Understanding Exempt Employees in Texas: A Guide for Recruiters and Hiring Managers

Understanding the rights of the exemption in Texas is necessary for recruiters, not only to follow the law, but also to ensure that you are hiring employees and hiring in a way that supports their success and the development of your organization. While exempt employees receive a regular salary, their role and expectations for compensation may vary depending on the company and the situation.
In Texas, employers carry certain responsibilities regarding salaried employees, specifically, exempt employees. Exempt employees come with their own set of guidelines.
In this article, we will run through the major points that you have to know about the exempt employees in Texas, which will help you to make informed recruitment decisions and manage your workforce with confidence.

Understanding Exempt Employees in Texas

Being exempt means that you are not eligible to receive overtime compensation. When an exempt employee works more than forty hours per week, they are not eligible for overtime compensation. Since Texas adheres to the FLSA's exemption categories, an employee's status as exempt or non-exempt is determined by their pay level, type of compensation, and the duties they are assigned.

If an employee satisfies these requirements, they are exempt:

• Level of Compensation: A salaried employee is eligible for exempt status if they make more than $844 per week, or $43,888 annually. Teachers in Texas have a lower salary threshold for exempt status; they must make at least $455 per week, or $23,660 annually, to be eligible. Notably, exempt salaried workers are entitled to bonuses and stipends but not overtime compensation. 
• Compensation Type: An employee must continuously receive the same regular pay during a predetermined pay period in order to be eligible for exemption. 
• Job Duties: In Texas, there are four types of workers who are exempt from overtime compensation: managers or executives, administrators, learned professionals, and teachers working in the state's educational institutions.

How to Determine if You're Exempt in Texas?

So, the key to establishing if an employee is exempt from overtime pay in Texas is the consideration of the conditions that make them eligible under the Fair Labor Standards Act (FLSA). The main tests to apply are listed below:

Salary Basis Test:
To be classified an employee under exempt status, the person must be paid on a salary basis, i.e., he receives a paycheck regardless of hours worked.

Salary Level Test:
At a minimum, an exempt employee must earn $844 per week ($43,888 per year). An employee earns below this minimum cannot be considered exempt from overtime.

Duties Test:
The employee's job duties must meet the exempt categories defined by the FLSA. Common exemptions include:

Executive exemption: Employees who manage a department or organization and supervise at least two other employees and have the ability to hire, fire, or promote.

Administrative exemption: The primary duties of these employees involve managing business operations and using discretion and judgment in significant matters and performing work conducted in an office.

Professional exemption: Employees whose work requires advanced, specialized education or intellectual ability, such as those in legal, medical, or technical fields.

Using these tests, a businessman can know whether or not an employee should be labeled as exempt, definite compliance with the Texas labor law.

Frequently Asked Questions About Exempt Employee Rights in Texas

Basic Rights of Exempt Employees in Texas

If you employ exempt staff in Texas, here are a few things to remember:

The Federal Rules Apply:
Exempt employees within the state of Texas are held to the Fair Labor Standards Act (FLSA), which gives guidelines for exemption based on the salary and job duties performed.

Minimum Wage:
Exempt employees are not entitled to minimum wage laws; thus, they don't have the protection of the minimum wage. They should be paid not less than $844 weekly ($43,888 yearly) to remain exempt.

Equal Pay:
They should pay exempt employees an equal rate for the same work. Workers performing similar work with equal skill, effort, and responsibility must be paid equally, regardless of exemption status.

Recordkeeping:
Exempt employees are free of the obligation to keep track of the hours they work. Exempt; therefore, they do not qualify for overtime, so no detailed record of hours worked is required.

Employment-at-Will:
As Texas is an at-will employment state, exempt and non-exempt employees may be let go without cause or notice, unless contrary to the terms of a contract.

Right to Work:
Exempt employees are protected by the right-to-work statute of Texas, meaning forced union membership or financial support cannot be made a condition of employment.

Payroll Deductions:
Payroll deductions from an exempt employee's pay can be made, as long as they are required by law (taxes, garnishments) or authorized by the employee (benefit contributions). Deductions from exempt employees' salaries for time missed or errors cannot be made.

Workplace Safety:
Exempt employees are entitled to the same workplace safety environment, with same rights and privileges as non-exempt employees.

Overtime Pay and Exempt Employees in Texas

Exempt employees in Texas must meet certain criteria to qualify for overtime exemptions under the FLSA. The final rule requires that employees:

• Be paid a fixed salary, unaffected by the quality or quantity of work.
• Earn at least the minimum salary threshold.
• Primarily perform executive, administrative, or professional duties as defined by the DOL.

As of January 1, 2025, the salary threshold for these exemptions is $844 per week. If employees earn below this amount, you must either:

• Increase their salary to meet the new threshold, or
• Reclassify them as non-exempt and pay overtime for any hours worked over 40 per week.

Wage Deductions for Exempt Employees in Texas

Yes, but only in limited situations, as specified by the FLSA:

• Partial work weeks: If you worked less than 40 hours during your first or last week, you are only entitled to be paid for what you worked. 
• Full-day absences: If you do not work during a day at all, a full-day deduction would be permissible. However, if you can say you worked even some time, no "partial-day" deductions are permitted.
• Unpaid FMLA Leave: Any time taken under FMLA may be deducted.
• Out of paid leave: If you did not accrue PTO yet, or have already used your PTO up, the employer may deduct for time not worked.
• Disciplinary suspensions: Pay may be deducted for serious violations of formal policy and must be done in accordance with a written disciplinary policy.
• Safety violations: If you violate safety rules that endanger others or the workplace, your pay may be deducted.

