Small Employer Exemptions in Texas: When Discrimination Laws Don't Apply

If your employer has fewer than 15 employees, neither Texas nor federal discrimination laws protect you. This is one of the most surprising—and frustrating—gaps in employment law. Millions of Texas workers at small businesses have no legal remedy when they face discrimination, harassment, or retaliation.

Unlike California (which covers employers with 5+ employees) or New York (4+ employees), Texas follows the federal 15-employee threshold exactly. If you work for a company with 14 or fewer employees, TCHRA and Title VII don’t apply.

This guide explains the 15-employee threshold, how it’s calculated, what protections you DO have at small employers, and alternatives when discrimination laws don’t cover you.

The 15-Employee Threshold: Basic Rule

Both the Texas Commission on Human Rights Act (TCHRA) and federal Title VII require employers to have 15 or more employees for most discrimination protections to apply.

What this means:

Employers with 15+ employees must follow TCHRA and Title VII
Employers with 14 or fewer employees are exempt from these laws
This applies to discrimination based on race, sex, national origin, religion, disability, age (for TCHRA), and more

Why this matters: According to the U.S. Census Bureau, approximately 30-40% of private-sector workers in Texas work for businesses with fewer than 15 employees. These workers have no discrimination protection under TCHRA or Title VII.

How Is the 15-Employee Threshold Calculated?

Courts use the “payroll method” to count employees:

The rule: An employer must have 15 or more employees for at least 20 weeks in the current or preceding calendar year.

Who counts as an “employee”:

Full-time employees
Part-time employees (even working just a few hours per week)
Employees on paid leave (vacation, sick leave, FMLA)
Employees on unpaid leave in some circumstances

Who does NOT count:

Independent contractors (1099 workers)
Volunteers
Employees of separate legal entities (unless they’re joint employers)

Example: A Dallas restaurant has 18 employees on the payroll in January through June. In July, it reduces to 12 employees for the rest of the year. Because the restaurant had 15+ employees for 20+ weeks in the calendar year, TCHRA and Title VII apply.

Close cases: If your employer is near the 15-employee threshold, an attorney can investigate whether they meet the requirement by examining payroll records, tax filings, and corporate structure.

Different Thresholds for Different Laws

Not all employment laws use the 15-employee threshold. Here’s how different federal protections vary:

Law	Protected Class	Employer Size
Title VII	Race, sex, religion, national origin	15+ employees
TCHRA (Texas)	Race, sex, religion, national origin, age 40+, disability	15+ employees
ADA (Disability)	Disability	15+ employees
ADEA (Age)	Age 40+	20+ employees
Equal Pay Act	Sex (pay equity)	ALL employers (no minimum)
FMLA (Family Leave)	Medical/family leave	50+ employees
FLSA (Wage/Hour)	Minimum wage, overtime	ALL employers (no minimum)

Key takeaway: If you work for a small employer (under 15 employees), you still have wage/hour protections and Equal Pay Act rights. But you have no Title VII or TCHRA discrimination protections.

What Protections DO Small Employer Workers Have?

Even if your employer has fewer than 15 employees, you still have some legal protections:

1. Equal Pay Act (All Employers)

The Equal Pay Act requires equal pay for equal work regardless of sex. This applies to ALL employers, no matter how small.

Example: A 10-employee accounting firm in Houston pays male accountants $80,000 and female accountants $65,000 for identical work. The female accountants can sue under the Equal Pay Act even though the firm is too small for Title VII or TCHRA coverage.

2. Fair Labor Standards Act (All Employers)

The FLSA guarantees minimum wage and overtime pay for most workers. This applies to virtually all employers.

What’s covered:

Minimum wage ($7.25/hour federal; no higher Texas minimum)
Overtime pay (1.5x for hours over 40/week)
Child labor protections
Recordkeeping requirements

3. Occupational Safety and Health Act (All Employers)

OSHA requires employers to provide a safe workplace free from recognized hazards. This applies to employers of all sizes.

4. National Labor Relations Act (Most Employers)

The NLRA protects workers’ rights to organize, discuss wages, and engage in “concerted activity” for mutual aid. This generally applies to employers with at least $500,000 in annual revenue (covering most businesses).

5. Wrongful Discharge in Violation of Public Policy

Even at small employers, Texas recognizes a narrow “public policy exception” to at-will employment. You cannot be fired for:

Refusing to commit illegal acts
Exercising a legal right (like filing a workers’ compensation claim)
Performing a public duty (like jury service)

Example: A 12-employee Dallas law firm fires a paralegal for refusing to forge documents. Even though Title VII doesn’t apply, the paralegal may have a wrongful discharge claim for being fired for refusing illegal conduct.

