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Wage and Hour Law Basics | New Hire Reporting | Pay and Policy Issues | Texas Payday Law | Sexual Harassment | Hiring | Family and Medical Leave Act | Employment Eligibility Verification | Military Family Leave Law | Resource Guidelines for Hiring Workers with Disabilities | Firing an Employee | Unemployment Claim and Appeal Process
The Fair Labor Standards Act (FLSA), a federal law, is the basic source of wage and hour law. This law defines the minimum wage (currently $7.25/hr), as well as overtime pay provisions, child labor, record keeping, and some other related topics. It also contains the Equal Pay Act which mandates equal pay for equal work regardless of gender. The Wage and Hour Division of the Department of Labor (DOL) administers this law.
Whether an employee is to be paid overtime is decided by the classification of "non-exempt" or "exempt." Generally speaking, administrative staff, professionals, outside sales people and workers in certain trades are considered exempt from minimum wage and overtime provisions. The Department of Labor (DOL) does have written guidelines on designating exempt status. Only being salaried, or having a certain job title, does not make an employee exempt. The nature of the work and the work relationship define exempt or non-exempt status. With some minor exceptions, employees classified as exempt must be salaried and spend 20% or less of their workday on line duties. The other 80% of work time must be devoted to supervisory, specialized or original work.
Overtime pay is specified under FLSA as time and a half for all hours worked in excess of 40 hours in a week (not 8 hours in a day), and it is to be paid in cash. The Act does require overtime pay for employees who are "engaged to be waiting" or on-call. The employee cannot effectively use on-call time for his/her own purposes.
Docking Pay of Salaried Exempt Employees
Employers cannot dock exempt employees for partial day or several days of absence without changing employees' status from salaried to hourly. When an employee is hourly, the employer must pay overtime. By changing status, the employer would be liable for all back overtime worked. Since an exempt employee must receive full salary for any week in which any work is performed, suspending this employee for a week is a viable option. Progressive disciplinary processes leading to termination are also an option. FLSA delineates how and what deductions from pay can be made. The Texas Payday Law also covers deductions from salary, so employers need to consider both options before making deductions from pay.
Classifying an employee as an independent contractor must be done according to the Department of Labor's (DOL) "economic realities" test. Degree of control or direction over the worker, the worker's investment and opportunity for profit and loss, work permanency, degree of skill and whether the work is an integral part of the employer's enterprise are involved in the determination. The Internal Revenue Service also has a definition of independent contractor. It provides a list of criteria that is used by the Texas Workforce Commission for determining unemployment taxes. Generally, very few workers fit the description of independent contractor.
Travel and Break Time Pay
Travel time from one work site to another work site during the workday must be paid. However, travel time going to work or returning home does not qualify for pay. Breaks that are 20 minutes or less count as paid work time.
The following employee benefits are not required under FLSA: vacation time, holidays off, severance or sick pay, meal or rest periods, premium pay for weekends or holidays, pay raises, or fringe benefits. It also does not require a discharge notice, reason for discharge, or immediate payment of final wages to terminated employees. Individual company policies apply to all of these categories and should be followed with consistency.
The Texas Payday Law states that employers must pay employees in full and on time on regularly scheduled paydays. The Texas Workforce Commission Payday Law Unit has powers of enforcement and adjudication for this law. The law has very strict guidelines for wage payments. A mandatory poster is available from TWC for display.
Definition of Wages
The Texas Payday Law defines wages as "compensation owed by an employer" for
- labor or services rendered by an employee, whether computed on a time, task, piece, commission, or other basis; and
- vacation, holiday, sick leave, parental leave, or severance owed to an employee under a written agreement with the employer, or under a written policy of the employer.
The basic wage agreement can be either verbal or written, or both, and is enforceable on both. Fringe benefits must be in writing to be enforceable.
Some Provisions Under Law
- Without specific written authorization from the employee, no deductions may be made from a paycheck unless they are court-ordered deductions or payroll tax deductions.
- If an employee is laid off or discharged, the employer must give final pay within 6 calendar days of the effective date of discharge.
- If an employee quits or resigns, the employer must give final pay by the next regularly scheduled payday.
Final Pay Deductions
While the dates for final pay are relatively straightforward, the question of deductions in pay merits special attention.
- No matter the circumstance, deductions in pay must be covered by a written agreement signed by the employee.
- Loan advances, expense advances, losses caused by employee, uniform and cleaning expenses, cost of failure to return property and other legitimate expenses must be specifically dealt with in the written and signed agreement prior to making a deduction.
- General policy statements dealing with deductions should be included in a company handbook, but will not be sufficient for terms of the Payday Law. A deduction authorization agreement should be specific, clear and reasonable, written and signed. This can be done in a general deduction authorization agreement at the beginning of employment. Deductions that are unforeseen can be covered in a separate agreement as the need arises.
