USA – TEXAS Law and Practice Contributed by: Alana Ackels and Katie Beaird, Bell Nunnally & Martin
1. Employment Terms 1.1 Employee Status
often entitled to recover their attorney’s fees if they prevail. 1.2 Employment Contracts Texas is an “at will” employment state, which means that – in the absence of an agreement otherwise – either party can end the relationship at any time, with or without notice. Employment contracts are not required except in the case of collective bargain - ing agreements with unionised employees. However, employment contracts may be entered into if desired between the employee and employer, and the con - tract should be in writing. What an employment contract includes is customis - able, and there are no required terms. If the intention of the employer is to limit how the parties can end the employment relationship, this should be carefully drafted with defined terms and specification of when the relationship can be terminated upon notice and without notice, and what the repercussions of the termination will be. It is also recommended that the agreement includes a carefully drafted outline of the employee’s compensation plan (including bonuses, equity and commissions, if applicable) and states whether the employer can change that compensation plan proactively without entering into a new agree - ment. When an employer does choose to enter into an employment agreement that sets out a specific term of employment, and under what circumstances the employee and employer can end the relationship, this is typically referred to as termination “for cause”. In such situations, it is not uncommon for disputes to arise concerning: • whether proper cause was present to end the employment; • whether the terminating party followed all the req - uisite steps to terminate the employment; • whether any severance is required; and • how the termination affects the employer’s obliga - tion to pay out bonuses and commissions or to implement their equity agreements. These disputes are highly variable depending on the contract language, including the remedies set out
Texas follows the federal wage and hour laws. Under the federal law governing wage and hour disputes (the Fair Labor Standards Act (FLSA)), jobs are classified as either exempt or non-exempt from overtime require - ments. Employees that are non-exempt from overtime are typically paid on an hourly basis and are entitled to be paid overtime for any hours worked in excess of 40 hours in a single working week. The overtime rate of pay is 1.5 times the non-exempt employee’s regular rate of pay. To avoid a claim of unpaid minimum wage or overtime, it is imperative for employers to ensure non-exempt employees are accurately recording and reporting their hours worked. Exempt employees are typically paid on a salary basis and are not entitled to be paid overtime. Thus, if an exempt employee works more than 40 hours in a working week, the employee is not entitled to be paid any additional money beyond their weekly sal - ary. Additionally, tracking hours is not required. Some - times, employers are inclined to classify employees as exempt in order to avoid tracking hours and paying overtime, but employers must ensure that the employ - ee properly qualifies as exempt to avoid potential liability. To be exempt from overtime, an employee must meet all the criteria of an applicable exemption. There are several exemptions, including the professional exemp - tion, administrative exemption, and highly compen - sated employee exemption. Each exemption has its own specific requirements in order for the employee to qualify. Employers who violate the FLSA are liable for eco - nomic damages in the form of unpaid overtime wages. If there is a violation, the employee is also entitled to liquidated damages or “double damages” that match the amount of the unpaid overtime wages, unless the employer proves it acted in good faith and had rea - sonable grounds to believe its actions did not violate the FLSA. Additionally, if the employee proves the violation was wilful, the statute of limitations period extends beyond the standard two years to a third year. In the largest category of damages, workers are also
782 CHAMBERS.COM
Powered by FlippingBook