Texas HR Compliance: Complete Guide for Employers

When I started hiring employees in Texas, I assumed that because there is no state income tax, the regulatory environment must be minimal. That is mostly true, and the word "mostly" carries a lot of weight. This guide shows you what Texas employers actually need to know, so you can run a compliant Texas business without hiring a lawyer to read every statute.

Texas is genuinely one of the most employer-friendly states in the country. Still, a handful of Texas-specific requirements are easy to miss and expensive to get wrong, and one of them (SB 45 on sexual harassment) applies to every employer regardless of size.

You will see where Texas simply follows federal law, where it adds requirements of its own, and where it deliberately opts out of requirements that other states impose. FirstHR was built for exactly this kind of employer: a small business that needs to get compliance right without a dedicated HR department.

Why Texas Is Called an Employer-Friendly State, and What That Actually Means

Texas operates under strict at-will employment doctrine. Either party can end the employment relationship at any time, for any reason or no reason, without notice. Texas courts recognize only one judge-made exception: the Sabine Pilot doctrine, established in Sabine Pilot Service, Inc. v. Hauck (Tex. 1985), which prohibits firing an employee for refusing to perform an illegal act.

Elsewhere the list is longer. California recognizes all three of the common-law exceptions catalogued by the Bureau of Labor Statistics: public policy, implied contract, and the covenant of good faith. Most other states recognize at least the public policy exception.

Texas also does not recognize the implied covenant of good faith and fair dealing as an employment doctrine, and it reads implied contract claims (where handbook language creates enforceable promises) extremely narrowly. Narrow is not the same as never, which is why the at-will statement in your handbook matters so much: progressive discipline language that says the company "will" follow certain steps can create an implied contract.

Texas is also a right-to-work state, which means employees cannot be required to join a union or pay union dues as a condition of employment (Texas Labor Code §§ 101.052-053). The practical effect for most small businesses is minimal, because union membership in the Texas private sector is low.

No Texas WARN Act

Texas does not have its own version of the federal Worker Adjustment and Retraining Notification (WARN) Act. Only the federal law applies: employers with 100 or more full-time employees must give 60 days' advance written notice before a plant closing or mass layoff. If you have under 100 employees, no WARN notice is required at all.

That is a significant difference from New York (50 employees, 90 days) or California (75 employees, 60 days). The Texas Workforce Commission (TWC) maintains a registry of WARN notices filed by Texas employers.

Worker Classification: The TWC 20-Factor Test

The Texas Workforce Commission uses a 20-factor direction-and-control test to determine whether a worker is an employee or independent contractor, based on Texas Unemployment Compensation Act §201.041. The TWC presumes employment status, putting the burden of proof on the employer to establish independent contractor status.

The TWC is not bound by IRS safe harbor rules, so a worker classified as a contractor for federal tax purposes may still be considered an employee under Texas unemployment law. Since 2019, Texas also regulates "marketplace contractors" (gig workers for app-based platforms) under the Texas Administrative Code (40 T.A.C. §815.134(b)), which creates a separate classification framework for those workers.

Hiring and Onboarding: Required Documents and Reports

Texas requires fewer documents at hire than most states. There is no state income tax withholding form, because there is no state income tax, and Texas does not mandate pay transparency in job postings. The required documents are straightforward, but the workers' comp notice requirement catches many employers from other states by surprise.

New Hire Reporting: 20 Days to the OAG

All Texas employers, regardless of size, must report newly hired and rehired employees to the Office of the Attorney General (OAG) child support division within 20 calendar days of the hire date. An employer reporting electronically may instead file twice a month, 12 to 16 days apart, under 42 U.S.C. 653a.

Section 653a also sets seven items for the report: your company name, mailing address, and federal employer identification number (FEIN), plus the employee's name, address, Social Security number, and date of hire.

The penalty is small but it is real. That same federal section caps the state charge at $25 per unreported new hire, and at $500 where the failure came out of an agreement between employer and employee not to report (Texas Family Code Chapter 234). Report online through the OAG employer portal, and see the detail on new hire reporting.

E-Verify

E-Verify is not required for most private Texas employers. Texas Government Code §673.002 is the one statutory mandate, and it reaches only state agencies: each one must register and participate in E-Verify to check its new employees. No Texas statute extends that duty to private employers, though an individual state contract may impose it as a term.

A 2025 Senate bill (SB 324) would have extended the requirement to nearly every employer. It passed the Senate on April 30, 2025, then sat in the House State Affairs committee until the session ended, so E-Verify remains voluntary for most businesses.

