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How to Hire Employees In Texas

Hiring in Texas for the first time can be challenging, especially with the state's complex employment laws. Whether you're hiring independent contractors, setting up a legal entity, partnering with a PEO, or using an Employer of Record (EOR), it's essential to understand the local employment landscape. Playroll's comprehensive guide is here to help, whether you're onboarding local talent or relocating team members.

Here are four primary ways companies can hire employees in Texas:

Establishing a local entity: Creating a legal entity in Texas allows for direct hiring, but it can be costly and time-consuming. However, it gives you full control over employment and reduces risk exposure.
Partnering with an Employer of Record (EOR): An EOR, like Playroll, takes on the legal responsibilities of employment, acting as the employer on your behalf. This option streamlines hiring, payroll, and compliance with Texas’s labor laws, helping you hire in Texas without navigating the complex legal landscape yourself.
Working with a Professional Employer Organization (PEO): A PEO, such as Playroll, co-employs your team, managing essential HR functions like payroll, benefits, and compliance. Partnering with a PEO ensures you meet Texas’s labor regulations while offering competitive employee benefits.
Hiring independent contractors: Hiring independent contractors can be more cost-effective, but Texas has strict contractor classification rules. Proper classification is essential to avoid penalties for misclassification when hiring in Texas.

Complying with Texas specific employment regulations and federal laws is critical to avoiding legal risks and costly fines. Our guide focuses on hiring in Texas, employment compliance, and how Playroll’s services can support your business as you navigate the complexities of hiring in the state.

Good To Know

Texas is one of the few states with no personal income tax, making it appealing for both employees and employers.

Texas is an at-will employment state, allowing employers to terminate employment for any reason not prohibited by law.

Texas has a diverse economy with major industries in energy, technology, and healthcare, Texas attracts a skilled workforce, especially in cities like Austin, Houston, and Dallas.

Key Things to Know About Hiring in Texas

Do I need an EIN or Payroll Tax Number to Employ in Texas

Employers must obtain an Employer Identification Number from the IRS for federal tax purposes and register with the Texas Workforce Commission for state unemployment tax. Employees do not need an EIN but must have a Social Security Number or an Individual Taxpayer Identification Number for tax reporting.

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Working Hours in Texas

The standard workweek is 40 hours, with overtime pay required for hours worked beyond 40 in a week, paid at 1.5 times the regular rate. There are no specific restrictions on daily hours for adult employees, but there are stricter limits and time-of-day restrictions for minors.

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What is considered full-time employment in Texas?

Texas does not define full-time employment by hours. Employers usually consider 30 to 40 hours per week as full-time, but the exact definition may vary based on company policy and benefits eligibility.

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Probation Period in Texas

There is no state-mandated probation period for new hires. Probationary periods, if used, are set at the employer’s discretion and outlined in company policy.

Labor Laws in Texas

Minimum wage in Texas

Texas follows federal law, with a minimum wage of $7.25 per hour. There is no state-specific law to raise this amount.

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Texas Anti-Discrimination Laws

Protected classes include race, colour, religion, sex (including pregnancy), national origin, age (40 and older), disability, and genetic information. Employers are prohibited from discriminatory practices in hiring, firing, promotion, and other employment-related decisions.

Onboarding New Hires in Texas

We can help you get your new employee started in Texas fast, with a minimum onboarding time from just 1-2 working days. Note that the timeline is dependent upon registration with the local authorities, and begins after the employee has submitted all the required information on the Playroll platform.

For non-citizens of the US, a work eligibility assessment may be required, and can add three extra days to the onboarding time. If a follow-up is needed, there may be additional delays.

Please note that payroll cut-off dates can impact the actual first day of employment. Playroll’s payroll cut-off date is the 10th of the month, unless otherwise specified.

Payroll Taxes For Texas

Texas allows various payroll cycles, including weekly, bi-weekly, semi-monthly, or monthly. For non-exempt employees, pay must occur at least semi-monthly; exempt employees may be paid monthly.

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Looking to grow your team in Texas?

Stay Compliant: Navigate Texas’s complex labor laws with ease.

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Texas Employment Taxes

In Texas, employers are required to manage several key employment taxes to support federal and state programs for employees.

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Employer Tax Contributions

Employment Tax Type	Tax Rate
Social Security	As per federal requirements
Medicare	As per federal requirements
Federal Income Tax	As per federal requirements
Federal Unemployment (FUTA)	As per federal requirements, with potential credits for SUTA contributions
State Unemployment (SUTA)	Varies, ranging from 0.31% to 6.31% of taxable wages, based on employer experience rating

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Employee Payroll Tax Contributions

Texas does not impose a state income tax on employees, so the primary contributions are federal payroll taxes. These deductions fund Social Security, Medicare, and federal revenue, ensuring compliance with federal law and supporting employee benefits.

Employee Payroll Tax Contribution	Tax Rate
Social Security	As per federal requirements
Medicare	As per federal requirements
Federal Tax income	Varies based on employee’s W-4 withholding elections

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Tax Due Dates in Texas

While Texas doesn't have a state income tax, residents are still subject to federal income tax obligations.The federal deadline for filing is typically on April 15. If April 15 falls on a weekend or federal holiday, the deadline is extended to the next business day.

