Texas Employment Law Frequently Asked Questions
The Q&A below is reprinted with permission from Texas Business Monthly.
Unemployment Claims and Appeals
Q: What is a base period?
A: The base period is a year-long period of time that determines both the amount of UI benefits a claimant can potentially draw and which employers will be in line for potential chargebacks if benefits are paid. Lagging behind the date the initial claim is filed, the base period is defined as the first four of the last five completed calendar quarters immediately preceding the initial claim. An easier way to think about it is to take the date the initial claim is filed, disregard that quarter (the quarter in progress), disregard the quarter immediately preceding that one (the lag quarter), and then go back in time four calendar quarters. That year-long period will be the base period, and any employer that paid the claimant wages during any of those quarters will be potentially liable for chargebacks. The liability will be proportional to the amount of wages the employer paid in relation to other base period employers, i.e., if you paid half the claimant’s wages during the base period and another company paid the other half, you will each have half of the chargeback liability.
Q: A long-term, but part-time, employee was permanently laid off with two weeks’ notice and received severance pay as per our policy. If he receives unemployment benefits, will the company be charged back for all of his benefits, or else receive a “break” for the amount of severance paid?
A: Severance pay paid under a policy or agreement has no effect on unemployment benefits, so it will not reduce the employer’s chargeback amount. The company will be charged back with its share of whatever benefits are paid to the laid-off employee. The percentage of chargeback will be the same as its share of the wages paid to the employee during the base period of the claim.
Q: We terminated an employee for cause. We do not believe she deserves UI benefits. What do we need in order to prove our case?
A: At a minimum, your company will need to prove that the claimant was fired for a specific incident of misconduct connected with the work (a final incident) and that she either knew or should have known she would be fired for such a reason (usually shown with a final warning or a clear written policy warning of discharge for a particular type of problem).
Q: Right after her one-year anniversary with my company, one of my employees told me that she is unhappy here and has already started looking for another job. Can I take that as her resignation, and do I have to pay her for the unused vacation?
A: TWC would not consider the employee’s expression of unhappiness as notice of resignation. Many employees think such things from time to time, and a few actually tell you, but it is only talk. Unless they actually give you a definite date as the effective date of their resignation, they have not resigned. An employer has to pay for unused vacation or sick leave only if stipulated in a written policy or agreement.
Q: The claimant was fired for missing a required meeting. His excuse was that his supervisor told him he did not need to attend, but his supervisor denied that. How can we best handle the appeal hearing?
A: Be sure to have the supervisor testify during the hearing, as well as any other witnesses who could confirm that attendance was mandatory at the meeting for the claimant. In addition, submit a copy of any written notices or e-mails that put employees on notice about the meeting – send copies to both the hearing officer and the claimant prior to the hearing.
Q: An employee gave two weeks notice of quitting. We accepted the resignation immediately. He now claims we owe him for the two weeks we did not let him work. Do we owe him such pay?
A: No, unless you have a written policy or agreement promising to pay resigning employees for the unworked portion of a notice period. Under TWC policy, if an employee gives notice of intent to resign by a definite date that is two weeks or less in the future, the employer can accept that notice anytime within the two-week period without changing the nature of the work separation from a quit to a discharge. Just be sure to let the employee know that the company is “accepting the notice early” and will not need him to work out the notice period, instead of using terminology such as “we’re letting you go early” or “we’ll go ahead and process your termination today”, which sounds like one would say in the event of a layoff.
Texas Payday Law
Q: My employee just quit last week and is refusing to return her uniforms. Can I hold her final paycheck until she brings the uniforms back?
A: No. Her duty to return the uniforms is separate from your duty to give her the final pay she earned. If you have a wage deduction authorization agreement, signed by her, allowing you to deduct the replacement cost of the uniforms, then you could take that money out of her final paycheck. Be sure not to let such a deduction take the employee’s pay below minimum wage ($7.25/hour).
Q: Do I need written authorization to deduct child support from an employee’s pay?