Background Checks: No Statewide Ban-the-Box Rule

Texas has no statewide ban-the-box law, the kind of rule that keeps criminal history questions off the job application. A private Texas employer may still ask about criminal history on the initial application. HB 2466 would have barred the question at employers with 15 or more employees, but the bill never left its House subcommittee in the 2025 session and died with the 89th Legislature.

Federal law is the real constraint here. The Fair Credit Reporting Act (FCRA) applies in full when you run a background check through a consumer reporting agency.

The Federal Trade Commission sets out the sequence: a stand-alone written disclosure and written permission before the check, then a pre-adverse action notice with a copy of the report and the summary of rights, then a final adverse action notice naming the reporting company.

Drug Testing: No Restrictions

Texas does not regulate drug testing for private employers. You may conduct pre-employment, random, post-accident, and reasonable-suspicion testing without any state-law restriction. Best practice still calls for three things: a written drug-free workplace policy distributed to employees before testing, informed consent, and a certified laboratory. Unlike California and New York, Texas has no cannabis protection law for employees, so you may test for cannabis and take adverse action based on results.

Texas once required a written drug-abuse policy from employers with 15 or more employees that carried workers' comp coverage. That rule is gone. HB 7 repealed its statutory basis, Labor Code Chapter 411, Subchapter G, effective September 1, 2005, and the Division of Workers' Compensation repealed the rules themselves (28 TAC 169.1 and 169.2) in 2009.

Texas Child Labor Law: Employing Workers Under 18

Texas child labor law makes it illegal to employ a child under 14, with narrow exceptions for agriculture, entertainment, newspaper delivery, and a parent employing their own child in a non-hazardous job. At 16 and 17 there are no state limits on hours or times of day, although school attendance rules and local curfews still apply.

The 14 and 15 year old bracket is where employers get caught, because two sets of limits sit on top of each other. Texas Labor Code Chapter 51 sets a flat cap of 8 hours a day and 48 hours a week whatever the calendar says. The federal Fair Labor Standards Act (FLSA) varies its cap by whether school is in session.

Wages, Overtime, and the Texas Payday Law

Texas labor laws for hourly employees come from two places. The federal FLSA sets the wage floor, the overtime rule, and the exemption tests. The Texas Payday Law governs when and how you actually pay. Almost everything an employee is owed comes from the federal side; the state's own layer is about payment mechanics.

Minimum Wage

The Texas minimum wage is $7.25 per hour, set by the Texas Minimum Wage Act (Texas Labor Code Chapter 62) to match the federal floor. This rate has not changed since July 24, 2009.

Two lower rates are allowed. Tipped employees may be paid $2.13 per hour as a cash wage provided tips bring their total hourly compensation to at least $7.25. Workers under 20 years old may be paid $4.25 per hour during their first 90 consecutive days of employment (the federal youth minimum wage).

Texas cities cannot set their own higher minimum wages, because Labor Code §62.0515 makes the state rate supersede local wage ordinances in private employment. Check twc.texas.gov for current wage information.

In practice the state act reaches only workers the FLSA misses: §62.151 exempts anyone already covered by the FLSA, which is most of the workforce. The Texas minimum wage page sets out the exceptions that still apply, the tipped and youth rates, and the poster requirement.

Overtime

Texas follows federal FLSA overtime rules: 1.5x the regular rate for hours worked beyond 40 in a workweek. There is no daily overtime (unlike California, which requires overtime after 8 hours per day). There is no mandatory premium for weekend or holiday work.

The exempt salary threshold is $684 per week ($35,568 per year) after a federal court in the Eastern District of Texas vacated the 2024 Department of Labor (DOL) rule that would have raised it to $1,128 per week. That November 2024 ruling returned the threshold to the pre-2024 level, and a final rule effective May 15, 2026 restored the text of 29 CFR Part 541 to match.

How overtime is calculated in Texas follows the federal method exactly. Take total straight-time earnings for the workweek, divide by the hours actually worked to get the regular rate, then add half that rate again for every hour past 40. The regular rate is not just the base wage: nondiscretionary bonuses (the ones promised in advance rather than given at your discretion), production and safety bonuses, shift differentials, and commissions all belong in it.

Two rules catch small employers off guard. Hours cannot be averaged across two workweeks, so 30 hours one week and 50 the next still owes 10 hours of overtime. And a private employer cannot bank overtime as compensatory time off in a later week. That option exists only for state and local government agencies.

