How to Navigate Texas Overtime Laws

Automate overtime calculations
May 2020
How to Navigate Texas Overtime Laws

For both workers and employers, keeping track of overtime laws in different areas of the United States can be a headache. Some states follow local regulations, while others conform to the federal law. But thankfully for you, we want to simplify the process as much as possible.

Here we explained what Texas overtime laws are and how to calculate overtime pay in line with the adopted rules. So, make sure to read this post till the end! And in case you need some extra help with overtime management, consider adopting actiTIME – a user-friendly solution for accurate hour tracking.

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What Are Texas Overtime Laws?

Texas has a straightforward system that follows national standards – in this case, the Fair Labor Standards Act (FLSA) passed back in 1938. If you’re new to the concept of overtime and need a more general introduction, read our primer before continuing below.

Before we continue, there are a few definitions we should talk about first.

Workweek: In Texas, a workweek is considered a seven-day period made up of 24 hours. It doesn’t have to match the calendar week – if it starts Tuesday and ends on Monday, that’s okay. The main thing is consistency; once a company operates with one definition of a workweek, it can’t change its definition. It can have different workweeks for different employees (accountants can work on one schedule and bank tellers on another, for example), but systems can’t change once they’re worked with.

Overtime: In some states, overtime starts once an employee has worked more than 8 hours in a 24-hour period, but in Texas it begins once you’ve worked more than 40 hours in one workweek. So if an employee works 12 hours every day for three days, none of those hours count as overtime. Also, they can’t juggle hours between different weeks – if an employee works 80 hours in two workweeks, employers can not say their extra hours from one week count as regular hours in the next.

Week 1:
46 hours
Week 2:
34 hours
74 regular hours
+ 6 overtime hours
Week 1:
46 hours
Week 2:
34 hours
80 regular hours

In Texas, compensation for overtime can be made in two ways.

  • Overtime pay: for every hour of overtime work, employees receive are paid at a rate of 1.5x their regular pay.
  • Compensatory time: for every hour of overtime work, employees receive 1.5 hours of paid time off.
There are a few extra factors to keep in mind when counting working hours on a given day:
Employees can not save more than 240 hours of compensatory time at any given moment. After this number has been reached, employers must switch to overtime pay.
Except in certain cases (nurses, paralegals), employers may require employees to work as many overtime hours as necessary so long as they are fairly compensated.
Time spent setting up (starting equipment, logging in, preparing tools) and shutting down for the day counts towards your total hours.
Time spent waiting for a task to begin counts towards your total hours.
Employers in Texas are not obligated to pay overtime for work done on weekends or holidays (though they may choose to do so as an incentive).

How Do I Calculate Overtime Pay in Texas?

In Texas, if an employee works a minimum wage job ($7.25 an hour), their overtime pay will be $10.88 an hour. Their paycheck in one month might look like this:

Week 1:
Week 2:
Week 3:
Week 4:
Regular hours:
Overtime hours:
36 hours (36 regular)
43 hours (40 regular + 3 overtime)
26 hours (26 regular)
48 hours (40 regular + 8 overtime)
142 x $7.25=$1029.50
11 x $10.88=$21.88

This seems simple enough, but there are two more factors to be aware of.

The first is commission. If employees work in an occupation like sales, where commission can make up a large part of their salary, then they need to calculate their regular pay (and thus your overtime rate) differently.

To calculate regular pay, you need to take the commission earned for that week, add it to the base hourly salary, and then divide it by the hours worked. If the employee makes minimum wage in your job, their regular pay might look like this:

Week 1:
Regular pay:
36 hours x $7.25 ($261) + commission ($200)=$461
$461 / 36=$12.81

If they work overtime with commission, their rate would be calculated as follows:

Week 2:
Regular pay:
Overtime pay:
Total regular hours:
Total overtime hours:
44 hours x $7.25 ($319) + commission ($250)=$569
$569 / 44=$12.93
$12.93 x 1.5=$19.40
40 x $12.93=$517.20
4 x $19.40=$77.60

The second is bonuses. This is more complicated, as some bonuses (including non-discretionary bonuses) are taken into account when calculating regular pay. In this case, you need to add the bonus to the amount earned during the bonus period and then divide that by the number of hours worked. This will be the regular pay rate that will be used to calculate overtime.

If the bonus period is monthly, the salary is minimum wage, the bonus is $1000 and the employee worked 160 hours this month, your calculation will look like this:

160 hours x $7.25 = $1160
Regular hours ($1160) + bonus ($1000) = $2160
Regular rate: $2160 / 160 = $13.5
Overtime rate: $13.5 x 1.5 = $20.25

Knowing the regular rate for that month will help when calculating any overtime hours worked that week.

Week 1:
Week 2:
Week 3:
Week 4:
36 hours (36 x $13.5)=$486
47 hours (40 x $13.5 [$540] + 7 x $20.25 [$141.75])=$681.75
40 hours (40 x $13.5)=$540
37 hours (37 x $13.5)=$499.5

NOTE: Many employers are not aware of these rules or perhaps they choose to ignore them. Some employees may need to remind their bosses to make all the necessary calculations.

By the way, whenever you need some assistance with determining the size of overtime pay for yourself or your team members, you may use our overtime calculator. This free tool takes all the necessary variables into account and provides error-free results. If the accuracy of calculations is a concern of yours or if you’re simply not a huge fan of math, this calculator can become your essential helper.

Who Is Qualified for Overtime Pay in Texas?

Not everyone is qualified for overtime pay, according to the FLSA. Overtime laws, generally speaking, were designed to prevent exploitation of blue-collar workers, particularly manual laborers.

In most cases, to qualify for overtime pay in Texas employees must meet two conditions:

  • They must earn an hourly wage of less than $455 a week ($23,660 a year);
  • They must work in an industry that isn’t exempt from overtime pay (see below).

However, if they qualify as a manual laborer under the FLSA, then they automatically qualify for overtime pay. Manual laborers include cashiers, builders, factory workers, tradespeople and more. Additionally, firefighters, paramedics, nurses, paralegals and police qualify for overtime.

Nurses have additional protection in Texas and cannot be legally compelled to work more than 50 hours in a given workweek, though they may choose to.

There is a list of professions, however, who are not qualified for overtime pay under the FLSA if they earn more than $455 a week:

Executives (who manage more than two people full-time);
Administrative workers;
Non-manual professional workers (artists, teachers, programmers);
External salespeople;
Independent contractors;
Certain transportation and agricultural workers;
Certain live-in employees.

If you don’t know who qualifies for overtime pay and who doesn’t, consult the FLSA to make sure.

Track Overtime Using actiTIME!

Keeping track of Texas overtime laws is only the first step: now you’ve got to track the hours your employees work!

But this doesn’t have to be a hassle. actiTIME provides a full suite of tools to help you every step of the way! Read about our services, mission and pricing to find out more.

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