Nonpayment of Wages

An employee who has not been paid the minimum wage or overtime may:

• With the assistance of an attorney, file suit in state or federal court within two (or in some cases three) years of the date the claimed wages originally became due for payment. If you cannot afford an attorney, contact a nonprofit legal services organization:
  • Equal Justice Center: specializes in employment law statewide, offices in Austin, Dallas, Houston, and San Antonio
  • Texas RioGrande Legal Aid: legal aid, including employment law, in South, Central and West Texas, and services to farmworkers statewide
  • Legal Aid of NorthWest Texas: legal aid, including employment law, in North and West Texas
  • Lone Star Legal Aid: legal aid, including employment law, in East, Southeast, and Northeast Texas

• Submit a wage claim with the Texas Workforce Commission within 180 days of the date the claimed wages originally became due for payment.
• File a complaint with the U.S. Department of Labor’s Wage and Hour Division within two years of the date the claimed wages originally became due for payment.

Most workers are defined as an “employee” under the law and receive certain rights and protections. Workers who are economically dependent on the business of the employer, regardless of skill level, are considered to be employees. On the other hand, independent contractors are workers with economic independence who are in business for themselves.

This is a very fact-specific question. The employer-employee relationship under the federal overtime law is determined by the "economic reality" test. This test considers many factors, including:

• the permanency of the relationship, 
• the amount of the alleged contractor’s investment in equipment, 
• the nature and degree of control by the principal, and 
• the alleged contractor’s opportunities for profit and loss.

As an example, an individual who works as a cook at a restaurant for 40 hours every week and receives an hourly wage is an employee of the restaurant. However, an electrician called in by the restaurant to fix the wiring, who brings their own tools, and negotiates their own rate with the restaurant owner would be considered an independent contractor.

The reality of the working relationship – not the label given to the relationship in an agreement – is what matters. If you think that you have been misclassified as an independent contractor, consult an attorney.

Federal and state law require employers to pay almost all employees $7.25 per hour.

• The federal Fair Labor Standards Act requires covered employees to pay their minimum wage nonexempt employees at least $7.25 per hour. Employees are covered if they work for businesses that gross more than $500,000 per year and have at least two employees, or if they are directly “engaged in commerce or in the production of goods for commerce” (i.e., they load products onto trucks that will cross state lines, or they make products that will enter the stream of commerce). Additionally, most domestic service workers (such as housekeepers, full-time babysitters, and cooks) are covered.
• The Texas Minimum Wage Act requires employers to pay at least the hourly federal minimum wage to most employees not covered by the FLSA.

The “regular rate of pay” for non-exempt employees must be at least the minimum wage regardless of how earnings are determined. In other words, an employer cannot pay a piece rate or a day rate in order to pay less than the required minimum wage. The regular rate of pay is determined by dividing the employee’s total pay for employment (with some exceptions) by the number of hours actually worked.

For example, if an employer pays a piece rate of $1 per item built and an employee builds 300 items in a 40-hour workweek, the employee’s regular rate is $7.50 per hour ($300 divided by 40 hours) and there is no minimum wage violation. If the next week the employee builds 200 items in a 40-hour workweek, his regular rate is $5 per hour ($200 divided by 40 hours), and the employer must pay him an additional $2.25 per hour.

Tipped employees are those who regularly get more than $30 per month in tips. The Fair Labor Standards Act permits an employer to take a “tip credit” toward the requirement to pay minimum wage. The employer’s tip credit is equal to the difference between the required cash wage ($2.13/hour) and the federal minimum wage. The employer may not use an employee’s tips for any reason other than as a credit against its minimum wage obligation to the employee or toward a valid tip-sharing arrangement employees. If the tips an employee actually gets, combined with the cash wage does not equal the minimum wage, the employer must make up the difference.

If you suspect that your tips are being misused, contact an attorney.

The Fair Labor Standards Act requires employers to pay their nonexempt employees time-and-a-half the regular rate of pay for all hours worked after 40 in a workweek. For example, if an employee receives $10.00 per hour, she should receive $15.00 per hour for all hours worked over 40 in a workweek.

Covered, non-exempt employees are entitled to overtime.