Exempt vs Non-Exempt in Texas

Texas has no exemption test of its own, so exempt vs non-exempt in Texas is decided entirely by the federal FLSA and the Part 541 regulations behind it. Job titles carry no weight. Three things have to line up at once: pay on a salary basis, a salary that clears the threshold, and duties that genuinely fit a recognized exemption.

In practice, who is exempt from overtime pay in Texas comes down to the same five federal categories: executive, administrative, professional, outside sales, and computer employees. The salary floor is $684 per week ($35,568 a year). The highly compensated route requires $107,432 in total annual compensation, including at least $684 a week paid on a salary basis. Outside sales carries no salary test at all.

Classification also drives your pay frequency obligation under the Texas Payday Law: non-exempt employees at least twice a month, exempt employees at least once a month. Calling someone exempt when they are not therefore creates two problems rather than one: unpaid overtime under federal law and a Payday Law violation the TWC can act on.

Meal and Rest Breaks

Texas law does not require meal breaks or rest breaks for adult employees in the private sector. If you choose to offer breaks anyway, federal FLSA rules decide the pay: breaks of 20 minutes or less must be paid, while breaks of 30 minutes or more can be unpaid if the employee is completely relieved of duties.

Texas carves out one exception, for retail. Under Texas Labor Code §52.001 a retail employer may not require seven consecutive days of work, and must give at least one period of 24 consecutive hours off for rest or worship in each seven-day period. The section does not reach a part-time employee whose hours for that employer do not exceed 30 in a calendar week.

Pumping breaks are a separate federal duty and a common place to get the headcount wrong. The PUMP Act extended the FLSA right to reasonable break time and a private space that is not a restroom, for up to one year after birth, to nearly every covered employee.

According to the Department of Labor, an employer with fewer than 50 employees is relieved of the duty only by demonstrating undue hardship, judged employee by employee, and the exemption is not available at all at 50 or more.

Texas Payday Law

The Texas Payday Law (Labor Code Chapter 61) is the state's primary wage enforcement mechanism, administered by the TWC. It differs from the FLSA in ways that catch multi-state employers off guard. Full details at twc.texas.gov/programs/wage-and-hour/texas-payday-law.

Leave Laws: Texas Provides Very Few

Texas has one of the thinnest leave requirement frameworks of any state. Most leave protections for Texas employees come from federal law, not the state.

Jury duty protection in Texas runs only to "permanent employees." Texas Civil Practice and Remedies Code §122.001 bars a private employer from terminating a permanent employee because that employee serves as a juror or grand juror, and gives the employee the right to return to the same job on prompt notice.

Section 122.002 entitles the injured employee to reinstatement, damages of no less than one year and no more than five years of compensation at the rate paid when they were summoned, and reasonable attorney's fees approved by the court. Section 122.0021 makes the violation a Class B misdemeanor.

Since SB 1 took effect on December 2, 2021, voting leave in Texas has covered both Election Day and the early voting period. Texas Election Code §276.004 makes it an offense to refuse an employee the time or to subject them to a penalty for going to the polls. The statute defines penalty as a loss or reduction of wages or another benefit of employment, so the absence cannot be docked.

The voting leave exception is narrow: it applies only where the polls are open for two consecutive hours outside the employee's working hours. Violation is a Class C misdemeanor.

How FMLA Works in Texas

Texas has no state family and medical leave statute for private employers, so FMLA in Texas means the federal law and nothing else. It reaches you only if you employ 50 or more people within 75 miles of the worksite. Under that headcount, no job-protected medical leave is required of you at all.

For a covered employer, an employee qualifies after 12 months of employment, which do not have to be consecutive, plus 1,250 hours of service in the 12 months immediately before the leave begins. The entitlement is 12 workweeks of unpaid, job-protected leave in a 12-month period. That length is the same in Texas as anywhere else, because the state adds nothing to it.

One entitlement runs longer. Military caregiver leave allows up to 26 workweeks in a single 12-month period to care for a covered servicemember. Eligibility and qualifying reasons are set by the Department of Labor, and Texas layers nothing on top of them for private employers.

Leave of Absence Rules in Texas

Texas has no personal leave of absence statute, so a leave of absence in Texas is either a legal entitlement, most often a federal one, or your own written policy. Nothing in state law requires you to grant unpaid time off for a wedding, a house move, a family emergency, or an illness that falls outside the FMLA.

