SUMMARY OF
TEXAS PAYDAY LAW
CHAPTER 61 - TEXAS LABOR CODE
HISTORY
Effective January 1, 1990, the Texas Employment Commission (now part of the
Texas Workforce Commission) was given a mandate to receive and adjudicate wage
claims. The current provisions of the Texas Payday Law are found in Chapter 61
of the Texas Labor Code; those provisions differ greatly from an earlier statute
which contained virtually no enforcement procedures. Both employees and
employers should be aware of the law so they will know the rights and
responsibilities which are conferred on them by the law.
PROCEDURE
Except for public employers, all Texas business entities, regardless of size,
are covered by the Texas Payday Law. Other than close relatives and independent
contractors, all persons who perform a service for compensation are considered
employees. An employee who feels that he or she has not been paid all wages
earned may file a complaint with the Texas Workforce Commission (TWC). Complaint
forms may be obtained from local TWC offices, or upon request through the mail,
through our agency website, or by calling 1-800-832-9243 /TDD 1-800-735-2989.
The completed form, along with any information necessary to support the
claim, must be mailed to TWC at the address shown on the complaint form. The
complaint must be signed, and the signature of the claimant must be verified by
a Notary Public or by any employee of TWC. A wage claim must be filed no later
than 180 days after the date the claimed wages originally became due for
payment.
Upon receipt of a wage claim, TWC notifies the employer of the claim by
sending the employer a copy of the wage claim and a form on which to furnish the
employer's response. An investigator from TWC's Labor Law Department, using the
information furnished by the employee and the employer, along with any
additional information that the investigator feels to be essential, issues a
written decision [Preliminary Wage Determination Order (PWDO)] as to whether
wages are due, and if so, the amount due.
Either party dissatisfied with the PWDO may appeal that ruling to the Special
Hearings Department. Requests for hearing must be made in writing no later than
the 21st day after the PWDO is mailed to the parties by the Commission. This
time limit is mandatory.
Appeal hearings are usually held by telephone conference call; any party may
present witness testimony and submit documentary evidence. The testimony in an
appeal hearing is taken under oath, and the entire proceedings are recorded on
audio tape. After testimony is concluded, the hearing officer renders a written
order for the payment of wages, or a finding that no wages are due. This
decision states the amount of wages due, if any, any penalty that has been
assessed, and advises the parties of their right to judicial review.
Either party dissatisfied with the results of the hearing may file a written
motion for rehearing. This motion must be filed within fourteen days after the
date on which the decision was mailed. Again, compliance with this time limit is
critical, because unless a motion for rehearing is filed or the Commission
reopens the hearing, the order becomes final after fourteen days.
Within thirty days after a final order of the Commission is mailed, either
party may file for judicial review in a court of competent jurisdiction. In the
petition for judicial review, the Commission and all parties to the proceedings
before the Commission must be made parties to the suit. Again, note that the
30-day time limit is critical. If the appeal for judicial review is filed late,
the court will have no jurisdiction to hear the case.
This action must be brought in the county of the claimant's residence; if the
claimant is not a resident of Texas, the action must be brought in the county in
Texas where the employer has its principal place of business.
If the final order of the Commission requires the payment of wages or a
penalty, the party must either deposit into a TWC escrow account the total
amount ordered to be paid, or file with the court a timely affidavit of
inability to pay. The money deposited is placed in an interest-bearing escrow
account to be disbursed at the conclusion of the judicial process, with the
interest being paid to the prevailing party.
RIGHTS, DUTIES AND OBLIGATIONS
Each employee who is exempt from the overtime provisions of the federal Fair
Labor Standards Act (FLSA) must be paid once a month; others must be paid at
least twice a month. Semi-monthly pay periods must consist as nearly as possible
of an equal number of days. Within those limitations, an employer may designate
any paydays he/she chooses.
Notices indicating the paydays must be posted in conspicuous places in the
workplace. If an employer does not designate paydays, the employer's paydays are
the first and 15th of each month.
