Quick Article Summary

• Texas employers are legally required to pay employees on time, accurately, and without unauthorized deductions under the Texas Payday Law
• Mistakes in handling final paychecks, commissions, or improper deductions often result in employee wage claims with the Texas Workforce Commission (TWC)
• By establishing compliant payroll practices and properly documenting wage agreements, small business owners can protect themselves from costly wage theft claims.

Understanding the Texas Payday Law

The Texas Payday Law governs how and when Texas employers must pay their employees. It applies to all private employers, regardless of size, and is enforced by the Texas Workforce Commission (TWC).

Employers are required to:

• Pay employees in full and on time.
• Maintain written records of agreed wages (including commissions and bonuses).
• Provide final paychecks by strict deadlines depending on the reason for separation.

Failing to do so may trigger a wage claim, an investigation, and potential penalties.

Pay Frequency and Payment Deadlines

Under the law:

• Non-exempt employees must be paid at least twice per month.
• Exempt employees (like salaried professionals) must be paid at least once per month.

When an employee leaves:

• If terminated, final wages are due within six calendar days.
• If they quit, final wages are due on the next regular payday.

This includes all owed compensation, such as:

• Regular wages
• Overtime
• Commission (if earned and calculable)
• Bonuses (if not discretionary)
• Reimbursement for work-related expenses (if agreed upon)

Employers often misstep by delaying commission or bonus payments, especially when the terms weren’t clearly documented.

What Counts as Wage Theft in Texas?

Wage theft doesn’t require malicious intent — even accidental underpayment or withholding can result in a violation. Common mistakes include:

• Failing to pay for all hours worked
• Withholding pay until company property is returned
• Making unauthorized deductions (e.g., for uniforms, equipment, or damages)
• Not paying accrued vacation or bonuses when due (if promised)
• Misclassifying an employee as an independent contractor to avoid payroll

While Texas allows some deductions, they must be authorized in writing by the employee. A blanket policy or handbook statement is not sufficient — you need an actual signed authorization form for each type of deduction. See the TWC’s guidance on permissible deductions.

Commission, Bonus, and Reimbursement Disputes

The Texas Payday Law recognizes commissions, bonuses, and reimbursements as wages — but only if they are clearly defined and measurable.

That means:

• Commission plans should be in writing, stating when a commission is “earned” (e.g., sale closed, payment collected, etc.).
• Bonuses must be clearly defined if promised — discretionary bonuses are not legally required.
• Reimbursement policies for tools, mileage, or travel should be outlined in advance.

Ambiguity in your agreements increases the risk of wage disputes. Employers must also retain pay records for at least three years.

What Happens if a Wage Claim is Filed Against You?

If an employee files a wage claim, the TWC will:

• Notify you of the claim (you must respond within 14 days).
• Request payroll records, timecards, and any agreements.
• Issue a determination.

If the TWC rules against you, you may be ordered to:

• Pay all back wages.
• Pay penalties or interest.
• Possibly face further legal action.

You can appeal, but only if your records are thorough and your case defensible.

Visit the TWC’s official wage claim process to see what employees are instructed to do.

Best Practices for Texas Employers

Use Written Agreements

Your business should always document:

• Base pay
• Commission structures
• Bonus criteria
• Reimbursement policies

Have employees sign clear acknowledgment forms at onboarding and when any terms change.

Pay On Time — Every Time

Set internal payroll reminders and review pay periods. If you change pay schedules, you must notify employees in writing in advance.

Limit Deductions to What’s Authorized

Only deduct what is:

• Legally required (e.g., taxes, court-ordered garnishments), or
• Specifically authorized in writing by the employee

Use individual authorization forms, not just general handbook language.

Handle Final Paychecks Promptly

Don’t withhold final pay over property return issues. Instead, pursue those matters civilly, but issue final pay in compliance with the law.

When to Call for Help

Even well-meaning employers get tripped up by Texas wage rules — and the TWC gives the benefit of the doubt to the employee if the documentation is unclear.

If you’re unsure about your payroll processes, final pay procedures, or deduction policies, our team can conduct a full audit to ensure compliance before a complaint arises.

We, the Texas HR Experts, Can Help You Prevent Costly Wage Claims

At The Unit Consulting, we help Texas businesses stay compliant with wage and hour laws by building strong policies, providing custom deduction forms, and auditing your payroll practices. Whether you have 5 employees or 50, we ensure you’re paying your team correctly — and documenting it well. Reach out today for a compliance check-up or policy review.