It is important for employers in Texas to understand how both Federal and State overtime law applies to how they pay their workers. Below we walkthrough all the essential components of the Texas overtime law.


Federal law has a lot to say about wage and overtime pay – the Fair Labor Standards Act of 1938 was created to provide minimum requirements for how employers across the USA must treat their employees. Texas overtime provision strictly follows the rules that are set in place by the FLSA – therefore Texas does not have its own overtime law.


Any questions or concerns about violations of overtime in Texas are a question of federal law. In a situation where federal law conflicts with state law, federal law controls even if federal law prescribes a stricter rule.


Overtime Compensation in Texas

If an employee in Texas is required to work in excess of 40 hours in a workweek, they are entitled to compensation for these excess hours. This compensation can either be:


  • Compensatory time off at the rate of 1.5 hours for every hour of overtime.


  • Overtime pay at the rate of 1.5 times the employee’s regular rate of pay.


According to the FLSA, there are no limits to the number of hours the employer may require the employee to work – as long as the employer compensates the employee for the overtime hours. The employer cannot accept the benefits of an employee’s work without considering the time spent to be hours worked.


Keep in mind that if the employee must take time to put on safety equipment, log into a computer or otherwise prepare before the start of their shift, the time they spend preparing must be included in the hours worked that week for overtime pay calculations. This is also true if the employee must take time after their shift to shut down equipment, computers, etc.


Also, if the employee is required to be at work and wait for something to happen or for something to do – this still counts as working. According to the Supreme Court, under the FLSA all employees must be paid for time spent in physical or mental exertion controlled by the employer.


There is one exception to the limits on the number of hours the employer may require the employee to work. Under the Texas overtime law that was passed in 2009, a nurse cannot be forced to work for more than 50 hours per week unless an emergency requires them to do so.


Defining the Workweek

A workweek in Texas must be determined by the employer as a fixed seven day, 24 hours per day schedule. It doesn’t have to start on Sunday at midnight – it can start on any day of the week and end seven consecutive days later.


However, once the employer has set the workweek it must remain the same every week. So, an employer may not change the definition of a workweek to avoid paying overtime for one or two weeks and then change it back. It is possible to have different workweeks for employees in different classes, but the work week for each employee must be fixed.


Overtime must be paid for every hour of work time above 40 hours in the workweek, it cannot be averaged over multiple weeks or carried over into later weeks. The hours must be calculated within the same workweek when the hours were worked – and they must be paid on the regular payday for that workweek.


Accumulating Overtime Credit

Employees who work a lot of overtime might begin to accumulate hours of overtime credit that may be taken as compensatory leave. However, according to the law an employee may not accumulate more than 240 hours of overtime credit for compensatory leave.


If the employee exceeds the amount of overtime credit they may accumulate, they must be paid 1.5 times their regular rate of pay for the number of overtime hours over the limit.


Holiday, Premium and Weekend Pay

There is no requirement in Texas overtime law that states a person needs to be paid more when working during weekends, holidays and other unusual times. However, usually employers will offer incentive to encourage workers to take these shifts, so many companies in Texas do offer extra holiday pay.


Regular Rate of Pay (and Bonuses)

Over time pay is paid at 150% of the regular rate of pay. This “regular rate of pay” is determined by dividing the total pay for employment in the workweek by the total number of hours worked in that workweek.


So, if the employee works in an hourly role plus commission, their regular rate of pay would be their hourly earnings plus the commission for that workweek – divided by the total number of hours worked during that workweek. No matter how you calculate it, the regular rate of pay can never be less than minimum wage under Texas overtime law.


Some bonuses are included in the regular rate of pay calculation. So, if an employee receives a non discretionary bonus and worked over 40 hours then the employer should divide the bonus by the number of work weeks in the bonus period (a non discretionary bonus is an incentive or performance bonus where the employee automatically qualifies for a fixed dollar amount).


Then, for each workweek in which overtime occurred they should divide out that week’s bonus portion by the number of hours worked in order to determine the regular rate of pay for that week – including the bonus. Overtime is then calculated on the regular wage factoring in the bonus.


Often employers don’t make this calculation on non-discretionary bonuses, or when they do it is calculated incorrectly and employees end up deprived of overtime pay that they should have earned.


Employers in Texas need to be aware of overtime law as it relates to their employees. The above guidelines can help companies make sure they are paying their staff correctly and are staying compliant with both Federal and State of TX labor laws.