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What Every Employer and Employee Should Know about Overtime Pay in Texas

Many hourly workers in Texas are aware that, when they work more than 40 hours in a week, they are supposed to receive overtime pay, which is 1.5 times their regular rate of pay.

Still, many workers are not sure of when their overtime rights have been violated and employers are not always sure of what constitutes a violation of the law. Here are some guidelines for employers and employees.

The Fair Labor Standards Act (FLSA) is the federal statute that governs overtime pay.

Under the FLSA, nonexempt employees are entitled to overtime pay for each hour worked over 40 in a workweek. Exempt employees are not entitled to overtime. So what does exempt and nonexempt mean?

An exempt employee is one who is exempt from the overtime requirements of the FLSA. The exemption usually involves two requirements: 1) that the employee be paid a salary; and 2) that his primary job duties be those of an exempt employee. Some examples are professionals, executives, managers, and others who perform non-manual work involving the regular use of independent judgment and discretion.

One of the biggest mistakes employers make is by overlooking the salary requirement of the exemption. In other words, an employer may have an employee who meets the job duty requirements of the exemption, but the employer pays the employee hourly and therefore loses the exemption.

A nonexempt employee -- one who is entitled to overtime pay -- is generally everyone who is not paid a salary or who is not a professional, executive, manager, or does not have a job requiring the regular use of discretion or independent judgment. 

The guidelines above are general. For example, outside salespeople are exempt from the FLSA and do not have to be paid a salary. There is also a retail service exemption and a laundry list of exemptions for certiain jobs and industries. Therefore, before classifying an employee as exempt (and thus not entitled to overtime pay) employers should consult with an employment lawyer to be sure.

Overtime can become complicated for tipped workers and employees who work at more than one location of the same business.

In Texas, employers are required to pay tipped employees at least $2.13 an hour. Additionally, the combination of the hourly wage and tips must total at least the federal minimum wage of $7.25 an hour.

If hourly wages and tips fall below the minimum wage, the employer is required to pay the difference. The same goes for overtime hours: for every hour worked over 40 in a week, a tipped employee must receive at least 1.5 times the minimum wage.

Keep in mind, too, that the $2.13 hourly wage typically applies only to tipped work, and not to other types of work, such as training time.

If a restaurant employee -- or any employee, for that matter -- works more than 40 hours in a week at two locations owned by the same employer, the employee is entitled to time-and-a-half for every hour worked over 40.

For more on these matters, please see Fiddler & Associates' wage and hour overview. Our firm advises and represents employers and employees in the Houston area.

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