of defense against employment claims. They need to recognize discrimination and harassment, document performance issues properly, follow disciplinary procedures consistently, and know when to escalate issues to human resources or legal counsel. A well-trained supervisor can prevent problems before they become lawsuits.
Third, document consistently. When you coach an employee about performance problems, note the conversation. When you discipline someone, create a written record. When you promote someone or give them a raise, document the reason. When you terminate someone, have clear documentation supporting your decision. Consistency is key. Treat similarly situated employees similarly.
Fourth, conduct periodic compliance audits. Review your pay practices to ensure you’re meeting minimum wage and overtime requirements. Check your worker classifications. Verify your posters are current. Make sure your recordkeeping is up to par. Look for potential discrimination or harassment issues before they explode into claims.
Fifth, know when to get help. Some employment situations are straightforward, but others have legal complexity that requires professional guidance. Drafting separation agreements, responding to EEOC charges, handling FMLA requests, determining whether an accommodation is reasonable, managing investigations, and defending against lawsuits all benefit from experienced legal counsel. Spending a few hundred dollars on legal advice before you act can save you tens of thousands in litigation costs later.
Texas employment law gives small businesses significant flexibility in managing their workforces, but that flexibility comes with responsibility. Knowing your obligations under federal and state law, treating employees fairly, maintaining accurate records, and getting help when you need it will keep your business compliant and reduce your legal risks. The investment in getting employment law right pays dividends in employee relations, productivity, and your own peace of mind.
Frequently Asked Questions
Q. Do I need an employee handbook for my small business in Texas?
A. Texas law doesn’t mandate employee handbooks, but having one is smart business practice. A well-drafted handbook establishes expectations, outlines policies, provides legal protections through at-will disclaimers and anti-discrimination policies, and gives you a documented foundation for disciplinary actions. Just make sure it’s reviewed by an attorney because poorly written handbooks can actually create unintended contractual obligations or contradict at-will employment.
Q. Can I require employees to give two weeks’ notice before quitting?
A. You can request it as a courtesy, and many employees voluntarily provide notice, but you can’t legally require it in an at-will employment relationship. Texas employees can quit at any time without notice. If you want to encourage notice, some employers offer to pay out unused vacation time only if proper notice is given, though this policy must be clearly stated in writing beforehand. However, you can’t withhold earned wages as punishment for failing to give notice.
Q. Am I required to provide breaks or meal periods to employees in Texas?
A. Texas law doesn’t require employers to provide breaks, meal periods, or rest periods for adult employees. However, if you choose to offer short breaks (usually 5-20 minutes), they must be paid time. Meal breaks of 30 minutes or longer can be unpaid if the employee is completely relieved of duties. Federal law requires breaks for nursing mothers to express breast milk. Some employees covered by union contracts may have negotiated break requirements.
Q. Does Texas require paid sick leave or vacation time?
A. No, Texas doesn’t mandate paid sick leave, vacation days, or other paid time off for private employers. These benefits are at your discretion. However, if you promise these benefits in a written policy or agreement, you must honor those promises. The Texas Payday Law treats earned vacation pay as wages that must be paid according to your written policy. Many employers provide these benefits to attract and retain quality employees, even though they’re not legally required.
Q. What should I do if an employee files a discrimination complaint?
A. Take it seriously and act quickly. Thank the employee for reporting, assure them retaliation is prohibited, and begin a prompt, thorough investigation. Interview the complainant, the accused party, and witnesses. Review relevant documents. Maintain confidentiality to the extent possible. Take interim measures if needed to separate parties during the investigation. Once you’ve gathered facts, make a determination and implement appropriate corrective action, which could range from additional training to termination, depending on findings. Document everything. Consider involving legal counsel, particularly for serious allegations.
Q. Can I fire an employee for any reason in Texas?
A. You can terminate employees for any lawful reason or no reason at all under at-will employment. However, you can’t fire someone for illegal reasons such as their protected class status (race, sex, age, religion, disability, etc.), retaliation for engaging in protected activities (filing discrimination complaints, workers’ comp claims, safety complaints), refusing to commit illegal acts, jury duty, military service, or other legally protected reasons. The safest approach is to have legitimate, documented business reasons for terminations.
Q. How long must I keep employee records in Texas?
A. The Texas Payday Law requires maintaining wage and hour records for at least three years. Federal FLSA regulations require three years for payroll records and two years for time cards and rate tables. Personnel records should be kept at least four years after employment ends. I-9 forms must be kept for three years from hiring or one year after termination, whichever is longer. When litigation is threatened or pending, preserve all potentially relevant records until the matter is fully resolved. Some attorneys recommend longer retention periods to be safe.
