As a Texas employer, your employees in other states are protected by the laws of the state in which they perform their work, not Texas law. In most cases, those laws give your out-of-state workers more rights and protections than employees in Texas are given.

As a rule of thumb, the state and local laws of the physical location where the employee is working will supersede Texas law. That means that Texas businesses are responsible for complying with the laws of those other states when they employ a worker across the Texas state lines.

Many of my business clients are headquartered in the Texas Panhandle, but they also have operations, offices, clients and therefore, employees, in New Mexico, Oklahoma, Kansas, Colorado or other states. In an attempt to simplify their operations, those multi-state employers often prefer to adopt policies that apply across the board to all employees, regardless of where the employee is located.

But you cannot ignore the employment laws of the state in which your employees reside and perform some work, even if they only work in that state part of the time. While it is impossible to list every different employment law for even just the nearby states, here are just some examples that employers need to be aware of:

• Minimum wage and overtime: While Texas’s  minimum wage is still $7.25 per hour, in New Mexico, $12 per hour is the current minimum wage. In Colorado, it is $14.81 per hour as of January 1, 2025. While your business may be paying higher wages than this minimum, you also have to take the minimum wage into account when you are taking a deduction from an employee’s paycheck. Higher minimum wages also make accurately recording every minute of an employee’s workday even more important. For example, a feedyard in New Mexico may not have to pay overtime pay under the Fair Labor Standards Act’s agricultural exemption, but that  business still has to pay minimum wage, meaning that $120 day rate for a cowboy in feedyard in New Mexico won’t be enough on the days that he works more than 10 hours. And in Colorado, state law says a feedyard located there has to pay not only minimum wage, but also overtime once the worker clocks 48-56 hours in any one 7-day workweek. Failure to comply with these compensation laws adds up to expensive repayment obligations quickly if the Department of Labor audits your business.
• Breaks: Texas and Oklahoma do not mandate that an employer has to give employees any paid or unpaid breaks. But Colorado requires employers to provide a 30-minute unpaid meal break anytime an employee works at least 5 hours. Employees in Colorado also have to be provided a 10-minute paid break every four hours.
• Paid Family Leave: While most Texas employers with more than 50 employees must provide unpaid leave of up to 12 weeks under the federal Family and Medical Leave Act, voters in Colorado approved a state-wide paid Family and Medical Leave insurance system that went into effect in 2024. Employers and employees both pay into the insurance system in the form of a tax on wages, which are then paid out in benefits to the employees on leave, similar to unemployment compensation. However, an employer can also choose to fulfill their obligation by certifying to the state that the employer provides paid leave equal to or better than the insurance system for serious medical conditions or family leave. So a Texas employer must either pay the additional payroll tax on their Colorado employees or provide paid leave as a benefit to all employees. New Mexico is attempting to institute a similar paid family and medical leave insurance program in 2025.
• Sick leave: Texas and Oklahoma have no regulations requiring businesses to provide paid sick leave. But Colorado and New Mexico require employers to provide one hour of paid sick leave for every 30 hours that an employee works, up to 48 hours per year in Colorado and 64 hours in New Mexico. There are numerous rules about how and when these paid sick leave hours can be deducted and if they have to be carried over from year to year or paid out upon termination.
• Unused Paid Time Off at time of termination: Many employers in Texas, Kansas, New Mexico and Oklahoma refuse to pay unused paid time off, sick leave or vacation pay at the time of termination of employment, particularly if the employee is fired for cause or resigns without providing 2 weeks’ notice. But many states, including Colorado, require employers to pay a departing employee for all unused paid time off in the final paycheck.
• Worker’s Compensation. Texas is alone in not requiring employers to subscribe to worker’s compensation insurance. Every other state mandates that employers purchase insurance to provide injured employees with medical care and some salary while recovering from an on-the-job injury. With very few exceptions, even if an employee is working from home in another state, the Texas employer still has an obligation to provide worker’s compensation insurance coverage to that out-of-state employee. The penalities for failure to provide worker’s compensation to out-of-state employees are usually very high.
• Labor Posters: All states require specific posters unique to that state describing employee rights to be provided to employees . Generally , these posters hang in visible spots in the office. If your worker is located in another state, you need to make sure that the appropriate posters (in the form of electronic notices) are provided to the employee at the time of hire even if the employee will be completely remote and working out of their home.
• County variations: The county or city in which your out-of-state employee works can also impose certain requirements on a Texas employer. For example, in addition to protecting age, race, sex, religion, disability and other classes that are generally protected by federal and state law, some counties in Colorado consider gender variance, political affiliation, income, public assistance status and parenthood/family responsibilities as classes protected by housing and employment anti-discrimination laws. You should consider these vulnerabilities when making significant employment decisions, such as a firing, about your out-of-state employees.

How do you address all of these variations in the employment laws as a Texas employer? If you have enough employees in a state outside of Texas, you may want to have a written supplement to your employee policy manual that is directed only to those employees in another state.

If you only have one or two employees in a state, consider employment contracts that cover those employees’ particular situations without changing the Texas policies that cover the great majority of your employees.

You should also think about whether your Texas employees may be angry when they find out you are providing additional benefits, such as paid sick leave or higher hourly rates, to some of your employees but not to them. Depending on your workforce, you may want to upgrade your Texas policies to be equal company-wide.

These are not easy decisions, but to be compliant with the laws of all of the states in which you operate, you should consult an employment law attorney to determine if your policies and procedures need to be changed for your non-Texas employees.