What is the Texas Payday Law?

The Texas Payday Law, formally known as the Texas Payment of Wages Act, sets out the procedures that an employer must follow in paying its employees and provides employees with an avenue of forcing their employers to pay unpaid wages.

The Act’s goal is to discourage employers from withholding wages unlawfully, and it provides a relatively inexpensive way for employees to enforce their wage claims. The Act is enforced by the Texas Workforce Commission, and, like many employment laws, only protects employees and not independent contractors. Whether a worker is an employee or an independent contractor under the Texas Payday Law depends on whether the employer has the right to control the details of how the worker performs his job, that worker is an employee. Further, the Act only covers private employers and not public employers.

The Texas Payday Law governs how and when employers must pay their employees and the administrative remedy for employees who have not been paid what they are owed.

The Texas Payday Law sets out how and when employers can pay wages. It also defines “wages” broadly to include most forms of compensation, even vacation pay, holiday pay, sick leave pay, parental leave pay, and severance pay.

Under the Texas Payday Law, an executive, administrative, or professional employee under the Fair Labor Standards Act must be paid at least once per month, and all other employees must be paid at least twice per month.

Unless determined otherwise by the employer, paydays fall on the first and fifteenth of the month. If an employee is not paid on payday, then the employer must pay the employee on another business chosen by the employee. Thus, an employer who fails to pay its employee on payday and fails to fulfill its employee’s request to get paid the next business day violates the Texas Payday Law.

The Texas Payday Law also restricts the manner in which an employer can pay its employees. An employer must pay wages by electronic transfer, check negotiable on demand, or cash. An employer can use a different method only if the employee agrees in writing.

There are similar restrictions on where an employer can pay its employees. Under the Texas Payday Law, an employer can give the employee his wages at work or at some other agreed upon time and place, can send the wages by registered mail if the payment will be received on payday, or can give the employee his wages by another method chosen by the employee in writing.

However, an employer can force its employees to use direct deposit to accept their wages by notifying each employee at least 60 days in advance.

If an employer unlawfully withholds wages in violation of the Texas Payday Law, the employee has choice to make about which remedy to pursue—he can sue the employer in court, or he can seek an administrative remedy under the Act. Unlike some statutes that provide administrative remedies, the Texas Payday Law does not require an employee to exhaust his administrative choices before turning to a court.

From the day that the wages were due, an employee has 180 days to file a claim under the Act with the Texas Workforce Commission. After the Commission investigates the charge, it will issue a preliminary wage determination order. Either party can request, in writing, a hearing to challenge the preliminary order within 21 days. If 21 days have passed without either party contesting the order, the order becomes final and the employer has 30 days to pay wages and penalties to the Commission, which will then distribute the wages to the employee.