Q. Do I need workers’ compensation insurance for my Texas business?
A. Most Texas private employers aren’t required to carry workers’ compensation insurance. However, if you contract with government entities, you must have coverage for employees working on those projects. Even when not required, many businesses choose to carry workers’ comp because it limits liability and provides legal protection. Without coverage, injured employees can sue you directly with minimal legal defenses available to your business. Consider your industry risk level and potential exposure when deciding.
Q. What is the difference between exempt and non-exempt employees?
A. Non-exempt employees are entitled to minimum wage and overtime pay for hours over 40 per week. Exempt employees aren’t entitled to overtime. To be exempt, an employee generally must be paid on a salary basis meeting minimum thresholds (currently $684 per week or $35,568 annually) and perform duties meeting specific tests, such as executive, administrative, professional, outside sales, or certain computer work. Simply paying someone a salary doesn’t make them exempt. Both salary and duties tests must be met, and when in doubt, classify as non-exempt.
Q. Can I deduct damages or shortages from an employee’s paycheck?
A. Only with written authorization from the employee and only for lawful purposes. You can’t automatically deduct cash register shortages, damaged equipment, uniforms, or other business costs without the employee’s written consent. Even with authorization, some deductions may violate federal minimum wage requirements if they bring the employee’s pay below minimum wage. Court-ordered deductions (child support) and legally required deductions (taxes) are always allowed. Get written authorization before hiring, and ensure all deductions comply with federal and state wage laws.
Q. What are my obligations when an employee requests FMLA leave?
A. The Family and Medical Leave Act applies to employers with 50 or more employees and requires up to 12 weeks of unpaid, job-protected leave annually for qualifying reasons such as serious health conditions, birth or adoption of a child, or caring for ill family members. Employees must’ve worked for you at least 12 months and 1,250 hours in the previous year. When you receive an FMLA request, provide required notices, request medical certification, designate the leave as FMLA, maintain health insurance during leave, and return the employee to the same or equivalent position afterward. This is a complex law with strict notice and documentation requirements.
Q. Are non-compete agreements enforceable in Texas?
A. Generally, yes, but they must be reasonable. Texas recognizes non-compete agreements if they’re ancillary to an otherwise enforceable agreement (such as employment), contain reasonable limitations as to time, geographic area, and scope of activity, and don’t impose greater restraints than necessary to protect legitimate business interests like trade secrets or customer relationships. Agreements that are overly broad or attempt to prevent someone from earning a living are often struck down. Texas law regarding non-competes with physicians recently changed. If non-competes are important to your business, have an attorney draft them to ensure enforceability.
Your Partner in Employment Law Compliance
Let’s be honest. You didn’t start your business to become an employment law scholar. You started it to pursue your passion, serve customers, and build something meaningful. But somewhere between your vision and your daily reality, employment law showed up uninvited and made itself at home. Ignore it, and it’ll eventually bite you. Hard.
The challenge for Katy small business owners is that you’re already stretched thin. You’re managing operations, handling finances, dealing with vendors, attracting customers, and somehow trying to find time for strategy and growth. Adding “stay current on employment law changes” to your plate feels like one more thing you don’t have bandwidth for. Yet one misstep with hiring, paying, or firing an employee can undo years of hard work.
This is where having knowledgeable legal guidance makes a difference, not just when you’re facing a lawsuit or government investigation, though certainly then. But before problems arise. When you’re drafting your first employee handbook. When you’re unsure whether to classify a new worker as an employee or contractor, when an employee makes a complaint you’re not sure how to handle. When you’re considering terminating someone and want to make sure you’re doing it right. When you receive that EEOC charge, and need to respond strategically.
The Brewster Howard & Associates, PLLC understands the unique pressures facing small businesses in Katy and throughout Texas. We know you need practical, cost-effective guidance that solves problems without breaking the bank. We’re focused on prevention, helping you build strong employment practices that reduce your risk exposure. But when disputes arise, we also provide aggressive representation to protect your interests.
Whether you need help creating compliant policies, training your management team, conducting workplace investigations, negotiating separation agreements, responding to government agencies, or defending against employment claims, we bring both legal knowledge and business sense to every engagement. We explain complex laws in terms you can actually use, and we work efficiently because we respect that legal fees impact your bottom line.
Your business deserves to thrive without the constant worry of employment law violations lurking in the background. Investing in getting your employment practices right protects your assets, your reputation, and your peace of mind. More importantly, it allows you to focus on what you do best while knowing your legal foundation is solid.
Don’t wait until you’re facing a lawsuit or government audit to address employment law compliance. Reach out to discuss your specific situation and see how proper planning and proactive guidance can save you time, money, and stress. Your business has tremendous potential, and protecting it starts with getting the basics right.