The Americans with Disabilities Act (ADA) is the exception, and it is the one that costs employers money. According to Equal Employment Opportunity Commission (EEOC) guidance on employer-provided leave and the ADA, an employer must consider unpaid leave as a reasonable accommodation even where it offers no leave benefit at all, the employee is not eligible under the policy, or the employee has already exhausted it. A maximum-leave cap does not end the analysis by itself.

That matters from 15 employees, the same headcount where the Texas Commission on Human Rights Act picks up disability discrimination. Applying a firm 12-week ceiling automatically is the classic mistake, because the real question is whether more leave would cause undue hardship (significant difficulty or expense for the business), and exhausting FMLA does not answer it.

Anti-Discrimination and Harassment: SB 45 Changes Everything

Texas's anti-discrimination framework is the Texas Commission on Human Rights Act (TCHRA), codified in Texas Labor Code Chapter 21. TCHRA is generally aligned with federal law, but one 2021 change makes Texas significantly different from the federal baseline for harassment claims.

Protected Classes Under TCHRA

TCHRA prohibits discrimination based on race, color, disability, religion, sex (including pregnancy), national origin, age (40+), and genetic information. Texas Labor Code §21.002 defines a covered employer as one with 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding year.

That threshold does the interesting work on age: the federal Age Discrimination in Employment Act (ADEA) starts at 20 employees, so a Texas employer between 15 and 19 faces state age-discrimination exposure with no federal counterpart.

Complaints go to the TWC Civil Rights Division or the EEOC within 180 days of the discriminatory act, except for sexual harassment claims, which now have 300 days (HB 21). Under a worksharing agreement between the two agencies, a complaint filed with one is dual-filed with the other. After receiving a Right to Sue letter, the complainant has 60 days to file a lawsuit. Details at twc.texas.gov/programs/civil-rights.

The CROWN Act (HB 567, effective September 1, 2023) added Labor Code §21.1095, which folds hair texture and protective hairstyles commonly or historically associated with race into what racial discrimination means under TCHRA. The statute names braids, locks, and twists.

SB 45: The Law That Applies to Every Texas Employer

For a small employer, SB 45 changes three things. A one-person company is now subject to Texas sexual harassment law. A manager who personally engages in harassment can be sued individually, not just the employer. And when a complaint comes in, the standard is "immediate and appropriate corrective action," not "reasonable" or "prompt" action.

Training is where public and private employers part ways. State agencies must train employees within 30 days of hire and every two years thereafter (Texas Labor Code §21.010). A documented anti-harassment policy and training program are not legally required for private employers, but operating without them makes a successful defense dramatically harder. Treat them as a strong practical requirement even though they are not a legal mandate.

Equal Pay and Salary History

Texas does not have a state Equal Pay Act for private employers (only for state employees under Texas Gov't Code §659.001). Federal law applies: the federal Equal Pay Act and Title VII both prohibit pay discrimination. Texas has no salary history ban, so you may ask candidates about their prior compensation. You may also decline to disclose salary ranges in job postings. This is a deliberate contrast with California, New York, and Colorado.

Workers' Compensation: The Texas Exception

Workers' comp is the most distinctive feature of Texas employment law. Texas is one of very few states where workers' compensation insurance is optional for most private employers. The Division of Workers' Compensation calls Texas the only such state, but South Dakota's Department of Labor and Regulation says there is no law in South Dakota requiring any employer to carry it either. According to the Texas Department of Insurance 2024 biennial report, 24% of Texas employers were non-subscribers, the lowest share since 2016, and only 13% of Texas employees worked for one. Non-subscriber filing details are at tdi.texas.gov/wc/nonsubscriber.html.

The Texas workers compensation page has the detail: the headcount at which coverage becomes mandatory, who is excluded, where to buy the policy, the injury reporting deadlines, and what going without coverage costs.

Non-subscribers lose three legal defenses under Texas Labor Code §406.033(a): contributory negligence (you cannot argue the employee was partly or fully at fault), assumption of risk (you cannot argue the employee knowingly accepted a dangerous condition), and the fellow-servant doctrine (you cannot blame a coworker for causing the injury). Without these defenses, even a workplace accident where the employee was substantially responsible can result in full liability for the employer.

Non-Subscriber Obligations

If you choose not to carry workers' comp coverage, you still have paperwork. File DWC Form-005 with the Texas Department of Insurance (TDI) between February 1 and April 30 of each year. Provide written notice to each employee that you do not carry coverage, and post a non-subscriber notice in the workplace in English and Spanish.

Non-subscribers with five or more employees who are not exempt from workers' comp coverage must also file DWC Form-007 to report on-the-job injuries (28 TAC 160.2). Failure to file these forms does not make you a subscriber. It just adds regulatory violations on top of your non-subscriber exposure.

