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When Is an Employee Entitled to Overtime in Texas?

Texas does not have its own statute requiring the payment of overtime to employees of private companies.  Instead, private sector employees in Texas are covered by the federal Fair Labor Standards Act (FLSA).  The Texas Government Code provides that most government employees are entitled to overtime in accordance with the FLSA.

Here are the answers to some common questions:

1. Which employers are covered by the FLSA?

In general, the FLSA applies to a company that engages in interstate commerce and that does at least $500,000 in business per year.  Certain types of businesses, such as most hospitals and schools, are exempt under the FLSA.

2. Which workers are covered by the FLSA?

The FLSA applies to employees, but not to independent contractors.  However, the legal definition of an independent contractor is narrower than some employers realize.  The mere fact that a worker is paid on a 1099 basis, as opposed to a W-2 basis, does not make the worker an independent contractor.  Instead, the key consideration is the extent to which the employer controls the worker's activities.  It is an increasingly common error by employers to convert existing employees into independent contractors, either to save on taxes or benefits or to reduce liabilites such as overtime.  These employers often find themselves in trouble with the IRS, the Department of Labor, the Texas Workforce Commission, or private litigants.

The FLSA divides employees into two categories: exempt and non-exempt.  A non-exempt employee is entitled to overtime.  An exempt employee is not.

3. Which employees are exempt?

The FLSA contains many different exemptions.  The most common exemptions are for executive, professional, and administrative employees; outside sales representatives; and certain computer professionals.  However, there are many other specific exemptions, ranging from employees on fishing boats to employees at seasonal amusement parks to employees in movie theaters.

One of the most common errors by employers is "misclassification."  This happens when a non-exempt employee is misclassified as exempt and is not paid overtime.  This is often due to the employer's reliance on job titles rather than job functions.  For example, many employees have a title such as "Night Manager."  A manager can fall within the executive employee exemption.  However, if the "Night Manager" really does not manage anyone and is essentially a cashier who works the night shift, then the exemption will not apply.

4. Does it matter whether the employee is paid a salary, instead of paid by the hour?

Salaried employees are not automatically exempt  from the FLSA.  Some of the exemptions to the FLSA apply only to salaried employees, but those exemptions contain additional requirements.  It is a common error by employers to assume that all salaried employees are exempt from overtime.

5. When does an employee qualify for overtime?

As a general rule, an employee must be paid time and a half for any hours over 40 per week.  There are different rules for some specific employees, such as fire departments and police departments.

6. What are the damages for non-payment of overtime?

The employer may be required to pay the past-due overtime, plus up to 100% extra in liquidated damages if the employer is found to have acted in bad faith.  Employees can also recover their attorneys' fees.

David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes