Texas Employment Agreement
Draft a Texas employment agreement built on at-will employment, Texas Payday Law final-pay timing, and the state's enforceable-non-compete framework under Bus. & Com. Code § 15.50, with no state income tax to withhold.
AI-generated draft for review. Not legal advice. Starting at $29.
Legal Requirements in Texas
State the at-will relationship clearly: Texas follows employment at-will, so either party may end the relationship at any time absent a contrary contract term.
Meet Texas Payday Law final-pay timing (Tex. Lab. Code Ch. 61): within 6 calendar days of an involuntary discharge, or by the next regular payday after a voluntary resignation.
Comply with federal wage-and-hour law (FLSA) for minimum wage and overtime, since Texas defaults to the federal $7.25 minimum and 40-hour weekly overtime, with no state daily-overtime or meal-break mandate.
Draft any non-compete to satisfy Tex. Bus. & Com. Code § 15.50: ancillary to an otherwise enforceable agreement, supported by consideration, and reasonable in time, geography, and scope.
Protect confidential information under the Texas Uniform Trade Secrets Act (Tex. Civ. Prac. & Rem. Code Ch. 134A) and the federal Defend Trade Secrets Act, 18 U.S.C. §§ 1836-1839.
No Texas state income tax exists, so no state wage withholding applies; handle federal income tax, FICA, and unemployment-tax obligations only.
Key Statutes & Regulations
- Texas Payday Law, Tex. Lab. Code Ch. 61 (final pay timing; § 61.014) (2026)
- Texas Covenants Not to Compete, Tex. Bus. & Com. Code § 15.50 (2026)
- Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code Ch. 134A (2026)
- Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (minimum wage and overtime) (2026)
- Defend Trade Secrets Act, 18 U.S.C. §§ 1836-1839 (2026)
Common Pitfalls
- •Using a California-style or one-size-fits-all template that omits the at-will disclaimer or includes provisions that inadvertently create a fixed term.
- •Drafting an overbroad non-compete with no geographic limit or excessive duration, which a Texas court may reform or refuse to enforce under § 15.50.
- •Missing the 6-calendar-day final-pay deadline for discharged employees under the Texas Payday Law.
- •Withholding a final paycheck for unreturned property or unsigned timesheets, which the Texas Payday Law does not permit.
Local Terminology
- At-will employment
- The default Texas rule that either employer or employee may end the relationship at any time, for any lawful reason, unless a contract says otherwise.
- Otherwise enforceable agreement
- Under § 15.50, the underlying valid contract (e.g., one giving access to confidential info or training) that a Texas non-compete must be ancillary to.
- Texas Payday Law
- Tex. Lab. Code Ch. 61, which governs wage payment timing, final paychecks, and permitted deductions for Texas employees.
How Texas Differs
Texas has no state income tax, so payroll involves only federal withholding plus state unemployment tax.
Texas enforces employee non-competes under § 15.50 if reasonable, with no salary threshold, the opposite of California's outright ban.
Texas has no state daily-overtime, meal-break, or rest-break mandate, deferring to the federal FLSA, unlike California.
Final pay timing splits by separation type under the Texas Payday Law: 6 calendar days if discharged, next payday if the employee quits.
Frequently Asked Questions
Is Texas an at-will employment state?
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Yes. Texas follows employment at-will, meaning either the employer or employee may end the relationship at any time, for any lawful reason, without notice, unless a written contract, policy, or statute provides otherwise. A clear at-will disclaimer in the employment agreement preserves this default and avoids implying a fixed term.
Are non-compete agreements enforceable in Texas?
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Yes. Under Tex. Bus. & Com. Code § 15.50, a non-compete is enforceable if it is ancillary to an otherwise enforceable agreement, supported by consideration, and reasonable in time, geographic area, and scope of activity. Texas imposes no salary threshold, but courts may reform overbroad restraints rather than enforce them as written.
When must a Texas employer pay a final paycheck?
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Under the Texas Payday Law (Tex. Lab. Code Ch. 61), an involuntarily discharged employee must be paid within 6 calendar days of discharge, while an employee who quits is paid by the next regularly scheduled payday. An employer cannot withhold final pay for unreturned property or unsigned timesheets.
Does Texas have state income tax withholding for employees?
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No. Texas has no state income tax, so employers do not withhold any state income tax from wages. Payroll obligations are limited to federal income tax withholding, FICA (Social Security and Medicare), and state unemployment tax. There is also no state daily-overtime or mandated meal-break requirement, so federal FLSA rules apply.
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