Workplace Safety: Federal OSHA Applies Directly

Texas does not have an approved state plan under the Occupational Safety and Health Administration (OSHA) for private sector workers, unlike California or Washington. Federal OSHA covers all private Texas employers directly, which means federal OSHA inspectors and federal OSHA standards apply. On top of that, Texas Labor Code §411.103 puts a general duty on every employer in the state to provide and maintain a workplace that is reasonably safe and healthful.

For help meeting that duty, the TDI offers a free, confidential OSHCON consultation program where safety experts visit your workplace to identify hazards without enforcement action. It is a useful resource for small employers.

Required Workplace Postings

Texas requires fewer postings than most states, but HB 915 added a workplace violence reporting notice for every employer, whatever its size. Free Texas posters are available at twc.texas.gov/programs/unemployment-tax/posters-workplace. Federal notices may go out electronically in place of a physical posting only where the whole workforce works remotely and customarily receives information that way, under DOL Field Assistance Bulletin 2020-7.

Termination, Final Pay, and Separation

Ending employment in Texas raises four practical questions: how fast the final paycheck is due, whether a non-compete will hold, what you can safely say in a reference, and how long health coverage continues afterward.

Final Paycheck: The 6-Day Rule

The 6-calendar-day rule for involuntary terminations is one of the most commonly violated Texas Payday Law provisions. Employers accustomed to waiting until the next regular payday (which is the rule in many other states) frequently miss this deadline. You cannot hold the final paycheck because the employee has not returned a company laptop or badge.

If you want to deduct for unreturned property, you need prior written authorization from the employee, and even then the deduction cannot reduce pay below minimum wage. Unused paid time off (PTO) and vacation are only payable if your written policy says they are.

Non-Compete Agreements in Texas

Non-competes are enforceable in Texas under Texas Business and Commerce Code §15.50, but only if three conditions are met. First, the agreement must be ancillary to (attached to) an otherwise enforceable agreement, such as a confidentiality agreement, specialized training, or a stock option grant. Second, the restrictions must be reasonable as to time (typically one to two years), geographic area, and scope of activity.

The third condition is that the agreement must not be more restrictive than necessary to protect the legitimate business interest. When a non-compete goes too far, Texas courts can reform (blue-pencil) it rather than voiding it entirely under §15.51.

The FTC's nationwide non-compete ban is off the table. A Northern District of Texas court set the rule aside in August 2024, and on September 5, 2025 the Commission voted to dismiss its appeals in the Fifth and Eleventh Circuits and accede to the vacatur, per the FTC's own announcement. Non-competes in Texas are governed by state law and remain enforceable when properly structured.

Healthcare is the carve-out to watch. SB 1318, signed June 20, 2025 and effective September 1, 2025, tightened the physician rules in §15.50 and added §15.501, which extends buy-out caps and geographic and duration limits to dentists, nurses, and physician assistants for the first time. It reaches agreements entered into or renewed on or after that date, so an auto-renewing contract signed earlier falls under the new rules when it renews.

Reference Checks: Texas Employer Immunity

Texas Labor Code Chapter 103 provides qualified immunity to employers who give honest job references. Section 103.003 covers a disclosure about a current or former employee's job performance made to a prospective employer, at the request of that employer or the employee. Section 103.004 then grants immunity from civil liability unless it is proven by clear and convincing evidence that the employer knew the information was false, or made the disclosure with malice or in reckless disregard for its truth.

The limits of Chapter 103 matter as much as the shield it offers. An unsolicited call to a former employee's new employer sits outside §103.003 and outside the immunity. Texas employers are not obligated to give references at all, but where they choose to, the statute takes most of the risk out of an honest answer.

COBRA and Texas Mini-COBRA

Federal COBRA applies to employers with 20 or more employees, providing up to 18 months of continuation coverage. Texas Insurance Code §1251.251 adds a state continuation right on fully insured group plans (plans where an insurance company, not the employer, carries the claims risk).

Section 1251.255 sets how long the state right runs: up to nine months from the election for someone not eligible for COBRA at all, which in practice means the employees of smaller Texas employers, and six further months for someone who has exhausted COBRA. Either way the person must have been continuously insured for at least three consecutive months before the coverage ended, and an involuntary termination for cause takes the right away.

The notice clock is federal and it is tighter than most employers assume. After a qualifying event, the plan administrator has 14 days from receiving notice of it to furnish the election notice. Where you are your own plan administrator, which is the usual arrangement in a small company, the whole thing collapses into 44 days from the qualifying event or the loss of coverage, depending on how the plan defines it.

