Texas Payday Law for Small Business: Paydays, Final Pay, and Deductions

Payday is the moment people decide whether they trust you. Not the mission statement. Not the cookout. The deposit. When it is late, short, or “we’ll catch it next period,” you have already started a story you did not mean to tell.

Texas has a Payday Law. The Texas Workforce Commission enforces it. Federal overtime rules still sit on top. Owners mix those two all the time. Here is the map in the order it usually shows up on your desk.

You need a real payday — not “when we can”

Pick scheduled paydays and tell people what they are. Weekly, biweekly, or twice a month is what most Texas shops run. The law expects employees to be paid in full, on time, on those days, for wages they have already earned. “We’re waiting on a customer to pay us” is a cash-flow problem. It is not a legal reason to skip a payday.

Write the schedule in the handbook and on the offer. If you change it, tell people in advance. Supervisors should not invent a different day because a job ran long.

When is the final paycheck due in Texas?

It depends on who ended the job. That is the question owners type into Google at 9 p.m., so here it is straight.

• If you fire, lay off, or otherwise let someone go: final pay is due within six calendar days of the discharge. Weekends count.
• If they quit, resign, or retire: final pay is due on the next regular payday after they leave.
• If it is unclear who ended it — “mutual,” a walkout, a “just don’t come back” — treat it carefully. The TWC looks at who actually initiated the split. When in doubt, the safer clock is the six-day one, and a call to counsel is cheap compared with a wage claim.

Final pay means the wages already earned — regular hours, overtime already worked, and other amounts that qualify as wages under Texas law. Unused PTO is not automatically wages in Texas unless you promised it in a policy or agreement. If your handbook says unused vacation is paid out, you likely made it wages. If your handbook is silent, do not invent a payout on the way out the door, and do not surprise someone who thought they had a bank.

Overtime is federal — Texas does not erase it

Most hourly people are due time-and-a-half under the Fair Labor Standards Act after 40 hours in a workweek. Texas does not have a separate daily overtime rule the way California does. That does not mean you can call someone a “salary” and skip overtime. The exemption tests are about duties and pay, not about what you wrote on the offer letter.

If your supervisors work 55 hours and you pay a flat weekly amount, get that reviewed. Misclassified overtime is one of the more expensive surprises a growing Texas company meets.

Deductions: written yes, “they owe us” is not enough

Texas is strict about taking money back out of a check. Uniforms, tools, cash drawer shortages, damaged product, a loan — many of those need a written, signed authorization that meets the Payday Law. A text that says “take it out of my check” is a weak file. A policy nobody signed is weaker.

Taxes, court-ordered child support, and a few other required withholdings are different. Those you run. Do not mix them in your head with “he broke a windshield.” For anything that looks like the company recovering a loss, pause and get the authorization right — or collect another way.

A payday rhythm that keeps you out of TWC mail

• Named paydays, in writing, that actually happen
• Timekeeping people can see — not a supervisor’s memory
• A six-day checklist for involuntary separations so final pay is not “when accounting gets to it”
• A signed deduction form, or no deduction
• One person who owns payroll questions, and a backup

Peace of mind on payday is not a software logo. It is a crew that is paid correctly so you can think about the next job, not a wage claim.

This is general information for Texas owners, not legal advice and not a determination about your company. Rules change. For a situation with names and dates, talk with an employment attorney. If you want a practical partner to stand the process up, that is the work we do.