Congratulations on starting your new business and becoming an employer in Texas. Being an employer comes with lots of legal requirements and responsibilities. That’s where having a good employment lawyer on your side can help.
But sometimes you just need a quick reference guide to what you are supposed to be doing as an employer. Here is a brief rundown of some of the things you have to consider when you start hiring people in Texas:
- You must have an employer identification number (“EIN”) from the IRS. This is easy to apply for online.
- To pay employees correctly and withhold from their paychecks the proper amount of taxes, you must have the employees complete a W-4 form. You must also withhold the employee’s portion and pay your employer portion of the employees’ Social Security and Medicare taxes or FICA (6.2% for Social Security and 1.45% for Medicare are paid by the employer based on the employee’s compensation). You may also be ordered by a court to withhold child support, alimony, student loan repayments or other garnishments.
- Texas Payday Law says that an employer must pay an employee at least twice per month if the employee is a non-exempt worker and once per month if an exempt worker. It also says that when an employee leaves your company, you must provide the final paycheck by the 6th day after you fired the employee, or by the next regular payday if the employee quit.
- The difference between non-exempt workers and exempt workers is a critical but seriously misunderstood area of employment law. The Fair Labor Standards Act is the federal law which determines which employees must receive minimum wage and overtime and which employees can be paid on a salary. Do not attempt to make this determination on your own. Please consult with an employment lawyer on this issue.
- Overtime pay is sacred when a non-exempt employee works more than 40 hours in any one 7-day workweek. There are many ways employers mess up overtime pay and get into expensive trouble with the Department of Labor. Get yourself and your payroll person some training on this issue.
- There is no federal or Texas law that mandates that you provide your employees with breaks or lunches, other than nursing mothers with children under the age of one. However, if you do provide breaks and meal times, there are strict rules about how your employees must be compensated for those breaks.
- You have to keep very meticulous records about your employees, particularly regarding payroll.
- Learn the difference between independent contractors and employees. Don’t try to avoid payroll taxes by designating a worker as “contract labor”. This is another determination that you could make better by consulting an employment lawyer before you decide to call any worker a “contractor”.
- You must only employ workers who are eligible to work legally in the United States. That doesn’t mean only employ U.S. citizens. It means that you must consistently use and understand the Form I-9 that must be completed on every new employee within 3 days of hiring.
- You cannot discriminate against any applicant or employee on the basis of race, religion, national origin, age (over 40), sex, pregnancy, citizenship, disability, genetic information, bankruptcy or veteran’s status if you employ at least 15 employees (counted by names on the payroll, whether part-time or full-time). At the time of this post, sexual orientation and gender identity are (unbelievably) still not protected classes under any Texas or federal statute. However, there are Texas city ordinances and court opinions, as well as Equal Employment Opportunity Commission enforcement actions, that protect an employee from discrimination on the basis of sexual orientation or gender identity, so don’t discriminate on those bases either.
- The Equal Pay Act requires that you pay women and men the same pay for performing the same or substantially equal jobs.
- Post the required employment posters in a conspicuous place so that your employees are informed of their legal rights.
- Yes, you do need a written employment policy manual. It tells your employees what you expect and gives you a road map when you run into disciplinary and other employee issues. It is your first line of defense if an ex-employee alleges discrimination or another employment violation. However, a written employment policy manual is not something you should attempt on your own. There are tricks and techniques that an employment attorney can provide you that will actually save you a lot of time and money over trying to compile your own written policies.
- OSHA requires that employers provide their employees with a safe workplace. But workplace injuries do occur. Texas does not require that you as an employer carry workers compensation insurance. You can choose to “go bare” or to buy an occupational accident policy. However, you will be at a severe legal disadvantage if you get sued by an injured employee and you don’t have workers compensation insurance. This is a decision that you should discuss carefully with your employment lawyer.
- Understand that the number of people you employ makes a big difference in which laws you have to follow. The Family and Medical Leave Act only takes effect once you have 50 names on the payroll. The Affordable Care Act doesn’t require you to provide health insurance for your employees until you hire enough people that they are working the hours equivalent to 50 full-time employees. As you get to the thresholds of 15 employees, 50 employees and 100 employees, consult with your employment lawyer about ways to minimize your increased legal risks that result from your growth.
This list is only the tip of the iceberg of employment law questions that Texas employers must recognize and address. I didn’t even mention allowable deductions from paychecks, drug testing, sexual harassment, employee theft, protecting your trade secrets, unemployment compensation, firing employees, or the many other issues that may arise for you as an employer. I address many solutions for employers in this blog, www.theemployersadvocate.com. I also highly recommend that you bookmark “Especially for Texas Employers”, the excellent online guide provided for free by the Texas Workforce Commission.