Compliance Watch:
Penalties for Breaking Texas Labor Laws

February 15th 2024

Ensuring fair and lawful treatment of employees is a fundamental responsibility for employers across Texas. To maintain a level playing field and protect workers’ rights, the state has implemented a comprehensive framework of labor laws and regulations. And Texas doesn’t pull punches when it comes to enforcing its labor standards. The penalties for breaking Texas labor laws range from hefty fines, criminal charges, to potential business closures.

In this article, we provide an overview of the penalties for breaking labor laws in Texas, shedding light on the potential financial, reputational, and operational impact on non-compliant employers. By gaining a clear understanding of these penalties, businesses can be encouraged to proactively strive for compliance and protect their workforce.

This Article Covers

Most Common Labor Law Violations in Texas
Penalties for Breaking Texas Labor Laws
How You Can Avoid Violating Texas Labor Laws

Most Common Labor Law Violations in Texas

Certain Texas labor laws experience more violations than others. And by getting to know these common violations, you can take proactive steps to avoid them.

  • Failing to pay at least the minimum wage: Texas has one of the highest severity of underpayment when it comes to minimum wage violations. According to the Economic Policy Institute, victims of such violations are typically cheated out of more than 30% of their earned pay.
  • Worker misclassification: Employers may misclassify workers as contractors instead of regular employees to avoid providing benefits or paying minimum wage and payroll taxes. The Texas Workforce Commission reported that between 2010 and 2012, approximately 35,000 workers in Texas were misclassified. Until now, worker misclassification remains a problem, with 10-30% of employers misclassifying their workers based on a 2020 National Employment Law Project analysis.
  • Not Ensuring a safe workplace: In 2020, Texas witnessed 469 fatal occupational injuries. And although this is a 23% decrease from 2019, it’s still a significant number of cases. Transportation incidents caused a majority of these fatalities.

Labor Law. Photo by Tingey Injury Law Firm on Unsplash

Penalties for Breaking Texas Labor Laws

To ensure compliance with labor laws in Texas, it is essential to be well-versed in the key regulations that govern the state’s employment landscape. This section delves into the important labor laws in Texas and provides a comprehensive overview of the penalties employers may face for violating them.

Texas Minimum Wage Laws

In Texas, the minimum wage rate follows the federal law that applies to all US states. This means that non-exempt employees in Texas are guaranteed a minimum rate of $7.25 per hour. It doesn’t matter what industry you’re in or how big or small your employer is – this rate applies across the board for all eligible employees.

It’s important to note that the Texas Minimum Wage Act doesn’t prohibit employees from negotiating collectively with their employers for a higher wage.

Not all workers qualify for the minimum wage rate in Texas. There are certain exemptions which include:

  • Executive, professional, and administrative employees who earn at least $684 per week
  • Computer employees who earn at least $684 per week or $27.63 per hour
  • Highly compensated employees earning $107,432 per year or more
  • Farm workers
  • Workers in the fishing industries
  • Seasonal and leisure workers
  • Minors

As for tipped employees in the state, the base hourly wage is $2.13, which is lower than the federal minimum wage. To make sure that the employee’s total earnings, including tips, meet the minimum wage of $7.25 per hour, employers must compensate for the difference. This is called a “tip credit.”

Penalty for Violation

Suppose the Texas Workforce Commission determines that an employer acted in bad faith by not paying proper wages. In that case, they may assess an administrative penalty against the employer equal to the unpaid wages or $1,000, whichever is less.

FLSA Overtime Standards

For the most part, Texas follows the overtime regulations set by the Fair Labor Standards Act (FLSA).

FLSA is an important federal law that regulates time management, sets hourly wages, requires accurate recordkeeping, and mandates overtime pay. According to the Act, an employee is entitled to overtime pay 1.5 times the regular rate for hours worked beyond 40 in a week.

However, some job categories, like executives, professionals, and administrative employees, may be exempt from overtime pay based on their job description and salary. This includes Agricultural employees, Seamen, Piece rate workers, Taxicab company drivers, and so on.

Learn more in detail about Texas Overtime Laws.

Penalty for Violation

If employers keep on purposefully or repeatedly breaking the overtime pay rules set by the FLSA, they can face a fine of up to $1,000 for each violation.

