Minimum Wage: Texas
Federal law and guidance on this subject should be reviewed together with this section.
Author: Cory Halliburton, Weycer, Kaplan, Pulaski & Zuber, P.C.
- Texas' minimum wage rate is tied to the federal minimum wage rate, which is currently $7.25 an hour. See Minimum Wage.
- Employees' tips and the cost of meals and lodging may be applied to employers' minimum wage obligations. See Tip Credit and Credit for Meals and Lodging.
Employers in Texas must pay each employee the federal minimum wage under the federal Fair Labor Standards Act (FLSA), which is currently $7.25 an hour. +Tex. Lab. Code § 62.051. Any change to FLSA's statutory minimum wage will be incorporated into the Texas minimum wage scheme, absent future legislation to the contrary by the Texas Legislature.
Texas law essentially defers to the FLSA in regard to computing wages of a tipped employee, including a tip-pooling or tip-sharing arrangement. As a result, an employer electing to claim a tip credit must be able to show that tipped employees receive at least the minimum wage when direct wages and the tip credit amount are combined. If an employee's tips combined with direct (or cash) wages of at least $2.13 per hour do not equal the minimum hourly wage of $7.25 per hour, then the employer must make up the difference. +Tex. Lab. Code § 62.052.
Coverage / Definitions
Under Texas law, a tipped employee is an employee engaged in an occupation in which the employee customarily and regularly receives more than $20 a month in tips. This is different from federal law, under which an employee must customarily and regularly receive more than $30 a month in tips. +Tex. Lab. Code § 62.052.
Texas law does not expressly address tip pools.
An employer must obtain written authorization to deduct credit card service charges from an employee's tips. +40 TAC § 821.28.
Credit for Meals and Lodging
In computing the wage paid to an employee an employer may include the reasonable cost to the employer of furnishing meals, lodging or both to the employee if:
- Meals or lodging customarily are furnished by the employer to employees; and
- The cost of the meals and lodging are separately stated and identified in an earnings statement furnished to the employee.
Patients or clients of the Texas Department of Mental Health and Mental Retardation may be paid subminimum wages under certain conditions. +Tex. Lab. Code § 62.057.
Protection for Franchisors
Effective September 1, 2015, the definition of a covered employer for purposes of the Texas Labor Code's minimum wage provisions will specifically exclude franchisors. A franchisor cannot be considered an employer of a franchisee or a franchisee's employees. However, this rule does not apply to a franchisor that has been found by a Texas state or federal court to have exercised a type or degree of control over the franchisee or the franchisee's employees not customarily exercised by a franchisor for the purpose of protecting the franchisor's trademarks and brand. +2015 Bill Text TX S.B. 652.
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