In Texas, there are only a couple of reasons employers can deduct wages from an exempt employee:

• Court Order: If an employer is required to make deductions by a court order (e.g., child support, alimony), the employer must comply with the court order. 
• Employee Authorization: An employee may authorize wage deductions for certain payments (e.g., retirement savings plan contributions, loan payments) if the employer has written authorization for the deduction from the employee. 
• Other Legal Deductions: Employers are required to withhold taxes or other deductions imposed by the government.

If an employer makes an incorrect deduction, they can fix it by:

• Make the employee whole by reimbursing the employee in a timely. 
• Adopt best practices to ensure compliance in the future. 
• Ensure compliance with the FLSA going forward.

Breaks and Leave Entitlements for Exempt Employees in Texas

Some states have laws in place that strictly require employers to provide their employees a meal or rest break. In Texas, the employer has the discretion to allow break time during the work day or not. If they do allow breaks, the employer must comply with the Department of Labor's limitations, such as:

• Employees must be paid for meal or rest breaks that last 20 minutes or less.
• Employees must be completely relieved of duty during a break over 30 minutes long, but it can be unpaid.

In the same way, Texas labor laws do not require the private sector employees to provide employees with paid or unpaid leave. However, employers in the state are required to follow the FMLA, which mandates employers with 50 or more employees to provide up to 12 weeks of unpaid leave to employees who:

• Have given birth, adopted a child, or had a foster child placed with them.
• Provided care for a member of their immediate family being diagnosed with a serious condition.
• Has been diagnosed with a serious condition.

Employers are not required to pay for the hours of leave, but they are legally required to provide employees on unpaid leave with guaranteed temporary job security.

Flexible Work Arrangements for Exempt Employees in Texas

A flexible work arrangement is any work schedule that deviates from the traditional 40-hour workweek. Since Texas labor laws defer to the FLSA, which does not make provisions for flexible working arrangements, employees in the state are not bound to 9 - 5 work schedules. As such, an employee and their employer can come to an arrangement on a flexible work schedule. Employers can consider a compressed work week and allow employees to work for fewer days as long as they hit 40 hours every week. Similarly, they can consider flex-time, whereby employees are free to set their own schedule as long as they work for 40 hours every week.

Minimum Wage Requirements for Exempt Employees in Texas

In Texas, the minimum wage is the same as the federal minimum rate of $7.25 per hour. The rate has remained unchanged since it was adjusted upward from $6.55 in 2009. For salaried employees, the FLSA sets a minimum pay of $844 (or $43,888 per year).

Deductions, Benefits, and Protections for Exempt Employees in Texas

The FLSA (Federal Labor Standards Act) is a law that prohibits employers from deducting or deducting any amounts from the salary of their employees. An employer can only deduct amounts from an employee’s salary in the following instances:

• If the deduction is required or permitted by both state and federal statutes.
• If a court of law has ordered the employer to make a deduction from an employee’s salary.
• If an employee is permitted to or authorizes the employer in writing to deduct their salary for a permissible purpose.

Aside from the FLSA guidelines, Texas labor laws protect salaries in the following ways:

• An employer cannot recover previous wage overpayments from an employee's current salary without written permission from the employee.
• An employer may not take partial-day wage deductions for small amounts of time when an employee has not worked a full 8 hours of a day.
• An employer may not deduct wages to cover uniforms or any other job-related supplies without written permission from the employee. 

However, there are a few cases where some deductions are permitted in the following circumstances:

• A full day's pay may be deducted if no work is performed on that day conversely, partial-day deductions cannot be taken when the employee performs even minimal work.
• If the employee takes time off before qualifying for paid leave or after using it, you may deduct either a full or partial day.
• Deductions are also permitted for disciplinary suspensions (not performance or attendance related) that have a written policy in place.
• Pay may also be deducted for serious workplace safety violations where the employee puts coworkers or the workplace at risk.

Employee Benefits and Protections for Exempt Workers Under Texas Law

Texas state law provides key protections and benefits for employees:

• Employees are shielded from discrimination based on race, gender, age, handicap, sexual orientation, and more.
• Unauthorized pay deductions are not allowed by employers.
• Under OSHA regulations, a safe working environment is absolutely required.
• Employees have the right to join unions free from intimidation or danger.
• Workers can file or support discrimination claims without fear of retaliation.

To Wrap Things Up

Exempt employees should be well informed about their legal safety and rights. As an employer, it is important to ensure that your employee understands these rights, empowering them to advocate for their own good and preventing any violations of those rights. It is important to remain updated with changes in labor regulations to maintain a positive working environment in Texas. Given the complexity of employment and labor laws, demanding expert guidance from a qualified employment lawyer or the Texas Workforce Commission or Representatives of the Labor Department can provide valuable insight and help ensure compliance.

Sourcing Exempt Employees The Smart Way

Finding the right exempt talent involves more than just looking through resumes; it also involves matching compliance requirements, role expectations, and qualifications. This process is made simpler by platforms such as EasySource, which assist recruiters in more accurately and quickly identifying, evaluating, and connecting with ideal candidates.

Read more about how EasySource can improve your hiring process and assist you in finding exempt workers here.