Occupational Safety and Health Act (OSHA)

Texas falls under the federal OSHA rules for maintaining workplace safety. This means that all Texas employers must comply with OSHA’s health and safety laws, which cover five main areas:

  • Administrative Requirements: This includes having a customized health and safety manual and conducting PPE assessments, among other things.
  • Employee Training Requirements: Training requirements vary based on the company’s operations and the hazards involved. Training is recurring, and all employees affected by the hazards must be trained.
  • Recordkeeping Requirements: This primarily involves maintaining OSHA 300 forms and training records.
  • Health Exposure Testing: Employers must ensure that their employees are not exposed to excessive levels of OSHA-listed chemicals and contaminants. They should also prevent excessive noise levels.
  • Managing and Abating Physical Hazards: This refers to addressing hazards on the shop floor, often resulting in fines and penalties during inspections.

It’s important to note that OSHA applies only to private employers and their employees. The Texas Occupational Safety and Health Consultation (OSHCON) program is available to help private employers identify and eliminate workplace hazards and maintain a hazard-free environment.

Penalty for Violation

If an employer breaks the rules set by OSHA and doesn’t ensure a safe workplace for employees, they can be fined between $5,000 and $70,000 for each violation under Section 17 of OSHA.

Texas Whistleblower Act

Whistleblower laws exist to protect employees who report illegal or unethical behavior at work. In Texas, the Whistleblower Act provides these protections specifically to public employees.

Under the Act, it is prohibited to retaliate against an employee for reporting a violation of the law. A state or local government cannot suspend, terminate, or take other adverse actions against a public employee who, in good faith, reports a violation of the law committed by the government entity or another public employee to the appropriate law enforcement authority.

Penalty for Violation

If a government employee suffers from adverse employment actions, like wrongful suspension or termination, they have the right to sue the government for various remedies, including injunctive relief, compensation for actual losses, court fees, and reasonable attorney’s fees.

The employee is also entitled to be reinstated to their former position and recover any lost wages and benefits. If a public worker believes they were treated unfairly as a whistleblower, they must initiate the grievance process within 90 days of the incident. Their responsible supervisors can face a civil penalty of $15,000 for taking adverse employment actions against public workers.

Family and Medical Leave (FMLA)

The Family and Medical Leave Act is a federal law that gives eligible employees the right to take up to 12 weeks of unpaid leave each year. To qualify for FMLA, employees must have worked for their current employer for at least 12 months or completed 1,250 work hours within the past 12 months. The law applies to various employees, including state employees, teachers, and workers in companies with at least 50 employees.

FMLA also covers different types of leave, such as parental leave for childbirth, adoption, or fostering, caring for a family member with a serious health condition, and addressing the employee’s own serious health condition. However, in Texas, employees must use up their paid sick leave and vacation days before requesting FMLA leave.

Penalty for Violation

The Wage and Hour Division handles the FMLA enforcement for private, state, and local government employees, as well as certain federal employees. If violations are not resolved satisfactorily, the US Department of Labor has the authority to take legal action to ensure compliance.

If the court rules in favor of the person who filed the complaint, the employer may be required to grant FMLA leave and provide monetary compensation, including attorney fees and court expenses.

Texas Child Labor Laws

Texas child labor laws apply to employees who are under 18 years old. Once people turn 18, they are already considered adults under these laws.

The Texas Child Labor Law ensures that children are not employed in ways that are harmful to their safety, health, or well-being. It is generally illegal to employ children under 14 years old, with some exceptions. They can only work on simple jobs like office and clerical work, price marking, grocery bagging, or errand and delivery work by foot. They can also work no more than 8 hours in one day.

As for 16 and 17-year-olds, the jobs they can work in are much wider. But there are still certain limitations in place. For example, they’re not allowed to work in hazardous jobs like manufacturing or storing explosives in plants or establishments, coal mining, log operations, and so on.

The Texas Workforce Commission (TWC) or its representative can visit a business during working hours to gather information about child employment if there is a valid reason to believe that a child has been or is being employed within the past two years. It is against the law to knowingly or intentionally obstruct such an investigation.