Pension in Texas

Texas does not require private-sector employers to offer pension or retirement plans.

The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Texas tailored to your needs.

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Benefit Requirements for Employers in Texas

Are employers required to provide health insurance in Texas?

Employers are not legally required by Texas law to provide health insurance. However, under the Affordable Care Act, employers with 50 or more full-time equivalent employees must offer health insurance or face penalties.

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Do part-time employees get benefits in Texas?

There is no law requiring benefits for part-time employees. Eligibility for benefits, such as health insurance or paid time off, depends on the employer’s policies. Employers can choose to extend benefits to part-time employees but are not obligated to do so.

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Are employers required to offer 401k in Texas?

Employers are not required to offer a 401(k) or other retirement plans in Texas. The decision to provide such benefits is at the employer’s discretion. If offered, they must comply with federal regulations under the Employee Retirement Income Security Act (ERISA).

Paid and Unpaid Leave Policies in Texas

What are Mandatory Leave Entitlements in Texas?

Type of Leave	Time Period	Mandatory	Pay Status	Eligibility Criteria
Annual leave	Determined by employer policy	No	Determined by employer policy	Determined by employer policy
Maternity leave	Up to 12 weeks (under FMLA)	Yes, under FMLA for eligible employees	Unpaid	As stipulated by federal FMLA legislation
Paternity leave	Up to 12 weeks (under FMLA)	Yes, under FMLA for eligible employees	Unpaid	As stipulated by federal FMLA legislation
Sick leave	Determined by employer policy	No	Determined by employer policy	Determined by employer policy
Military leave	Duration of service	Yes, under USERRA	Unpaid	Applies to all employees in uniformed services
Jury Duty	Duration of Jury Service	Yes	Unpaid	All employees summoned for jury duty
Parental leave	Up to 12 weeks (under FMLA)	Yes, under FMLA for eligible employees	Unpaid	Same as maternity and paternity leave eligibility under FMLA
Voting leave	As needed for voting hours	Yes, if polls aren’t open for two hours outside work hours	Paid	All employees eligible if work schedule conflicts with polling hours

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Paid Time Off in Texas

Texas does not require employers to provide paid time off. Employers may offer PTO based on their policies, and if they do, they must follow the terms established in those policies.

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Maternity Leave In Texas

The leave is a federal requirement. Under the Family and Medical Leave Act (FMLA), employers with 50 or more employees must provide unpaid, job-protected leave for eligible employees. This leave can be taken for:

The birth or adoption of a child
Serious health conditions of the employee or a close family member
Certain military family needs

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Paternity Leave In Texas

In Texas, there is no state-mandated paternity leave. Eligible employees may qualify for unpaid, job-protected leave under the federal Family and Medical Leave Act (FMLA) to care for a newborn, adopted child, or newly placed foster child. If FMLA doesn’t apply, any paternity leave would depend on the employer’s specific policies, as Texan law does not provide additional leave requirements for paternity.

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Sick Leave In Texas

Texas does not mandate paid or unpaid sick leave. Employers may choose to provide sick leave, but it is not required by law.

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Military Leave in Texas

Under the federal Uniformed Services Employment and Reemployment Rights Act (USERRA), employers must grant unpaid leave and protect the job status of employees serving in the military. USERRA ensures reemployment rights upon completion of military service.

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Jury Duty in Texas

Employers must provide unpaid leave for employees called to jury duty. Employers cannot penalise employees for taking leave to fulfil jury service obligations.

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Voting Leave in Texas

Texas law requires employers to provide paid time off for voting if polls are not open for at least two consecutive hours outside of the employee's work hours.

It’s Easy To Manage Benefits For Employees In Texas With Playroll

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Employment Termination Protocols in Texas

Termination Process in Texas

Texas follows an "at-will" employment policy, meaning employers can terminate employees for any lawful reason, at any time, without prior notice. However, terminations cannot be based on discrimination (race, colour, sex, religion, national origin, age, disability) or retaliation (for reporting legal violations or participating in investigations).

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Notice Period in Texas

There is no requirement for a notice period before termination. Employers and employees can end the employment relationship immediately unless specified otherwise in a contract.

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Severance in Texas

Texas law does not require employers to provide severance pay. If offered, severance pay is based on company policy or employment contracts.

Hiring Employees in Texas with an employer of record

Discuss how an EOR handles onboarding, including setting up compliant employment contracts, registering for taxes, and managing benefits like Texas's superannuation system (if applicable).

The employer of record is responsible for:

Employment Compliance: Ensure all employment contracts comply with Texas's labor laws and regulations, including proper classification of employees.
Payroll Management: Calculate, process, and distribute employee salaries in accordance with Texas's payroll laws, including deductions for taxes and social security contributions.
Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social security contributions to the relevant authorities.
Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with Texas's legal requirements.
Benefits Administration: Provide mandatory employee benefits as required by [State]'s labor laws, such as health insurance, pension contributions, and statutory leave.

Employer of Record for Texas

Guide to Hiring Employees in Texas