Texas Overtime Laws

Introduction to Texas Overtime Laws

Overtime pay in Texas is governed by federal legislation known as the Fair Labor Standards Act (the FLSA).  As a general rule, employees are entitled to be paid one and a half times their regular hourly rate for every hour in excess of forty per week.  It is a common misconception (among both employees and employers) that salaried employees are not owed overtime pay.  This is not true – the FLSA’s requirements of overtime pay apply to many employees that are paid a salary.  There are almost certainly hundreds, if not thousands, of employees throughout the Dallas-Fort Worth Metroplex and across Texas that are being shorted unpaid overtime that they are owed under federal law – employers pay hundreds of millions of dollars to resolve unpaid overtime actions every year.

This post is intended to provide a broad, general overview of Texas overtime pay under the FLSA.  More detailed posts, which will explore Texas unpaid overtime rules and regulations in greater depth, analyze particular overtime cases of interest and discuss Texas unpaid overtime issues unique to specific fields and industries, will be published over the next few weeks and months.

When and why was the FLSA enacted?

The FLSA was enacted by Congress in 1938 in an effort to remedy what the legislature perceived to be the exploitation of workers during the Great Depression.  The FLSA was one of the first national fair wage laws to be enacted.  Low wages, long working hours, and high unemployment were common before and during the Great Depression, and Congress enacted the FLSA and its wage and hour requirements in an effort to standardize working conditions across the country.

The FLSA established an overtime rate of not less than 1.5 times the employee’s regular hourly rate for any hours worked in excess of the standard workweek. When enacted, the “standard workweek” was defined as 44 hours, though the law was revised shortly thereafter to make a standard 40 hour workweek, where it remains today.  Congress established the overtime provision in an effort to reduce unemployment by making it more expensive for the employer to work a small number of employees longer hours than more employees for shorter hours, and to improve the health and well-being of workers by discouraging excessive hours of employment.  The overtime provisions were also intended to reduce the causes of labor disputes that were common during the Great Depression and to reduce unfair competition by unscrupulous employers.  The statute has been amended several times in the decades that have followed, though the overtime pay requirement of one and a half times the rate of normal pay for has never been altered.

Who is entitled to overtime pay under the FLSA?

The FLSA was intended by Congress to apply as broadly as possible.  There are two ways that a worker can be covered by the FLSA – enterprise coverage and individual coverage.  To prove enterprise coverage, a worker must show that his employer: (1) has at least two employees engaged in interstate commerce or the production of goods for interstate commerce, or who handle, sell, or otherwise work on goods or materials that had once moved or been produced for in interstate commerce, and (2) has gross sales of at least $500,000 in sales annually.  If an employer qualifies for enterprise coverage, all of its non-exempt employees are entitled to FLSA protection.

If an employer does not qualify for “enterprise” coverage, individual employees can be entitled to overtime pay under the FLSA.  An employee is subject to individual coverage if he is directly and regularly engages in interstate commerce.  This means that an employee must be directly participating in the actual movement of persons or things in interstate commerce by (i) working for an instrumentality of interstate commerce, e.g., transportation or communication industry employees, or (ii) by regularly using the instrumentalities of interstate commerce in his work, e.g., regular and recurrent use of interstate telephone, telegraph, mails, or travel.  Given how broadly courts have construed the meaning of “interstate commerce,” and the global economy of today, it is difficult to imagine an employee that would not fall within this category.

Given the broad scope of the FLSA and the expansive meaning given to the term “interstate commerce,” as a general rule, almost every employee in the United States is covered by the FLSA (though, as discussed below, whether an employee’s position is exempt from overtime pay is a separate question).  Congress has excluded certain employers from the FLSA, such as “common carriers” (i.e. trucking companies and railroad companies, which are governed by separate federal laws and regulations) and “mom and pop” stores who employ only immediate family members.

What are the unpaid overtime requirements of the FLSA?

The FLSA requires the payment of overtime at a rate of one-and-a-half times (also referred to as time-and-a-half) the employee’s regular rate of pay for all hours worked in excess of 40 per week.  The FLSA provides that overtime pay is due if the employer “suffered or permitted” the employee to work more than 40 hours per week.  This creates a presumption that the employer knew or should have known that the employee was working more than 40 hours per week.  Overtime pay is calculated using 1.5 time the “regular rate of pay,” which includes the employee’s (1) wages, salary, commission, or piece rate; (2) incentive bonuses; (3) shift premiums; (4) cost-of-living allowances; (5) hazardous work pay; and (6) other payments that are regarded as part of the employee’s regular compensation.

It is not a defense under the FLSA for an employer to claim that there are no records that support the employee’s claim for unpaid overtime.  This is because the FLSA imposes a requirement for employers to maintain adequate records of all hours worked, all employees, the wages received, and other records related to their employees.  Thus, once an employee has made a claim for overtime and provided an estimate of hours worked, the employer has the burden to “disprove” the evidence of hours worked by the employee.

What are the major “exemptions” to the overtime pay requirements of the FLSA?

There are a number of exemptions under the FLSA. If an employee is subject to such an exemption, he is not entitled to overtime pay.  The most common of these exemptions are executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and employees in certain computer-related occupations.  Whether an employee is exempt or not is generally the most hotly-contested issue in any overtime case, because the case law and Department of Labor regulations explaining the exemptions are vague and leave considerable room for debate.  Additional posts will follow that will explore some of these exemptions in more detail.

What remedies are available to workers who have been denied overtime pay?

An employee who prevails on a claim for unpaid overtime under the FLSA may be entitled to the following remedies: (1) all unpaid overtime (i.e. the damages representing one-and-a-half times (also referred to as time-and-a-half) the employee’s regular rate of pay for all hours worked in excess of 40 per week; (2) liquidated damages in an amount equal to the damages awarded as unpaid overtime; (3) attorney’s fees; and (4) court costs.  The liquidated damages award, which is in essence a penalty to encourage compliance with the FLSA, is mandatory under the FLSA, unless the employer can show that its failure to comply with the FLSA was in good faith.  This is an onerous burden for the employer to meet, and thus, once the employer is found to have violated the overtime provisions, the employee stands to receive twice the amount of his unpaid wages, as well as attorney’s fees and court costs.

How far back can a worker seek overtime pay?

A 2-year statute of limitations applies to the recovery of unpaid overtime, except in the case of a willful violation, in which case a 3-year statute applies.  Accordingly, if an employee believes he is due unpaid overtime, it is important for him to seek legal counsel quickly.

What protections are available to current employees who believe they are due unpaid overtime?

It is a violation of federal law to terminate, discipline or discriminate in any way against an employee for filing a complaint or for participating in a legal action under the FLSA.  Many courts have also held that it is a violation of the FLSA for an employer to retaliate against an employee for asking about unpaid overtime.  An employee who suffers any adverse employment action as a result of his participation in a legal action under the FLSA may recover lost wages, front pay and attorney’s fees.  Some courts have also allowed such employees to recover punitive damages and mental anguish damages.

About the Author: I represent individuals in a variety of matters, including employment claims for lost wages. While my office is located in Fort Worth, I am admitted to practice in every state and federal court in Texas, and I am able to handle unpaid overtime cases in Dallas, Midland-Odessa, Fort Worth, Denton, Houston, Waco, Austin, San Antonio, and across Texas.  If you believe you may be entitled to unpaid overtime, call me at 817.908.9861 or 432.242.7118 or fill out my contact form for a free evaluation.

Author: Josh Borsellino

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