Doing Business in Texas: Labor Laws

Picture of Schuyler "Rocky" Reidel

Schuyler "Rocky" Reidel

Schuyler is the founder and managing attorney for Reidel Law Firm.

Doing Business in Texas: Labor Laws

In this installment of our Doing Business in Texas Series we will discuss the various labor laws that affect Texas businesses. Texas labor laws strike a good balance between protecting contract freedom and the rights of employees. Many states have complex and often onerous employment regulations, Texas takes a strong pro-jobs approach to labor laws encouraging growth and business. Texas labor laws are anchored by right-to-work laws, minimum wage provisions, and strong worker protections.

Texas is an employment-at-will and a right-to-work state. Employment at will means that in Texas employees without a contract may quit or be terminated without liability at any time for any reason that is not explicitly prohibited under law (see Discrimination below). This philosophy is based on the view that parties, both employers and employees, should have full freedom to contract for employment. Other states and countries often require that an employee only be terminated for an explicit list of reasons. These laws prevent good workers from being hired and bad workers from being terminated, clogging the labor market and creating an inefficient economy. Being a right-to-work state means that Texas guarantees workers the right to work without regard to membership or nonmembership in a union. Employers cannot require employees or applicants to join a union nor can they prohibit employees from joining a union. The Texas Labor Code also regulates how labor unions are governed, organize, and some resolution process of labor disputes, such as arbitration. Texas strikes a balance between the right to organize and limits on the behavior of a labor union, such as physical altercations or preventing the free entrance of a work premises.

While Texas does maintain a minimum wage for employers who are not subject to the Fair Labor Standards Act (FLSA) (any private business that makes less than $500,000 annually and is involved in interstate commerce), employers are not limited by a maximum number of hours employees are required to work with some exceptions. The most notable exceptions include retail employees, religious exceptions for business with 15 or more employees, and other regulated industries or collective bargaining agreements. This unlimited hours rules also applies to minor as it does adult workers. Texas does not require employers to offer breaks to employees with a few industrial or health exceptions.

The State also prohibits employers with 15 or more employees from discriminating on the basis of race, color, disability, sex, religion, national origin, or age. Discrimination can take the form of refusing to hire or discharge or even limiting, segregating, or classifying employees on basis of a protected class characteristic. The Texas Commission on Human Rights is the agency that is responsible for investigating and pursing a worker’s complaint against an employer. While employees can bring a private cause of action for discrimination, Texas law requires the employee to have exhausted all administrative remedies available before a suit. Texas also prohibit employers from requiring genetic testing or discriminating on the basis of genetic information.

Religious beliefs and practices of an employee are protected under Texas law. An employer must accommodate the religious beliefs or practices of an employee to the extent that doing so would not constitute an undue burden on the business. While this is a rather amorphous requirement, it is generally advised to err on the side of caution when dealing with religious beliefs of employees. Some accommodations an employer may need to offer include: changing an employee’s job assignment, providing flexible scheduling options, accommodating dress or grooming practices, and modifying employee testing.

Texas does not require employers to maintain workers’ compensation insurance unlike many states and countries. Employers who choose not to have workers’ compensation insurance must notify the Texas Workers’ Compensation Commission as well as their employees. Choosing not to have compensation insurance can subject the business and business owners to liability for personal injury suits. Generally when an employer does have appropriate workers’ compensation insurance, the only available remedy for an injured employee is the insurance policy coverage.

An important protection Texas recognizes for employers are non-competition agreements although important restrictions are placed on any non-compete. The two basic requirements a non-compete must have to be enforceable are that the non-compete is ancillary to or part of an otherwise enforceable agreement and the non-compete must contain reasonable time, geographic, and activity scope limitations. A well drafted non-compete in Texas protects both the workers right to engage in future commerce and employer’s investment into an employee.

Texas labor laws are designed to promote business while maintaining strong protections for our workers. Call Reidel Law Firm today about Texas labor laws and your business, (832)510-3292 or use the contact form below.