Texas Payroll Guide: Paycheck Laws & Pay Stub Requirements

Texas Pay Stub Requirements

Are pay stubs required by law in Texas?

Yes. Under the Texas Payday Law (Texas Labor Code, Chapter 61), employers are required to provide employees with a written earnings statement, commonly referred to as a pay stub, check stub, or paycheck stub, for each pay period. This requirement applies to employees paid on an hourly, salaried, or commission basis.

What Must Be Included on a Texas Pay Stub

A compliant Texas pay stub should include:

• Hours worked and the pay period dates
• Rate of pay (hourly rate or salary)
• Gross earnings for the period
• Itemized deductions (federal tax, FICA, benefits, garnishments)
• Net pay after deductions
• Employer name and address

Not sure what each line item means? See our guide to understanding your pay stub.

Employees vs. Independent Contractors

• Employees (W-2): Receive a pay stub showing wages, deductions, taxes, and net pay.
• Independent Contractors (1099): Don't receive a traditional pay stub because payroll taxes aren't withheld. Instead, they generally receive Form 1099-NEC for tax reporting, although many businesses also provide a payment statement for recordkeeping.

Payroll Record Retention

Employers should maintain payroll records even after wages have been paid. Since Texas doesn't establish a separate record retention period, employers generally follow the Fair Labor Standards Act (FLSA) requirement and retain payroll records for at least three years.

Keeping organized payroll records can help:

• Verify employee earnings
• Resolve payroll disputes
• Support audits and compliance reviews

Penalties & Wage Claims

Failing to pay employees correctly can lead to wage disputes and penalties under Texas paycheck laws, specifically the Texas Payday Law.

If an Employer Doesn't Comply

Employers who fail to pay wages as required may be ordered to pay unpaid wages and could face additional administrative penalties through the Texas Workforce Commission (TWC).

Filing a Wage Claim

Employees who believe they haven't been paid correctly can file a wage claim with the Texas Workforce Commission within 180 days from the date the wages were due. Supporting documents such as pay stubs, time records, and employment agreements can help during the review process.

Texas Minimum Wage Requirements

Texas does not have a separate state minimum wage, so minimum pay in Texas follows the federal minimum wage of $7.25 per hour. Tipped employees may be paid a direct cash wage of $2.13 per hour, provided their tips increase their total earnings to at least $7.25 per hour. If an employee's wages and tips combined fall below the federal minimum wage, the employer is legally required to pay the difference to ensure the employee receives at least the minimum wage.

Texas Overtime Laws

Texas overtime rules follow the federal Fair Labor Standards Act (FLSA) rather than adding state-specific daily overtime rules.

Private employers are generally required to pay overtime wages, while public-sector employers may offer compensatory time off in certain situations instead of cash overtime.

Texas Employee Leave and Break Requirements

Meal and rest breaks: Texas does not require employers to provide meal or rest breaks. If an employer chooses to offer short breaks (typically under 20 minutes), federal rules require those breaks to be paid. Unpaid meal breaks of 30 minutes or more are allowed as long as the employee is fully relieved of duties.

Paid leave: Texas does not require private employers to provide paid time off, sick leave, or holiday pay. Benefits such as vacation and sick leave are generally offered at the employer's discretion.

Texas Pay Frequency

The Texas Payday Law sets minimum pay frequencies based on how an employee is classified:

• Nonexempt employees must be paid at least semi-monthly (twice a month)
• Exempt employees must be paid at least once a month
• If an employer does not set specific paydays, the default under state law is the 1st and 15th of each month
• Employers must post their pay schedule (paydays and hours worked) in the workplace where employees can see it

Texas Payroll Taxes

Although Texas does not impose a state income tax, employers are still responsible for withholding federal payroll taxes and paying state unemployment tax (SUTA). Understanding these payroll tax obligations helps ensure accurate payroll processing and compliance with federal and state requirements.

Federal Payroll Taxes

All Texas employers are responsible for withholding and remitting the following federal payroll taxes:

• Federal income tax, withheld based on the employee's Form W-4
• Social Security tax — 6.2% withheld from employee, matched by employer
• Medicare tax — 1.45% withheld from employee, matched by employer

State Income Tax

State Unemployment Tax (SUTA)

Texas employers are required to pay the Texas unemployment tax, commonly known as SUTA, which is administered by the Texas Workforce Commission (TWC).

A new employer generally pays the 2.70% rate until an experience rate is assigned by the Texas Workforce Commission (TWC). After that, the tax rate is based on factors such as the employer's industry and unemployment claims history. Employers should always refer to their annual TWC rate notice to confirm the applicable SUTA rate.

Texas State Local Taxes

There are no local taxes in the cities and counties of Texas. Employers are not required to withhold local income taxes from employee wages, no matter which city your business operates in, including:

Payroll Deductions

Payroll deductions may include both mandatory and voluntary deductions.

Texas New Hire Reporting

Texas employers must report every new hire and rehire within 20 calendar days of the employee's start date. Under Texas Administrative Code Title 1, Section 55.302, this reporting requirement extends to independent contractors as well as traditional employees.

Reports go to the Texas Office of the Attorney General, Child Support Division, not the Texas Workforce Commission.

Report Online

Texas Attorney General Employer Portal: employer.oag.texas.gov

Report by Mail

Mailing Address:

Texas Employer New Hire Reporting Operations Center
P.O. Box 149224
Austin, TX 78714-9224

Texas Payroll Tax Filing And Deadlines

Texas employers are responsible for filing unemployment tax reports and meeting federal year-end payroll reporting requirements. Filing on time helps employers avoid penalties, interest, and unnecessary compliance issues.

Quarterly Payroll Tax Filing

Employers must file the Employer's Quarterly Report (Form C-3) with the Texas Workforce Commission (TWC) to report employee wages and pay state unemployment tax.

Annual Payroll Filing

Texas does not require an annual state income tax reconciliation because there is no state income tax.

However, employers must still complete their federal year-end reporting obligations by:

• Providing Form W-2 to each employee.
• Filing Form W-2 with the Social Security Administration (SSA) by January 31.

Final Paycheck Requirements

When an employee leaves your company, Texas law establishes when the final paycheck must be issued based on the reason for separation.

Workers' Compensation in Texas

Texas is unique because it is the only state where most private employers can choose whether to carry workers' compensation insurance. Employers that choose not to provide coverage are known as non-subscribers.

While opting out is permitted, non-subscribing employers may lose certain legal protections if an employee is injured on the job. Employers must also notify both employees and the Texas Department of Insurance of their non-subscriber status.

Wage Garnishment Protections in Texas

Texas offers some of the strongest wage garnishment protections in the United States. In most cases, an employee's wages cannot be garnished for ordinary consumer debts, such as credit card balances or medical bills.

Wages Can Be Garnished For

• Court-ordered child support
• Court-ordered spousal maintenance
• Unpaid federal taxes (IRS levy)
• Defaulted federal student loans

Child Support Withholding

When a court orders child support withholding, employers must remit the withheld amount to the Texas Child Support Disbursement Unit, not directly to the employee's family.

Mailing Address:

Texas Child Support Disbursement Unit
P.O. Box 659791
San Antonio, TX 78265-9791