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Texas payroll services and resources

Texas payroll services and resources

Here’s what we’ll cover

Payroll for Texas employees

Texas employers have a lot to consider when complying with payroll laws. From minimum wage requirements to unemployment taxes, there are a few highlights every Texas employer should keep in mind.

Understanding Texas’s minimum wage

The Texas Workforce Commission oversees unemployment benefits and other services related to employment and Texas’s minimum wage.

  • Texas sets its minimum wage to the federal minimum wage rate. In 2020, the federal minimum wage was $7.25 per hour.
  • Employers are allowed to count tips and the cost of work-related meals and lodging towards an employee’s minimum wage.
  • Agricultural workers may earn the minimum wage. But those who harvest crops can also earn more, or a “piece rate,” for producing or picking higher quantities.
  • Employees who are patients of the Texas Department of Mental Health and Mental Retardation, or whose age or disability affects their productivity, may earn less than the minimum wage. Other exceptions to the standard minimum wage requirement include prison inmates, apprentices, and students.

Texas income tax withholding

Texas employers must withhold Medicare and Social Security taxes as part of an employee’s federal payroll taxes. But the state of Texas does not have its own state or local income tax. So Texas employers do not have to withhold state or local income taxes from their employees’ paychecks.

Texas employee benefits

Texas law doesn’t require employee benefits such as paid time off, health insurance, retirement plans, and paid breaks. Most Texas employers can choose whether or not to offer these benefits to their employees. If an employer offers benefits, they should create their own benefits policies that comply with the Texas Payday Law.

Sick time: Texas labor laws don’t require employers to pay for time not worked, including sick time.

Vacation time: Texas employers are not required to pay for time off for vacations or holidays. If an employer offers paid vacation time, they can create policies and rules for how employees earn, accrue, and use the time off. Employers can also decide if they’ll pay earned and unused vacation time when an employee leaves the company.

Health insurance benefits: Health insurance benefits are not required for most Texas businesses. If an employer decides to offer health insurance, all employees who work 30 hours or more must be eligible for coverage.

Retirement benefits: Retirement benefits are not required for Texas businesses. Employers may decide to offer retirement benefits. Any employee who works 1,000 hours or more in a 12-month period must be allowed to participate.

Workers’ compensation: Workers’ comp insurance is not required for private employers in Texas, except when they are contracting with the government. Employers who choose not to offer workers’ comp still need to follow certain requirements, however. Employers have to tell new employees in writing that they’re not covered by workers’ comp. Employers must also post a written notice of this in the workplace and report worker injuries and deaths to the Texas Division of Workers’ Compensation.

Family and medical leave: In Texas, most public and private employers with 50 or more employees must provide family and medical leave under the Family and Medical Leave Act (FMLA). The same goes for all public agencies and elementary and secondary schools, regardless of their number of employees. To be eligible for leave, employees must have worked for their employer at least a year and worked 1,250 hours or more. The FMLA provides job-protected time off to:

  • Bond with a newly born, adopted, or fostered child.
  • Care for a family member with a serious health condition.
  • Assist loved ones when a spouse, domestic partner, child, or parent is deployed abroad on active military service.

Full-service payroll for Texas state businesses

If you’re a Texas state business, you’ll need online payroll services that help you stay tax compliant and save time.

Payroll Core helps you manage payroll, calculate taxes, and access expert product support.**

Payroll Premium adds powerful tools, including same-day direct deposit, mobile time tracking, and help with HR compliance.*

Payroll Elite offers customized setup, a personal HR advisor, tax penalty protection, and 24/7 support.**.

All plans come with full-service payroll and include automated taxes and forms.**

State resources

Texas employers can find more information on labor laws, taxes, and business development through state government resources.

Federal resources

The U.S. Department of Labor provides information for employers looking for federal payroll-related information and assistance. These resources are a good place to start:

The Small Business Administration (SBA) also has information relevant to employers and those considering starting their own business. Business owners can visit multiple Small Business Development Centers across Texas. In 2020, the SBA also launched coronavirus relief programs for struggling businesses.

QuickBooks Payroll resources

The QuickBooks Resource Center offers tips and resources for small businesses, including processing and calculating payroll. As a small business owner, it’s smart to become familiar with these best practices.

Frequently asked questions