Wage and Benefit Agreement
Putting a wage and benefit agreement in writing is helpful to both employer and employee. Any confusion can be avoided by having clearly spelled out documents. Wage and benefit agreements are one of the terms and conditions of employment that may be changed or terminated at will by either party. Additionally, if a wage claim is filed and investigated, the Texas Workforce Commission (TWC) follows the "best evidence" rule. Unambiguous, clearly delineated agreements are crucial for a favorable ruling.
When a new employee is hired, certain procedures can facilitate a smooth employment relationship. Giving the new employee a company handbook and having a signed statement of receipt is one of the most important first steps. The handbook must clearly and specifically explain company policy and procedures to be useful.
Because Texas is an at-will state, the handbook can be changed and updated as needed, as long as all employees are notified. Communicating company policy can only help the employee in understanding required work performance. In addition, a good handbook will improve an employer's position, not just in any investigative procedures, but in all aspects of employee relations.
Having a new employee sign any wage deduction agreements is another critical procedure that is covered under the hiring section of the Texas Payday Law. In general, Texas employers are able to design and change their own personnel, compensation and benefits policies with few restrictions. Letting a new employee know exactly what these policies and procedures are from the beginning helps in getting desired work performance. This information also protects the employer from misunderstandings when problems arise.
Employers must comply with the Immigration Reform and Control Act of 1986. They must verify employment eligibility of all applicants actually hired. The identity of the applicant and the applicant's authorization to work must be established. Once documents are verified, a Form I-9 must be filled out. It is preferable that copies of the verifying documents be made.
The I-9 forms must be kept a minimum of three (3) years or one (1) year after the employee leaves the job, whichever is later. Forms must be available for government inspection upon request. An I-9 form, as well as other useful information such as lists of acceptable documents, can be downloaded from the US Immigration Support page.
The U.S. Department of Education has two guides that assist employers to integrate individuals with disabilities into their workforce. They can be accessed at this link:
Disability Employment 101
Americans with Disabilities Act
All employers with fifteen (15) or more employees must comply with this law. Under ADA, an employer may not ask about an applicant's prior or current medical condition, prior injuries, prior claims for compensation, or disabilities. An employer may only inquire into a person's ability to perform the essential functions of the job, with or without reasonable accommodation.
Employers can hire the most qualified applicants, but must consider all persons without discriminating on the basis of disabilities. Employers do not have to lower their performance standards nor hire individuals with disabilities over applicants who are not disabled.
People who have been treated in the past, and/or are currently being treated, for drug or alcohol abuse are protected by the ADA. Current users are not protected. A job offer may be made contingent upon the results of a medical exam. All candidates for that job must have the same exam.
The U.S. Equal Employment Opportunity Commission has information on the Americans with Disabilities Act (ADA). Access this information at: Small Employers and Reasonable Accommodations.
The U.S. Department of Labor lists the facts and myths associated with the Americans with Disabilities Act (ADA). Click on Employers and the ADA.
Business Tax Credits
There are tax credits and incentives for employers who hire persons with disabilities. For more information, click on these links:
"Disability is Not Lack of Ability" - EMPLOYER TOOLKIT
Workforce Solutions invites you to review the materials in this Employer Tool Kit and learn about additional employer benefits associated with hiring persons with disabilities.
Since October 1, 1998, all employers have been required to report specific information about newly hired and rehired employees to the Texas State Directory of New Hires. This reporting requirement is due to a federal law whose primary purpose is to enforce child support orders.
Employers must give information about any individual who completes a W-4 (Employee Withholding Allowance Form) at the start of work, and/or to whom the employer will issue a W-2 (Wage and Tax Statement). Employees who return for a recall from a layoff or from a leave of absence must also be reported if a new W-4 is submitted. Information must be sent within twenty (20) days of each employee's first day on the job. Various reporting methods can be chosen.
Information on the reporting methods, along with what needs to be reported.
Sexual harassment is a legal offense under civil law. There are two types: "quid pro quo" and "hostile environment".
"Quid pro quo" involves basing hiring, firing, promoting, and salary decisions on an employee's submission to sexual demands. "Hostile environment" involves conduct that creates an intimidating, hostile, or offensive working environment. Employers can be held liable for sexual harassment even if they do not know it is happening.
Preventative measures are imperative to protect an employer from liability. An explicit policy against sexual harassment that is clearly and regularly communicated to employees and effectively implemented should be in place. A grievance procedure for resolving complaints should also be in place, and it needs to be one that does not require going first to an immediate supervisor.