A: No. Court-ordered garnishments and required deductions such as those for payroll taxes, other tax debts, and guaranteed student loan wage attachments do not need to be authorized in writing. Generally speaking, any other type of wage deduction must be authorized in writing. Be sure the written authorization is as specific as possible regarding the purpose and amount of the deduction, and that it states that the deduction will be made from the employee’s pay.
Q: Our former payroll employee accidentally overpaid two employees for several payroll periods. How can we legally get that money back?
A: After explaining the situation to the employees, ask them to sign a written wage deduction authorization agreement allowing the company to deduct the wage overpayments from their future paychecks in certain specific amounts. If they refuse, the company may either delay any anticipated pay raises or give the employees a temporary reduction in the pay rate in order to recoup the amounts in question. Try to keep the pay reduction as small as possible (as much under 20% as possible) to avoid giving them good cause to quit and file unemployment claims, and be sure to give the notice of pay reduction in writing.
Q: I fired an employee for falsely claiming he was authorized to work in the U.S., and did not pay him for the time he worked. Now TWC is telling me I have to pay him. If he was not legally authorized to work in the U.S. and had no right to work, how does he have a right to file a claim?
A: Neither the FLSA nor the Texas Payday Law condition an employee’s right to be paid on their status as an
authorized worker. He did the work – your company received the benefit of his services – and so he has a right to be paid for the work he did. A case like this illustrates how important it is to carefully go through the I-9 process and use the Social Security Number (SSN) Verification Service to minimize the risk of hiring workers who do not have genuine SSNs. Contact TWC and IRS to learn the procedures for reporting wages for someone who does not have a valid SSN.
Q: What paid holidays are required in Texas?
A: None. Paying employees for time off is left up to each employer to decide for itself. However, paid holidays that are promised in a written policy or agreement are enforceable under the Texas Payday Law.
Q: Do we have to offer health insurance to our employees?
A: Under current law, no.
Q: What is considered “full-time” employment?
A: While the definition of full-time and part-time employment is left up to each employer to decide for itself, 30 hours per week is enough to make an employee eligible for a company health insurance plan, and 1,000 hours of work within a twelve-month period makes an employee eligible to elect participation in any retirement or pension plan that the company may have.
Q: We have fewer than 20 employees. Can former employees elect to receive federal COBRA continuation coverage for 18 months, or must they accept Texas “COBRA” coverage for six months?
A: With fewer than 20 employees, federal COBRA continuation coverage is not available. Texas state law allows continuation coverage for up to six months, so that would be the best option for the former employees. Remember that the 65% COBRA premium subsidy applies to both federal and state COBRA benefits; the subsidy applies only to those who were laid off or terminated for reasons other than gross misconduct – it does not apply to employees who quit or were fired for gross misconduct.
Wage and Hour Law
Q: What breaks are we required to give employees?
A: Breaks are not required under Texas or federal law. It is up to a company to decide whether rest breaks or meal breaks will be allowed and under what conditions.
Q: Can we give employees comp time in lieu of pay for the overtime they work?
A: Not if your organization is in the private sector. Public employers may compensate employees who work overtime with comp time, but that must be done at time and a half, i.e., one and a half hours of comp time for each overtime hour worked, and the employer needs to advise employees in advance of the comp time policy (the best way is to have each employee sign a written wage agreement that includes the comp time policy).
Q: My employee told me I need to give her extra overtime pay based on the commission pay she earned for the past month. Is that true, and if so, how do I calculate the overtime pay? She is paid an hourly rate.
A: Commission and bonus payments must be included in the regular rate of pay for overtime purposes. Assuming that the employee has already been paid for the overtime based upon her hourly rate, she just needs to be paid an additional amount of overtime pay based upon the commission earnings. If it was a monthly commission, multiply it by twelve and then divide the annualized amount by 52 to determine the weekly equivalent. Take the weekly equivalent, which represents extra straight-time pay for the hours worked that week, and divide it by the number of hours worked to get the increase in the regular rate of pay for that week. Then, divide that result by two, multiply that figure by the number of overtime hours that week, and add it to the commission to bring the commission pay up to time and a half for the overtime hours.
