The Basics of Minimum Wage in Texas
To make sure you are in line with the laws in the state of Texas that govern paying your employees fairly, consider the information below.
Current Texas Minimum Wage Rate
For 2025, the minimum wage in the state of Texas is scheduled to stay at $7.25, the same level as 2024 and the same as the federal minimum wage. This has been the established minimum wage in Texas since it became law in 2009.
Tipped Minimum Wage
When an employee receives tips as part of their work, the minimum wage in Texas drops to $2.13 per hour. However, it is required for employers to confirm that the tips received effectively raise the employee’s income to at least the $7.25 minimum wage level. If they do not, the employer is required to make up the difference to ensure the employee is making at least the standard minimum wage.
How Minimum Wage Differs for Different Types of Employees
There are a few variations in the law based on the types of employees in question and how the minimum wage laws are applied.
Full-Time vs. Part-Time Employees
Whether an employee is full-time or part-time makes no difference in how they are treated under minimum wage requirements. Employees in both of these categories in the state of Texas are required to make at least $7.25 per hour.
Student and Minor Workers in Restaurants
Under the Fair Labor Standards Act, or FLSA, it is permissible to offer a training wage to employees under 20 years of age for the first 90 days of their employment. After those 90 days have passed, however, the employees must be elevated to at least the standard minimum wage that applies to all other workers.
Minimum Wage Challenges in the Hospitality Industry
Due to the very nature of hospitality, businesses in this industry tend to hire more employees than are hired in other sectors. This industry is also home to a lot of part-time work, whether it is young people just getting started with their first job, or adults looking to pick up extra income. Effectively managing payroll costs while complying with minimum wage law can be difficult.
Wage Challenges for Restaurant Owners and Managers
Few things take up the time and attention of restaurant owners and managers quite like trying to manage labor costs. It’s important to treat all employees fairly, of course, but margins are thin in the restaurant industry, and spending too much on labor can lead a restaurant down a losing path. It takes active monitoring of labor spending to effectively balance fair wages and hours with profitability concerns.
Balancing Wages with Operating Costs
All restaurants should understand how wages relate to their overall operating costs. The other big cost of operating a restaurant is purchasing food, and food prices can fluctuate, so it’s important to keep wages as steady as possible to have predictability in the budget.
The Impact on Waitstaff, Kitchen Staff, and Bartenders
It’s important for managers to remember that not all members of the staff will have equal access to tips during their shifts. Those in back-of-house positions not receiving tips may be dissatisfied with their pay as compared to front-of-house employees who earn tips, such as those who serve alcohol to guests.
Best Practices for Compliance with Texas Minimum Wage Laws
Complying with minimum wage laws is about treating employees fairly, first and foremost. There is also the potential for fines and other punishments if these laws aren’t followed, so it’s in your best interest to get it right.
Training and Certification as a Tool for Compliance
There is nothing quite as valuable as training when it comes to compliance. For example, our Texas Food Manager Training course is an excellent tool to make sure all managers in your business have the knowledge they need to lead the team effectively.
Tracking Tips and Wages
Proper tracking of both wages and tips is necessary to prove that minimum wage laws are being met. This tracking will also be needed for tax purposes, resolving any employee disputes, and other purposes. Using quality payroll software and having the records audited regularly will keep you on track.
Employee Rights and Employer Responsibilities
A healthy workplace has an open line of communication between employer and employee. All employees should be familiar with their rights – including what the law says about minimum wage – while the employer should fully understand their responsibilities in treating employees fairly.
Texas Minimum Wage vs. Other States
Is the minimum wage in the state of Texas higher or lower than what is offered in other states across the country?
How Texas Stacks Up Against Neighboring States
By definition, Texas is tied for the lowest minimum wage in the country, as it is against federal law to go any lower than $7.25. There are other nearby states that also adopt the $7.25 federal limit – such as Oklahoma and Kansas – while states to the west like New Mexico and Arizona are considerably higher.
Hospitality Wage Trends Across the United States
Recent years have seen a steady, consistent climb in the wages that hospitality workers earn across the United States. The West Coast tends to lead the way in this area, with minimum wage levels above $15 in both Washington and California. The northeast also has many states with minimum wage laws that are more than double the federal level, including New York, Connecticut, and Massachusetts.
The Future of Minimum Wage in Texas
The future of the minimum wage law in Texas is unclear at this time. There are no active pieces of legislation that would move the minimum wage level away from what is currently mandated by the federal government. Of course, if the federal government makes a change to the $7.25 minimum wage, that would impact all businesses in Texas.
What This Means for the Hospitality Industry
Businesses operating in the hospitality industry in the state of Texas should carefully monitor any proposed changes that come up regarding minimum wage. Raising the minimum wage would have an immediate and profound impact on many businesses, especially those in hospitality that rely on a significant number of employees to operate.
Also, it is worth noting that only offering minimum wage may be to the detriment of a hospitality business. If other nearby restaurants are offering higher wages than $7.25 per hour, for example, those competitors may have an advantage in terms of securing the best workers. It’s up to each business to figure out how to control labor costs while still attracting the right people to serve their customers.
Compliance is Critical in the Hospitality Industry
Minimum wage law is just one of many areas where businesses in the hospitality industry must stay compliant. To help you stay on top of wage requirements and other key regulations, download our Texas Hospitality Compliance Checklist to ensure you’re meeting all necessary standards.
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Stay ahead of industry regulations with Responsible Training. Our expert-led courses and certifications make compliance easy, keeping your team educated and your business protected.
