Operating a business in Texas means navigating a regulatory landscape as wide and varied as the state itself. From employment practices to wage laws, understanding Texas-specific HR regulations is essential to protecting your workforce and minimizing risk. That’s where SWBC PEO comes in. Our team helps businesses stay compliant, informed, and ready to manage the complexities of HR across the Lone Star State. Here are five HR regulations that may not be top of mind, but should be.
Right To Work Laws
Texas is a right-to-work state, which means employees can’t be required to join or pay dues to a union. For employers, this offers more flexibility in managing labor relations, especially in industries where unionization is less common. It’s a foundational part of Texas’ pro-business environment.
At-Will Employment
Texas adheres to the at-will employment doctrine, which allows employers to terminate employees at any time, for any lawful reason—or no reason at all—unless an employment contract or statute states otherwise. While this offers operational flexibility, it also places a significant responsibility on employers to ensure terminations are not discriminatory, retaliatory, or in violation of public policy.
For example, employers cannot terminate an employee for refusing to commit an illegal act. Additionally, inconsistent documentation, unclear policies, or poorly communicated expectations can expose businesses to legal claims, including wrongful termination or unemployment disputes.
To mitigate risk, Texas employers should maintain clear, accessible policies, document performance consistently, and train managers on lawful termination practices. At-will employment may be the law of the land—but in Texas, it’s best practiced with a strong compliance strategy.
Texas Whistleblower Act
This law protects public employees who report legal violations by their employer. While it doesn’t apply to private businesses directly, it sets a tone for how whistleblower protections are viewed in Texas. Private employers should establish internal reporting procedures and anti-retaliation policies to stay ahead of potential issues.
Minimum Wage Laws
Texas adheres to the federal minimum wage of $7.25 per hour. However, employers can negotiate higher pay, and in many industries, doing so is a strategic move. Competitive wages help attract top talent—especially in Texas’ fast-growing markets.
Workers’ Compensation Is Optional in Texas
Texas is the only state that doesn’t require private employers to carry workers’ compensation insurance. While this offers flexibility, opting out—known as non-subscription—can expose businesses to direct lawsuits from injured employees. Without coverage, employers lose certain legal protections and may be held liable for damages in court.
Non-subscribers must notify both the state and their employees, and should have a strong risk management strategy in place. For many businesses, partnering with a PEO or securing coverage through a licensed provider is a smart move to protect both their workforce and their bottom line.
Texas offers businesses room to grow, but with that freedom comes responsibility. Partnering with a PEO like SWBC helps you stay compliant, informed, and ready for whatever the Texas landscape throws your way.
To learn more about how we help support businesses like yours across the Lone Star State, contact us today!
