Hiring New Employees in Texas: A Legal Guide for Employers

Create a clear job description that outlines the position's responsibilities, required qualifications, and compensation. Ensure the job posting complies with Texas employment laws and does not contain discriminatory language. Texas follows federal anti-discrimination laws, so avoid any language that could indicate preference based on protected characteristics.

Develop an application form that collects necessary information from candidates while complying with Texas and federal laws. In Texas, you may ask about criminal history, but be aware of 'ban the box' ordinances in certain cities like Austin that restrict when you can inquire about criminal history. Include an at-will employment disclaimer and authorization to verify information provided.

Interview qualified candidates and select the best fit for the position. Ensure all interview questions comply with anti-discrimination laws. Avoid questions about age, religion, national origin, disability, family status, or other protected characteristics. Document the selection process and reasons for hiring decisions to protect against potential discrimination claims.

With the candidate's written consent, conduct appropriate background checks. Texas follows the federal Fair Credit Reporting Act (FCRA) requirements for background checks. Obtain written authorization before conducting the check and provide pre-adverse action and adverse action notices if you decide not to hire based on the results.

Prepare a form that complies with the FCRA, clearly explaining the background check process and obtaining the candidate's consent. The form should be standalone (not buried in the application) and clearly state that reports may be used for employment decisions.

Draft an offer letter outlining the position, compensation, benefits, start date, and at-will employment status. Texas is an at-will employment state, so clearly state that employment can be terminated at any time by either party. Include any contingencies such as background checks or drug testing.

If using a formal employment contract rather than at-will employment, draft a contract that clearly outlines terms and conditions. Most Texas employment is at-will, but if you choose to use a contract, include specific terms regarding duration, termination conditions, duties, compensation, and benefits. Have legal counsel review the contract to ensure compliance with Texas law.

Create an NDA to protect confidential business information. Texas courts generally enforce reasonable NDAs. Ensure the agreement clearly defines what information is considered confidential, the employee's obligations, and the duration of the confidentiality obligation. The agreement should be reasonable in scope and not overly restrictive.

If necessary, draft a non-compete agreement. In Texas, non-compete agreements are enforceable if they are reasonable in scope, geography, and time and are supported by valid consideration (such as access to confidential information or specialized training). The agreement must be ancillary to another agreement and protect legitimate business interests. Have legal counsel review to ensure enforceability.

Complete Form I-9 to verify the employee's identity and authorization to work in the United States. This is a federal requirement that must be completed within 3 business days of the employee's first day of work. Examine original documents presented by the employee and properly complete all sections of the form. Store I-9 forms separately from personnel files.

Have the employee complete a W-4 form to determine federal income tax withholding. This federal form must be completed before the first payroll is processed. Keep the completed form in the employee's payroll records.

Texas does not have a state income tax, so no state withholding form is required. However, you should inform employees of this fact and maintain documentation showing you've addressed state tax requirements.

Provide a direct deposit authorization form for the employee to complete if they wish to have their pay directly deposited. In Texas, employers cannot require direct deposit unless the employee was hired with direct deposit as a condition of employment that was disclosed in writing at the time of hiring.

Have the employee provide emergency contact information. While not legally required, this is a best practice for workplace safety and emergency response. Ensure the form includes space for multiple contacts and relevant medical information the employee wishes to share.

Provide information about available benefits and collect enrollment forms. If your company offers health insurance, retirement plans, or other benefits, provide the necessary forms and information about enrollment periods. Under the Affordable Care Act, employers with 50+ full-time employees must offer health insurance.

Give the employee a copy of your company's handbook and have them sign an acknowledgment of receipt. The handbook should include policies on workplace conduct, anti-discrimination, harassment, leave, benefits, and other important information. Texas-specific policies should address the state's at-will employment doctrine and any relevant state laws on breaks, leave, or workplace safety.

Report the new hire to the Texas Employer New Hire Reporting Program within 20 days of the hire date. This is required by federal and state law to help with child support enforcement. Report through the Texas Attorney General's website, by mail, or by fax. Include the employee's name, address, SSN, and your company's name, address, and Federal Employer Identification Number (FEIN).

If not already registered, register with the Texas Workforce Commission (TWC) for unemployment insurance. Texas employers are required to pay unemployment insurance taxes if they pay wages of $1,500 or more in a calendar quarter or have at least one employee during 20 different weeks in a calendar year.

Consider obtaining workers' compensation insurance. Unlike most states, Texas does not require private employers to carry workers' compensation insurance. However, employers who choose not to have coverage (non-subscribers) lose important legal protections and may face higher liability in workplace injury lawsuits. If you choose not to carry workers' comp, you must file an annual notice with the Texas Department of Insurance and notify employees.

Display all required federal and Texas employment posters in a conspicuous location. Federal posters include FLSA, FMLA, USERRA, OSHA, and Equal Employment Opportunity. Texas-specific posters include Texas Payday Law, Texas Unemployment Compensation Act, and Workers' Compensation notices (or notice of no coverage if you're a non-subscriber).

Ensure your payroll system is set up to properly calculate and withhold federal taxes. While Texas has no state income tax, you must still withhold federal income tax, Social Security, and Medicare taxes. Ensure your system complies with Texas Payday Law requirements regarding pay periods and methods of payment.

Provide orientation to familiarize the new employee with company policies, procedures, and culture. Cover workplace safety, emergency procedures, and any job-specific training. Document the orientation to demonstrate compliance with training requirements.