Firing an Employee in Texas: Final Pay and the Rules

Employment at will, and where it stops

Texas follows employment at will. The Texas Workforce Commission (TWC) explains that, without an express agreement to the contrary, either side can end the relationship or change its terms at any time, for any reason, with or without notice. The exceptions are what get employers in trouble:

Discrimination laws, federal and state (see below).
Retaliation for protected activity, such as filing a workers' compensation claim, reporting suspected wrongdoing to government authorities, serving on a jury, voting, military service, or union activity.
The public policy exception: you cannot fire someone for refusing to commit an illegal act.
Contracts: a discharge that breaks an express employment agreement is wrongful.

Final pay deadlines under the Texas Payday Law

Texas final pay deadlines
How the job ends	Final pay is due
Laid off, discharged, fired or otherwise involuntarily separated	Within 6 calendar days of discharge
Quits, retires or resigns	On the next regularly scheduled payday after the resignation takes effect

Six calendar days counts weekends and holidays, so a Friday firing can mean a payment due the following Thursday, before your next payroll runs. TWC is direct about one common mistake: it is not legal to hold a final paycheck past the deadline because company property was not returned, timesheets were not signed, or similar problems. If you want a way to recover the cost of unreturned equipment, set it up in advance with a signed written agreement, not by holding the check.

Vacation, sick leave and severance

Texas does not require you to pay out unused leave. Under the Payday Law, a payout of accrued leave is owed only if you promised it in a written policy or agreement, and the wording of that policy controls. When a written policy does promise a payout, the money is part of final pay and is due by the same deadline as the wages. Severance works the same way: it is owed only if a written policy promises it. Payments made in exchange for a release of claims are not severance under the Payday Law.

Write down what happens to unused vacation at separation, and whether quitting and firing are treated differently.
Apply the policy the same way every time.
If you offer severance for a release from a worker who is 40 or older, follow the federal 21-day and 7-day rules in severance agreements.

Discrimination rules in Texas

Chapter 21 of the Texas Labor Code, the state anti-discrimination law, applies to employers with 15 or more employees for each working day in each of 20 or more calendar weeks. For sexual harassment, the threshold drops to one employee. Federal law also applies: Title VII and the ADA at 15 employees, and the Age Discrimination in Employment Act at 20.

Health coverage: COBRA and Texas state continuation

Federal COBRA applies if you had 20 or more employees on more than half of your typical business days last year. Notify the plan within 30 days of the termination.
Texas state continuation applies to group plans issued by insurance companies and HMOs regulated by Texas. It does not apply to self-funded plans.
If the employee is not eligible for COBRA, state continuation can last up to 9 months. If they had COBRA, Texas adds up to 6 more months after COBRA ends.
The employee must have been covered for the three months before the job ended. The Texas Department of Insurance notes that state continuation is usually not available to someone who was fired.
The Texas Department of Insurance tells employees that the employer must tell them about continuation of coverage within 30 days from the date the job ended.

Notice, unemployment and layoffs

Texas law does not require advance notice of a termination, and it does not require written notice of a termination or layoff. TWC still recommends a short, clear written notice of separation, because it prevents later disputes about whether the person knew they were let go and what they are owed. Larger layoffs can trigger the federal WARN Act, which applies to employers with 100 or more employees (not counting part-time workers) and requires at least 60 days' notice; TWC is the state agency that receives WARN notices in Texas. See WARN Act layoffs and the Texas HR guide.

Common questions

Is the Texas 6-day deadline business days or calendar days?

Calendar days. TWC says final pay for an involuntary separation is due within six calendar days of discharge.

Do I have to pay out vacation when I fire someone in Texas?

Only if your written policy or agreement promises a payout. If it does, the payout is due with the rest of final pay.

Can I keep the last paycheck until equipment is returned?

No. TWC says holding final pay past the deadline for unreturned property is not legal.

How MambaHR handles this

For a Texas termination, MambaHR works out the six-day final pay deadline and amount for a person to approve, drafts the separation paperwork, prepares the COBRA continuation notices, and removes system access. A person makes every termination decision, and every change is logged.

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Sources

Last reviewed October 2, 2026. This page is general information, not legal advice. Laws change and exceptions apply, so check the sources above or an employment lawyer before you act on a specific case.