Payroll and Taxes

Texas's payroll tax picture is straightforward because there is no state income tax. The constitutional prohibition (Texas Constitution Art. VIII, §24-a, added by the voters in November 2019) means no state withholding form, no state income tax returns, and no state income tax withholding tables. For new hires in Texas, you withhold federal income tax only.

Register for Texas UI (SUTA) with the TWC once you become liable, which means paying $1,500 in wages in a calendar quarter or employing someone in 20 different weeks of a calendar year. The taxable wage base is $9,000, one of the lowest in the country.

The Texas new-employer rate is the greater of 2.7% or your industry average. In 2026, that works out to 2.7% for every industry. The rate holds until your account has been chargeable for four consecutive quarters and experience rating (a rate based on your own claims history) takes over. Experience rates for 2026 run from 0.32% to 6.32%, with the replenishment tax built in. All quarterly wage reports must be filed electronically.

Employee Handbook: What Texas Actually Requires

Texas does not require employers to maintain a written handbook. But the TWC consistently requests documentation of policies when investigating wage claims, discrimination complaints, and unemployment disputes, and a handbook is the practical way to have it ready.

One note on terminology, because two different documents share the name. A Texas employment law handbook usually means the state's own reference guide rather than your internal policy document. The TWC publishes that guide as the Texas Guidebook for Employers, still widely known as Especially for Texas Employers, free to read by chapter or download in full.

5 Things That Make Texas Employment Law Unique

After working through the full compliance picture, five features stand out as genuinely distinctive to Texas:

1. Workers' comp is optional. Texas is one of very few states where most private employers can legally forgo workers' compensation insurance. Roughly a quarter do, and they employ about one Texas worker in eight. The economics are tempting (no premiums), but no benefit schedule caps the exposure. Every non-subscriber employer should model the worst-case scenario of a serious workplace injury before deciding.

2. The TWC is a super-agency. Unemployment insurance, wage claims, civil rights and discrimination enforcement, child labor, and workforce development all run through one agency: the Texas Workforce Commission. Most states split these across three or four agencies. For Texas employers, the TWC is the primary compliance touchpoint for nearly every employment topic.

3. HB 2127 (the Death Star Law) froze local labor regulation. Since September 1, 2023, no Texas city or county can pass labor ordinances that exceed state or federal requirements. The paid sick leave ordinances passed by Austin (2018), San Antonio (2018), and Dallas (2019) were already blocked by courts. HB 2127 made the preemption permanent and universal. Texas employers in major cities face one uniform regulatory environment statewide.

4. SB 45 is a hidden compliance trap. Texas markets itself as employer-friendly, and on most issues it is. But SB 45 makes sexual harassment an area where Texas is actually stricter than most states. Every employer, including sole proprietors with a single employee, is covered. Individual managers face personal liability. The response standard is immediate and appropriate, not merely reasonable. Many employers discover this only when they receive a complaint.

5. The Texas Payday Law is its own system. It operates alongside (and sometimes differently from) the federal FLSA. The 6-day final paycheck rule, the 180-day wage claim window through the TWC, the 60-day notice for direct deposit transitions, and the written-authorization-only rule for deductions are all Texas-specific. Employers moving operations to Texas from other states frequently violate the Payday Law in the first months simply because they apply their home-state rules.

Texas vs. Federal Law vs. California

The table below shows why Texas is considered one of the most employer-friendly states: on most rows it simply matches the federal floor, and it differs sharply from California.

The pattern: Texas primarily adopts the federal standard and skips state-level additions. The exceptions are the voluntary workers' comp system (a choice very few states give private employers), the 6-day final paycheck rule (stricter than federal), and SB 45 (applies at a lower threshold than most states).

Recent Legislative Changes

The two most consequential recent changes for small employers are SB 45, which fundamentally changed Texas harassment liability in 2021, and HB 2127, which ended local labor regulation in 2023. The 2025 session is worth reading for what it did not do: the statewide ban-the-box bill and the universal E-Verify bill both died, so neither is law.

With the FTC non-compete ban gone, Texas non-compete law continues to govern, and properly drafted agreements remain enforceable. For a small Texas employer, the priorities stay the ones this guide keeps returning to: a written harassment policy backed by training, a final-pay process that meets the 6-day deadline, and a deliberate decision on workers' comp with the non-subscriber trade-offs in view.

Frequently Asked Questions