6. Workers’ Compensation Retaliation

Texas law prohibits firing employees for filing workers’ compensation claims. This applies to employers of all sizes if they carry workers’ compensation insurance.

7. Whistleblower Protections (Limited)

Some Texas and federal whistleblower laws protect employees who report violations of specific laws, regardless of employer size. These are narrow protections tied to specific industries or violations.

What Small Employer Workers DON’T Have

If your employer has fewer than 15 employees, you have NO protection against:

Discrimination Based on Protected Classes

Race discrimination
Sex/gender discrimination
Religious discrimination
National origin discrimination
Disability discrimination
Age discrimination (under TCHRA; federal ADEA requires 20+ employees)

Example: A 10-employee restaurant in San Antonio fires all its Black employees and replaces them with White workers, making racist comments openly. The fired employees have no Title VII or TCHRA claim because the restaurant is too small. This is legal under current law, even though it’s morally wrong.

Harassment and Hostile Work Environment

Sexual harassment, racial harassment, and other hostile work environment claims require Title VII or TCHRA coverage. Small employer workers have no remedy.

Example: A 12-employee tech startup in Austin has a CEO who makes constant sexist comments, creates a hostile environment for women, and makes unwelcome advances. Female employees have no sexual harassment claim under Title VII because the company is too small.

Failure to Accommodate

Disability accommodation and religious accommodation requirements come from the ADA and Title VII. Small employers don’t have to accommodate.

Example: A 9-employee accounting firm refuses to provide a wheelchair ramp for a disabled employee. Unlike large employers, this small firm has no ADA obligation to provide reasonable accommodation.

Pregnancy Discrimination

The Pregnancy Discrimination Act (part of Title VII) only applies to employers with 15+ employees.

Example: A 14-employee dental practice fires a dental hygienist when she announces her pregnancy. She has no PDA claim because the practice is too small, even though the firing was clearly because of pregnancy.

Why Does the 15-Employee Threshold Exist?

The threshold was created to balance worker protections with concerns about burdening very small businesses. The reasoning (whether you agree with it or not):

Arguments for the exemption:

Small businesses have limited resources for HR and compliance
Discrimination laws impose administrative burdens
Small businesses need flexibility in hiring/firing
Personal relationships at small firms make formal laws less necessary

Arguments against the exemption:

Discrimination is equally harmful at small and large employers
Most small businesses can comply without undue burden
The exemption leaves millions of workers unprotected
Other countries and some U.S. states cover smaller employers

Political reality: Texas has not expanded discrimination protections to cover smaller employers. California covers employers with 5+ employees. New York covers 4+. But Texas follows the federal 15+ standard exactly, with no state-level expansion.

How Courts Determine Employer Size in Close Cases

When it’s unclear whether an employer meets the 15-employee threshold, courts examine:

Integrated Enterprise Test

Multiple related companies may be considered a single employer if they:

Have common ownership or financial control
Share management or centralized HR
Interchange employees
Have common operations or equipment

Example: A Dallas restaurant owner operates three restaurants as separate LLCs, each with 8-10 employees. If the businesses are sufficiently integrated (shared ownership, shared managers, employees work at multiple locations), courts may treat them as a single 24-30 employee enterprise covered by Title VII.

Joint Employer Test

Two separate companies may be “joint employers” if they:

Share control over employees’ work
Both have authority to hire/fire
Share payroll or HR functions

Example: A temp agency and the company where temps work may be joint employers, combining their employee counts to meet the 15-employee threshold.

Counting Part-Time and Intermittent Workers

Even employees working just a few hours per week count toward the threshold. This often pushes small employers over the 15-employee line.

If you’re close to the threshold: Consult an attorney. Investigating corporate structure, payroll records, and employee counts may reveal that your employer does meet the 15-employee requirement.

Real-World Impact: Stories from Small Business Workers

Example 1: Fired for Being Gay at 12-Employee Firm

Marcus worked at a 12-employee marketing agency in Houston. When his boss learned he was gay, he was fired with comments like “We don’t want your kind here.” Marcus has no Title VII claim (company too small) even though Bostock protects LGBTQ+ workers at larger employers.

Reality: Marcus has no legal remedy for sexual orientation discrimination. This is a harsh gap in the law.

Example 2: Racist Hostile Environment at Small Restaurant

Linda, a Black server at an 8-employee Dallas restaurant, endured daily racial slurs from the owner and other employees. She complained multiple times. Nothing changed. She quit and developed anxiety.

Reality: Linda has no Title VII hostile work environment claim because the restaurant is too small. She may have wrongful discharge claims if she can prove constructive discharge in violation of public policy, but this is a difficult standard.