If a complaint is made, act immediately! The EEOC investigates to determine that employer action was prompt, appropriate and effective. Do not disregard any complaint. Carefully document all phases of the investigation from the initial complaint through witness interviews to any action taken. Be very careful to keep the investigation confidential. Disciplinary measures for employees found guilty of policy violations may include verbal or written warnings, transfers, demotions or discharge. Prompt remedial action constitutes a very effective defense against legal liability.
The Fair Labor Standards Act (FMLA) requires employers with fifty (50) or more employees within a seventy-five (75) mile radius to offer eligible workers family and emergency medical leave. This includes up to twelve (12) weeks of unpaid leave during a twelve (12) month period for birth or adoption; to care for a seriously ill parent, spouse or child; or to undergo medical treatment for their own serious illness.
To be eligible for leave, a worker must have been employed for at least twelve (12) months and have worked a minimum of 1,250 hours during the twelve (12) calendar months immediately prior to the beginning of the leave. The right to take leave applies equally to male and female workers. When an employee returns to work after taking leave, an employer must guarantee that the employee can return to the job he or she held before the leave, or an equivalent position. To be an "equivalent" position, all privileges, duties, terms and conditions of the worker's previous job must correspond. The twelve (12) weeks of leave provided under FMLA is cumulative of whatever leave an employer already allows. If six weeks of paid leave were allowed, as an example, only six weeks of unpaid leave would be required.
FMLA is administered by the Wage & Hour Division of the U.S. Department of Labor.
On January 28, 2008. President Bush signed into law the National Defense Authorization Act for FY 2008 (NDAA), Public Law 110-181. Section 585(a) of the NDAA amended the FMLA to provide eligible employees working for covered employers two important new leave rights related to military service:
- New Qualifying Reason for Leave. Eligible employees are entitled to up to 12 weeks of leave because of "any qualifying exigency" arising out of the fact that the spouse, son, daughter, or parent of the employee is on active duty, or has been notified of an impending call to active duty status, in support of a contingency operation. By the terms of the statute, this provision requires the Secretary of Labor to issue regulations defining "any qualifying exigency." In the interim, employers are encouraged to provide this type of leave to qualifying employees.
- New Leave Entitlement. An eligible employee who is the spouse, son, daughter, parent, or next of kin of a covered service member who is recovering from a serious illness or injury sustained in the line of duty on active duty is entitled to up to 26 weeks of leave in a single 12-month period to care for the service member. This provision became effective immediately upon enactment. This military caregiver leave is available during "a single 12-month period" during which an eligible employee is entitled to a combined total of 26 weeks of all types of FMLA leave.
- SEC. 102. LEAVE REQUIREMENT
Tools, Resources and Posting
Information on the amendments and a version of Title I of the FMLA with the new statutory language incorporated are available on the FMLA amendments. Additional references about the National Defense Authorization Act for FY 2008 is available at NDAA.
Although Texas is an "at-will" employment state, there are several issues to consider if an employer decides to terminate a worker. While "at-will" means good cause or notice is not needed, an employee cannot be fired for discriminatory reasons. Written, implied oral or express contracts negate the "at-will" doctrine. Avoiding an unemployment chargeback to the employer's tax account dictates documentation of misconduct to show good cause for firing an employee.
A good company handbook is an invaluable aid in the discipline process. It can deflect discipline problems by clearly communicating company policies and procedures. It is difficult to prove that employees violated rules if it cannot be proven they were informed of them. Employees should sign off on a handbook to acknowledge that they have read, understood, and agree to be bound by company rules and regulations, and that failure to do so can lead to discipline up to and including termination.
Documentation of discipline problems needs to be in writing. Do not put anything in a personnel file that could not stand up to a jury's scrutiny. Be factual, objective and fair. Follow a progressive discipline program (except in cases of serious criminal activity) that is outlined in the company handbook.
No federal or state law exists that requires a certain number of written warnings. Employers can determine their own policy. If an employee is in danger of being terminated, give a written statement that says, "Your job is in jeopardy." Ask that it be signed. If an employee refuses to sign, write on the document that a job in jeopardy warning was given, the date, and a statement that the recipient understands his job is in jeopardy even though he refuses to sign. In this situation, it is best to have a company witness present at the disciplinary counseling meeting.
Workforce Solutions has compiled a number of tips and resources for local employers regarding pay and policy issues. These excerpts are gathered from the Especially for Texas Employers handbook, published as a service to the employers of Texas by the office of the Commissioner representing employers on the Texas Workforce Commission, under the authority of Texas Labor Code Section 301.002(a)(2). To get a copy of these excerpts contact email@example.com.
For more information on workplace issues, labor policies, or to obtain a free copy of the "Especially for Texas Employers" handbook contact:
The Texas Workforce Commission holds responsibility for the state unemployment compensation program. Below is a brief outline of the unemployment claim and appeal process, in order of occurrence.