Many classes of employees are exempt from overtime. Exempt employees include:

• “Executive,” “administrative,” and “professional” employees
• Outside sales employees
• Agricultural employees
• Live-in domestic employees
• Many computer professionals

Whether these exemptions apply is highly fact-specific. Consult an employment attorney if you think you might be exempt.

Persons employed in domestic service in private homes are covered by the Fair Labor Standards Act. Domestic service workers include companions, babysitters, cooks, waiters, maids, housekeepers, nannies, nurses, janitors, caretakers, handymen, gardeners, home health aides, personal care aides, and family chauffeurs.

Some domestic employees, while covered by the FLSA, are exempt from its protections:

• Domestic service workers who reside in the employer’s home (and thus are “live-in” domestic service workers) may be exempt from the FLSA’s overtime pay requirement, but they still are entitled to the minimum wage. In order to be a live-in domestic service worker, a worker must reside on the employer’s premises either “permanently” or for “extended periods of time.”
• Casual babysitters and domestic service workers employed to provide “companionship services” for an elderly person or a person with an illness, injury, or disability are not required to be paid the minimum wage or overtime pay if they meet certain regulatory requirements.

If you aren’t sure whether you are exempt from the law’s protections, contact an attorney.

Retaliation against an employee who seeks to enforce their rights under the Fair Labor Standards Act is illegal, even if the employee’s work and the employer are not covered by the Act.

Under the National Labor Relations Act, it is also illegal for an employer to retaliate against an employee for engaging in “concerted activity” – when two or more employees take action for their mutual aid or protection regarding terms and conditions of employment, or when a single employee engages the employer on behalf of other employees, brings group complaints to the employer’s attention, tries to induce group action, or seeks to prepare for group action.

Under the Texas Payday Law, an employee who is laid off, discharged, fired, or otherwise involuntarily separated from employment must receive her last paycheck within six calendar days of discharge.

If the employee quits, retires, resigns, or otherwise leaves employment voluntarily, their final pay check is due on the next regularly-scheduled payday following the effective date of resignation. A worker who did not receive her last paycheck should file a claim with the Texas Workforce Commission within 180 days of the date the wages become due for payment.

Independent contractors are not covered by most employment laws, such as state and federal wage and hour and anti-discrimination laws. However, independent contractors still have contract rights, such as the right to be paid the amount promised for the work performed. Also, certain statutory rights apply to construction, demolition, and remodeling workers.

Employees can seek unpaid wages through the Texas Workforce Commission, The Department of Labor’s Wage and Hour Division, or a lawsuit.

Additionally, both employees and independent contractors can seek payment under Texas’s mechanic’s lien statute. A mechanic’s lien is a powerful remedy often available to employees and independent contractors who go unpaid for work on demolition, construction, or renovation projects (including post-construction cleanup work).

A mechanic’s lien secures payment for labor performed on the project. It gives the worker an interest in the property and can obligate the owner to pay for the work even if the contractor who hired the worker disappears.

It is crucial to act fast in these cases; the law is complicated and has strict and swift deadlines. Depending on the circumstances, a worker may have as few as 30 days after she completes work on a project to get a lien claim, so an unpaid construction or demolition worker should speak with a lawyer as soon as possible.

Although mechanic’s liens are generally available on private projects only, public bonds exist for governmental projects with similar protections and timelines. Further, employees on public projects may be entitled to a prevailing wage rate that is higher than the federally mandated $7.25 per hour.

All of the laws discussed here protect workers regardless of their immigration status. In addition, victims of certain workplace crimes who are helpful in law enforcement investigations may be eligible for U-visas, which provide protection from deportation, work authorization, and a pathway to lawful permanent residence. Moreover, victims of trafficking, including labor trafficking, may be eligible for T-visas, which provide similar rights.

Contact an attorney who specializes in employment law. If you cannot afford an attorney, contact a nonprofit legal services organization:

• Equal Justice Center: specializes in employment law statewide, offices in Austin, Dallas, Houston, and San Antonio
• Texas RioGrande Legal Aid: legal aid, including employment law, in South, Central and West Texas, and services to farmworkers statewide
• Legal Aid of NorthWest Texas: legal aid, including employment law, in North and West Texas
• Lone Star Legal Aid: legal aid, including employment law, in East, Southeast, and Northeast Texas