Q: I just found out that one of the crew managers has been letting his crew work overtime without turning in the extra hours. He promised them they would have a better chance of avoiding layoff if they looked like a more efficient crew. That is not legal, is it?
A: Correct – that is not legal. That is basically the same as working “off the clock.” Neither employers nor employees have a choice about overtime pay – if non-exempt employees work overtime, they must be paid for it.
Q: To trim overtime costs, we are considering paying the clerical staff on a salary basis. Do we have to get them to sign some kind of agreement?
A: An agreement will make no difference. If the employees are non-exempt, simply paying them a salary will not make them exempt employees. Even an agreement to not be paid overtime is not enough, since employees cannot waive their right to minimum wage or overtime pay. It is generally best to pay non-exempt employees such as clerical staff on an hourly basis. That way, if they ever run out of paid leave and miss work, the company does not have to worry about getting their written authorization to deduct the value of the unpaid leave from the salary.
Q: We have data entry clerks who work at home and are paid $0.35 per line entered. Are they entitled to overtime pay?
A: Yes, if their total work hours exceed 40 hours in a workweek. To calculate overtime pay for employees paid on a piece-rate basis, determine their straight-time pay (lines entered times the per-line rate), divide that amount by the number of hours worked to get the regular rate of pay, multiply one-half of the regular rate by the number of overtime hours, and add that result to the straight-time pay. That total would be the employee’s gross pay for the workweek. The regular rate of pay for such an employee must be at least minimum wage.
Q: To establish access to the company computer system for employees, company staff send e-mails with personal information, including employees’ ages and SSNs, to the IT department. These e-mails are copied to all levels of management, even those who are not directly involved with those employees. Is this all right?
A: To reduce the chance of personal information getting out to unauthorized people, as well as the related risk of identity theft, it would be best to restrict the recipient list to those who have a job-related need to know the information. In addition, limiting the number of people who know age-related information shrinks the circle of those who can be credibly accused of taking age into account in an adverse employment decision.
Q: Are we required to give employees one day off of work per week?
A: Only in the case of retail employees, or if the company could let a non-retail employee have a day off as a reasonable accommodation of the employee’s religious beliefs. Otherwise, there is no legal limit to the amount of time that an employer can require an employee to work.
Q: What makes a random drug test random?
A: Any procedure that makes it impossible to predict with certainty when a specific employee will be asked to take a drug test.
Q: If drug test results come back as “dilute”, or the lab reports some other problem with the sample, what can our company do? Can we have them retake the test? What if they refuse the second test?
A: While no law would prohibit your company from discharging the employee if the drug test sample is found to be altered or otherwise unsuitable for testing, it might be difficult to use that one thing as proof of misconduct in an unemployment claim, unless you have rock-solid proof that the sample submitted by the claimant was altered in some way (test results, perfect chain of custody, and preferably firsthand testimony from the one who tested the sample). Concerning retesting, everything depends upon what your policy provides. If your policy is flexible enough, or comes right out and provides for retesting upon proof of an untestable sample, then require the retest and discharge the employee if he or she refuses to cooperate.
Q: We accepted an employee’s notice of resignation early because we were concerned that she would not be a good influence upon the other employees. Now she is refusing to leave. What can we do?
A: Hopefully, you have waited until the end of the day to let her know that her resignation is being accepted early. Take a witness along and let the employee clearly know that she needs to remove her personal belongings and take them with her promptly, because she will not be allowed to return. If she persists, warn her that she no longer has permission to be on the premises and will be considered a trespasser if she does not leave within a prescribed number of minutes. If she still refuses to leave, tell her you will call the police and ask them to remove her as a trespasser. If she does not take her personal belongings with her, have a witness watch while you carefully assemble her possessions in a box, keep an inventory of what goes into the box, place a copy of the inventory (signed by both you and the witness) in the box, seal the box, label it, and place it somewhere near the reception area where it can be easily retrieved by the ex-employee or someone designated by that person.
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