If an employee quits, she/he must be paid in full at the next regular payday.
If an employee is terminated, he/she must be paid in full within six days. If an
employee is not paid on a payday for any reason, including the employee's
absence, the employer shall pay those wages on another business day as requested
by the employee.
PAYMENT OF WAGES
The kinds of payments subject to the Texas Payday Law include compensation
for services rendered regardless of how they are computed, commissions and
bonuses according to the agreement between the parties, and certain fringe
benefits due under a written agreement with or policy of the employer. Expense
reimbursements, gratuities, gifts and the like are not considered wages and are
not covered by the Texas Payday Law. Unless an employee agrees in writing to
accept part or all of his/her wages in kind, or in another form, wages must be
paid in United States currency, a written instrument negotiable on demand at
full face value for United States currency, or by electronic transfer of funds.
Wages must be delivered to the employee at her/his regular place of work
during working hours, mailed by registered mail to be received by the employee
not later than payday, or by any reasonable means, or to any person authorized
in writing by the employee.
DEDUCTIONS FROM WAGES
One of the most troublesome aspects of determining what wages are due and
unpaid is the question raised by deductions from wages made by the employer. The
employer may not make deductions unless ordered to do so by a court of competent
jurisdiction (as in court-ordered child support payments); authorized to do so
by state or federal law (as in IRS withholding); or authorized in writing by the
employee, and then only for a lawful purpose.
The latter category is the one that causes many problems. Authorizations that
are too general or too broad may not be given effect.
Deductions for out-of-pocket loans to an employee, even though there is an
oral agreement to repay, or even to repay out of a particular wage payment, will
not be allowed, unless the deduction is authorized in writing.
Employers must be careful to get a proper written authorization before making
a payroll deduction.
BOND TO SECURE WAGE PAYMENTS
The Commission may require an employer to deposit a bond if the employer is
convicted of two violations of the act or if a final order of the Commission
remains unpaid after the 10th day after the order has become final and no appeal
is pending. The bond must be in an amount set by the Commission; it must
guarantee the payment of any sum recovered against the employer under this act,
and that the employer, for a period of up to three years, will pay the employees
in accordance with the Texas Payday Law. Because of the high cost of such surety
bonds, the requirement that an employer furnish such security could well cause
the failure of a business. Additionally, failure to deposit the bond required
could result in an order from a court that the employer cease doing business
until the bond is furnished.
COLLECTIONS
When an order for an employer to pay money to the Commission for the use and
benefit of an employee has become final, the law allows for administrative liens
and bank levies. The Commission may assign the administrative lien to the
claimant at the claimant's request.
The Commission may enforce, by any of these collection methods, an order
against a party who has filed for judicial review without depositing the ordered
amount into escrow or filing an affidavit of inability to pay.
PENALTIES
If the Commission determines that an employer acted in bad faith in not
paying wages as required by the statute, the Commission may assess an
administrative penalty against the employer in the amount of the wages claimed
or $1,000, whichever is lesser. Penalties in the same amount may be assessed
against an employee who files a wage claim in bad faith.
An employer commits an offense that is a third degree felony if the employer
hires or intends to continue to employ an employee with the intent to avoid
payment of wages owed to the employee and if the employer fails after demand to
pay those wages.
IT SHOULD BE NOTED THAT THIS DOCUMENT IS NOT THE COMPLETE TEXT OF
THE TEXAS PAYDAY LAW, NOR IS IT WRITTEN IN THE EXACT LANGUAGE OF THAT LAW. IT IS
INTENDED AS AN INFORMAL EDUCATIONAL TOOL FOR THE BENEFIT OF EMPLOYERS AND
EMPLOYEES IN TEXAS.
FOR A COPY OF THE TEXAS PAYDAY LAW, OR TO RECEIVE ANSWERS TO SPECIFIC
QUESTIONS ABOUT THIS LAW, CALL:
1-800-832-WAGE (9243)
or
TDD 1-800-735-2989.
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