Penalty for Violation

Violating child labor laws is generally considered a misdemeanor in Texas, with different penalties depending on the specific offense. Employing a child for selling or soliciting is a higher-level misdemeanor. However, if an employer unknowingly hired a child who didn’t meet the minimum age requirement but relied on a seemingly valid Certificate of Age form, it may be a defense against prosecution.

Apart from criminal penalties, the TWC has the authority to impose administrative fines on employers who violate child labor laws. These fines can be up to $10,000 per violation.

Recordkeeping Laws

Recordkeeping laws in Texas require employers to maintain various types of records for specific periods of time. Here are the types of records and their retention durations:

  • Compensation records: Employers must keep these records for at least four years.
  • Family and Medical Leave (FMLA) records: These should be retained for at least three years after the leave ends.
  • I-9 records: Employers must keep these for at least three years after the date of hire or one year after the date of separation, whichever is later.
  • Hiring records: These should be retained for at least one year after the date of hire.
  • Disability-related records (ADA): These must be kept for at least one year after the document creation or the personnel action, whichever is later.
  • Benefit-related information (ERISA and HIPAA): These records should be retained for at least six years after the document creation date.
  • Age-discrimination documentation (ADEA) and payroll records: These must be kept for at least three years.
  • Documents concerning personnel actions: These should be retained for at least one year.
  • OSHA records: Employers must keep these records for at least five years.

All of these recordkeeping requirements can be confusing. You might comply with one requirement but inadvertently violate another. Employment law attorneys typically recommend keeping all employment-related records for at least seven years after an employee’s separation from work to ensure comprehensive compliance and protection. This timeframe covers the statutes of limitation for common law causes of action in Texas and ensures compliance with federal and state statutes.

Penalty for Violation

The Texas Workforce Commission is the agency mainly responsible for enforcing recordkeeping laws in the state.

Under Texas law, the penalties for noncompliance with recordkeeping requirements can vary depending on the specific violation and the governing statutes. These penalties can range from monetary fines to potential criminal charges.

How You Can Avoid Violating Texas Labor Laws

Save yourself the trouble of dealing with the penalties for breaking Texas labor laws by following these key measures to help you stay in compliance:

Tip #1 Familiarize yourself with key labor laws.

Take the time to educate yourself about the labor laws specific to Texas. Most of Texas labor laws follow federal laws, so you won’t have much of a hard time juggling between the two. Understand the requirements and obligations imposed on employers regarding wages, working hours, leave policies, discrimination, and other relevant areas.

Tip #2 Review and update policies.

Regularly review your company policies and procedures to ensure they align with current labor laws. Make any necessary updates or adjustments to comply with legal requirements.

Tip #3 Maintain accurate records.

Keep comprehensive and accurate employee information records, including wages, working hours, and any other relevant documentation required by Texas labor laws. Proper recordkeeping demonstrates your commitment to compliance and provides evidence in case of any disputes or audits.

Tip #4 Provide proper training.

Educate your management team and employees on labor laws, company policies, and best practices. Offer training programs that outline their rights and responsibilities under the law. By promoting awareness and understanding, you can mitigate the risk of unintentional violations.

Tip #5 Stay informed about updates.

Stay current with any updates or changes to Texas labor laws. Regularly monitor official sources of information. The official site of the Texas government and the US Department of Labor offers comprehensive resources as well as any important updates about legislation. Being aware of modifications ensures that your practices remain in line with the latest legal requirements.

Tip #6 Seek legal guidance.

If you have specific concerns or uncertainties regarding labor laws, it’s wise to consult with an employment law attorney or seek advice from reputable sources. Legal professionals can provide tailored guidance based on your business’s unique circumstances, helping you navigate complex legal requirements.

By following these steps, you can minimize the risk of violating Texas labor laws and create a fair and respectful work environment for your employees. Remember, compliance with labor laws not only safeguards the rights of your workforce but also contributes to the long-term success and reputation of your business.

Important Cautionary Note

The penalties for breaking Texas labor laws mentioned in this article are potential consequences under the FLSA and related statutes. However, actual penalties depend on the violation severity and the decision of the court or relevant authorities. The information provided in this article is intended to be informative but should not be considered legal advice.

Laws and regulations can change, so it’s advisable to consult employment attorneys or consultants for current and personalized guidance in your circumstances and jurisdiction. Learn more about Texas Labor Laws through our detailed guide.

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