In Texas, final compensation policies and practices are regulated by the state’s Payday Law. Among other things, the law instructs employers and employees on their rights after an employee leaves employment. In cases in which an employee is fired, discharged, laid off, or involved in any other involuntary separation, they are due their pay within six calendar days. In instances in which the employee leaves voluntarily, such as by quitting or retiring, they are due their final pay on the next regularly scheduled payday.
Texas Severance Pay
Under the Texas Payday Law, Texas employers are not required to provide their employees with severance pay, although many employers do provide this or may be required to provide this for a multitude of reasons, such as provisions in Texas employment contracts.
Severance pay is a type of compensation that some companies offer when employees are terminated due to no fault of their own. This is usually applicable in situations in which an employee has worked at a particular job for some length of time or in a certain position and has been let go. Generally, employers use a set formula to determine when an employer will be due severance pay. The theory behind severance pay is to compensate the employee for the lack of advance notice of their termination. Although the Fair Labor Standards Act (FLSA) does not mandate severance pay, many Texas employers offer this type of compensation.