Wage and Hour Laws

Right to receive the agreed-upon pay for work performed and to be paid at least minimum wage and overtime

State and federal laws regulate wage payments and wage and hour conditions. The right to receive the agreed-upon pay for work performed usually involves basic contract law and state payday laws. An employer may change a pay rate, a pay method, or the pay agreement in general, but such things may not be changed if the changes would result in a retroactive pay cut. A retroactive pay cut is always illegal. In Texas, the Texas Payday Law states that an employee must be paid in full and on time on regularly scheduled paydays. "Paid in full" means two things: first, that the employer must pay everything that is due according to the wage agreement that was in effect when the work was actually performed, and two, that the wages must be paid in full without any illegal deductions. Legal deductions fall into three categories:

court-ordered garnishments (in Texas, that means child support and alimony);
deductions required by state or federal law (payroll taxes, IRS tax levies, and student loan wage attachments); and
deductions authorized in writing by the employee and made for a lawful purpose.

The third category is what causes the greatest number of wage claims under the Texas Payday Law. Any deduction that does not fall under the first two categories must be authorized in writing by the employee. A deduction not made with written authorization can thus be illegal. Under the payday law, an employer may be forced to pay the employee back for the money that is illegally deducted.

"Lawful purpose" means that the deduction must be based upon some lawful transaction. For example, since gambling is generally illegal, a deduction made to settle a gambling debt, even if authorized in writing by an employee, would not have been made for a lawful purpose and would thus fail under category three. Examples of deductions made for lawful purposes include deductions for meals, lodging, and facilities furnished in connection with the job; loans and salary advances; group health plan contributions by the employee; wage overpayments; union dues; administrative fees in connection with child support and student loan wage attachment deductions; vacation and sick leave pay advances; losses caused by the employee, as long as the deductions do not take the employee below minimum wage; and misappropriation of money by the employee.

The main federal law dealing with wage and hour matters is the Fair Labor Standards Act of 1938. (To view a user-friendly version of the FLSA, click here - you must have a version 3.0 or later browser, preferably 4.0 or later.) It provides that with very few exceptions, an employee must be paid at least $5.15 per hour for all hours worked, plus time and a half for all hours worked in excess of 40 in a seven-day workweek. The law presumes that all employees will be eligible for overtime pay if they work more than 40 hours in a seven-day workweek. However, there are a few exceptions. For example, some higher ranking or professional employees might be exempt from overtime pay. Such exemptions contain very strict and narrow requirements. If the requirements are not met, the exemption does not apply. It is very common in workplaces all around the country for non-exempt employees to be misclassified as exempt. If the employee files a wage complaint with the U.S. Department of Labor wage and hour division, or else files a lawsuit in court, or else files a Texas Payday Law wage claim, and the determination is made that the employee was wrongly classified as exempt, the employer can be held liable for all the overtime pay that should have been paid to the employee.