Example 3: Pregnancy Discrimination at Dental Office

Sarah worked at a 14-employee dental practice in San Antonio. When she announced her pregnancy, she was fired immediately. Her boss said, “We can’t have you taking time off.”

Reality: Sarah has no Pregnancy Discrimination Act claim because the practice is too small. If she can prove pay disparities between her and male employees, she might have an Equal Pay Act claim, but PDA doesn’t apply.

Example 4: Disability Accommodation Refused

James, who uses a wheelchair, was hired at a 13-employee El Paso insurance agency. He requested a desk adjustment and accessible restroom. The employer refused, saying “We’re not required to accommodate you.” James was forced to quit.

Reality: James has no ADA claim because the agency is too small. The employer is legally correct—they’re not required to provide reasonable accommodation.

What Can You Do If You Work for a Small Employer?

If you face discrimination at a small employer (under 15 employees), your options are limited but not zero:

1. Investigate the Employee Count

Hire an attorney to examine whether your employer actually meets the 15-employee threshold by:

Reviewing payroll records
Investigating corporate structure (integrated enterprise)
Identifying joint employer relationships

You may discover your employer is covered after all.

2. Pursue Equal Pay Act Claims

If you’re paid less than opposite-sex coworkers for equal work, the Equal Pay Act applies to ALL employers. This is an avenue even at very small businesses.

3. Explore State Common Law Claims

Consider wrongful discharge in violation of public policy if:

You were fired for refusing illegal conduct
You were fired for exercising a legal right
You were fired for performing a public duty

These claims are narrow but don’t depend on employer size.

4. File Workers’ Compensation Retaliation Claims

If you were fired for filing a workers’ comp claim, this protection applies regardless of employer size (if the employer carries workers’ comp insurance).

5. Report Safety Violations to OSHA

OSHA protections apply to all employers. If discrimination involved unsafe working conditions, report to OSHA.

6. Document and Leave

If you have no legal remedy, document everything and seek employment elsewhere. Consider leaving reviews on sites like Glassdoor to warn other workers, though be careful about defamation liability.

7. Advocate for Legal Change

Support legislative efforts to expand Texas discrimination protections to smaller employers (like California’s 5+ or New York’s 4+ thresholds). Contact your state representatives.

Frequently Asked Questions

Why doesn’t Texas cover smaller employers like California and New York?

Texas has chosen to follow federal law exactly, which exempts employers with fewer than 15 employees. Unlike California or New York, Texas has not passed state legislation expanding protections to smaller businesses. This reflects Texas’s generally employer-friendly approach to employment law.

What if my employer has exactly 15 employees?

If your employer had 15 employees for at least 20 weeks in the current or preceding calendar year, they’re covered. Part-time employees count. Have an attorney examine payroll records to confirm.

What if my employer has multiple locations?

Employees at all locations count if the locations are part of the same legal entity. If locations are separate corporations, they may still be treated as an integrated enterprise if they share control, management, and operations.

Can small employers legally discriminate?

Yes. As harsh as it sounds, employers with fewer than 15 employees can legally make hiring and firing decisions based on race, sex, religion, national origin, disability, or age without violating Title VII or TCHRA. This is a major gap in civil rights protections.

Should I still file a TWC or EEOC complaint?

If you believe your employer meets the 15-employee threshold, yes—file immediately. The agencies can investigate and determine employer size. If the agency determines your employer is too small, you haven’t lost anything by filing, and you’ve preserved your claim date in case the investigation reveals the employer is actually covered.

The Bottom Line: A Major Gap in Texas Worker Protections

The 15-employee threshold leaves millions of Texas workers without discrimination protection. Unlike California (5+ employees) or New York (4+ employees), Texas provides no state-level advantage for small business workers.

If you work for a small employer and face discrimination:

Verify the employee count with an attorney
Explore Equal Pay Act and other universal protections
Document everything
Understand that discrimination law may not protect you
Consider seeking employment at a larger employer with legal protections

This is a harsh reality of Texas employment law. Workers at small businesses have far fewer rights than those at larger companies.

Legal Disclaimer

This article provides general information about employer size requirements for Texas discrimination laws and is not legal advice. Employment law cases are fact-specific, and outcomes depend on individual circumstances. For advice about your specific situation, consult a qualified Texas employment attorney. Nothing in this article creates an attorney-client relationship.

Laws and court interpretations change. This information is current as of the last updated date shown above. Always verify current law before taking action.

Tags: Employment Law Aid, Texas, Small Employer, Employer Size, TCHRA, Title VII, Discrimination Law

FREE Evaluation

Helpful Resources

Related Articles

Recent Blog Posts