Employers in Texas face a nuanced landscape, notably when it comes to overtime and worker classification. State requirements can interact with federal standards, and in some areas, local rules may layer on additional obligations for employers.
They say that everything is bigger in Texas. However, Texas maintains a relatively simple wage and hour framework, largely guided by federal law.
The state has no minimum wage above the federal standard, no statewide paid sick leave mandate, and few local labor ordinances. However, employers are still responsible for adhering to the Fair Labor Standards Act (FLSA) and for maintaining transparent policies around wages, time off, reimbursements, and classification. Whether you employ workers directly or through an Employer of Record (EOR) like HireArt, understanding Texas labor standards ensures your business stays compliant and competitive.
This blog is based on information available to HireArt as of October, 2025. HireArt does not provide tax, accounting or legal advice. This material has been prepared for informational purposes only, and should not be relied on for, tax, legal or accounting advice. Consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.
Texas follows the federal minimum wage as its statewide standard.
Employers must pay at least $7.25 per hour, which is the federal minimum wage established by the FLSA. The state does not set a higher rate, and local governments are preempted from creating their own minimum wage laws.
Employers must follow the higher applicable rate between state and local law.
Texas does not have a statewide paid sick leave requirement.
Employers are free to set their own paid or unpaid leave policies. A few cities, including Austin, Dallas, and San Antonio, attempted to pass local paid sick leave ordinances, but those measures were blocked or preempted by state law before taking effect. Employers should ensure their internal policies are clear, fair, and consistently applied across all employees.
Texas law prevents cities and counties from adopting local wage or leave requirements that go beyond state or federal standards.
This statewide preemption creates a uniform employment law environment, allowing employers to operate under consistent rules across all Texas locations.
Texas law does not require employers to provide meal or rest breaks for adult employees.
Employers should rely on their internal policies, collective bargaining agreements (CBAs), or FLSA guidelines regarding rest periods and compensable time. Offering scheduled breaks can support employee wellbeing and productivity, even when not legally mandated.
Whether unused paid time off (PTO) must be paid out when employment ends depends on the employer’s written policy.
Texas law does not require PTO payout unless the employer has established such a policy in writing or through an employment contract. To avoid disputes, companies should clearly define their vacation and PTO payout rules in handbooks or offer letters.
Texas does not have a general statute requiring reimbursement for business-related expenses.
Employers may establish their own reimbursement policies, outlining which expenses (such as mileage, equipment, or phone use) qualify for repayment. Transparent reimbursement policies help maintain compliance with federal wage laws and promote fairness among employees.
Employers in Texas must provide pay statements and meet specific deadlines for final wage payments.
Timely payment of final wages is a key component of Texas wage law compliance.
Texas follows the economic realities test under federal and state law to determine whether a worker is an employee (W-2) or an independent contractor (1099).
If an employer exercises significant control over how and when work is performed, the individual should generally be classified as an employee. Misclassification can lead to tax penalties, back wages, and potential legal claims.
HireArt serves as an Employer of Record (EOR) to help companies stay compliant with federal and state labor laws in Texas. Through HireArt, employers can:
By partnering with HireArt, employers can reduce compliance risk, simplify administration, and ensure fair and consistent management of their Texas workforce.
