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, may be mailed to TWC at the address shown on the complaint form or may be faxed to 1-512-475-3025. 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 Section, 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 Labor Law Section. 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. 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, and any penalty that has been assessed.

If either party disagrees with this decision, the party may request a review of the case by filing an appeal in writing to the Commission. The Commission may then review the hearing and decision. The Commission then issues a written decision stating the amount of wages due, if any; any penalty amount due; and advising the parties of their right to judicial review.

Either party dissatisfied with the results of the Commission's decision 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 at least 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, 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 summary 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 answers for specific questions about this law,
Please contact TWC Labor Law Section at:

1-800-832-WAGE (9243)
TDD 1-800-735-2989
or
Visit our website
www.twc.state.tx.us/ui/lablaw/lablaw.html