Initial Claim: Once an employee is no longer working, a "work separation" occurs and the worker may file an initial claim for unemployment benefits. If the claimant is out of work due to no fault of his own, and otherwise eligible, benefits are payable.
- Immediately after the initial filing, TWC mails a notice of the initial claim, a "notice of application for unemployment benefits," to the organization or individual listed as the "last employing unit" where the claimant last worked for pay.
- The employer has 14 calendar days to file a timely written response to make itself a "party of interest" with appeal rights.Claim responses may be filed by mail, fax, telephone, or by TWC's Internet claim.
Initial Determination: TWC makes an initial determination, a "determination on payment of unemployment benefits," and mails copies of the decision to all interested parties. If the employer filed a late response to the initial claim, the determination is a "late protest" ruling.
- In any case of a "late protest" ruling, the employer should allege the problem was outside its power of control as the reason for an untimely protest, if it wishes a hearing on the underlying merits of the unemployment claim.
- If the employer filed no response and the claimant draws benefits, the employer receives a notice of maximum potential chargeback, a "wage verification notice."
- No matter which form the initial determination takes for the employer, the employer should file a written appeal and request for a hearing within 14 calendar days of the date TWC mails the ruling.
Appeal Tribunal: Once an appeal has been filed, the Appeals Department dismisses the appeal, issues an on-the-record decision, or sets up an appeal hearing.
- This appeal is dismissed if it is filed outside the 14-day appeal period.
- If the employer fails to disagree that it filed a late protest to an initial claim notice, an on-the-record decision is issued affirming the fact of a late protest.
- In all other cases, the Appeals Department mails notices of an appeal hearing to the claimant, the employer, and any representatives they may have designated.
- Appeals hearings are usually held by telephone. The employer should act as if this is the only chance to explain its side of the situation.
- In general, firsthand testimony from witnesses with direct, personal knowledge of the events leading to the claimant's work separation takes precedence over all other forms of evidence.
- Documentary evidence may be entered as exhibits.
- When a hearing is by phone, the employer must send copies of any exhibits to both the hearing officer and the claimant.
- Failure to send copies to the claimant may result in the hearing officer refusing the items as exhibits.
- All parties may offer direct testimony, conduct cross-examination, and make concluding statements.
- Usually within one calendar week, the hearing officer issues a written decision either affirming, reversing, or modifying the determination which was appealed.
Commission Appeal: The three-member Commission board, appointed by the Governor for staggered six-year terms, heads The Texas Workforce Commission. The chairperson of the board represents the public at large, one commissioner represents employers and the other commissioner represents labor. The Commissioners are the highest authority within TWC in deciding an unemployment appeal.
- Any party may appeal an adverse Appeal Tribunal decision to the three-member Commission.
- An appeal must be done in writing within 14 calendar days of the date the hearing officer mails a decision or it will not be considered.
- The Commission affirms, reverses or modifies the Appeal Tribunal decision. It may also order a further hearing.
- Action on appeals occurs in a weekly docket meeting where the Commissioners cast their votes. They do not take testimony from the affected parties, but may consider relevant written materials submitted after the hearing.
- In such a case, the Commission orders a rehearing to officially admit the new evidence into the record.
- All three Commissioners sign the Commission's written decision. The losing party may either file a motion for a rehearing or an appeal to a court.
Motion for Rehearing: The final stage of the administrative appeal process is this motion, which must be filed in writing within 14 calendar days of the date the original Commission decision is mailed.
- To grant a rehearing, the motion must offer new evidence, give a compelling reason why the evidence could not have been offered earlier, and show specifically how it could change the outcome of the case.
- If the Commission denies the motion, a written decision is mailed to each party that can be appealed to a court.
Court Appeal: A Commission decision is final 14 calendar days from the date it is mailed.
- After the Commission decision is final, the losing party may file a court appeal within 14 calendar days.Therefore, the court appeal period is between the 15th and 28th calendar days following the last Commission decision mailing date.
- Because the standard of review is the "substantial evidence rule," there is no right to a jury trial in an unemployment compensation case. The law provides for a trial de novo and the parties may present their entire case again for the judge.
- The judge decides as a matter of law whether substantial evidence exists to uphold the TWC ruling.
- The court's decision may be further appealed as in any other civil case.
Evidence Needed for a UI Claim and/or Appeal: While different situations require different evidence, some types of evidence are always required, no matter the cause of the claimant's work separation. These types are:
- Firsthand testimony from witnesses with direct, personal knowledge of the events leading to the claimant's work separation, i.e. "the ones who saw it happen"
- Documentation of policies, warnings, attendance, or any other subjects relating to the claimant's work separation
- In a discharge case, evidence relating to a specific act of misconduct that happened close in time to the discharge, i.e., the event that precipitated the discharge
- In a resignation case, evidence relating to whatever motivated the claimant to resign