Employment Law

Hire, classify, pay, and separate without expensive surprises.

Your fifth employee is when the legal exposure starts to outweigh the legal awareness. Sterling & Hayes is the Austin small-business employment counsel that gets the offer letter right on the way in, keeps the handbook current while you grow, and runs a clean separation when the relationship ends. Texas non-compete enforceability, contractor classification, equity grants, and EEOC response all in one place.

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Employment law is the practice area founders underestimate.

You can be a Texas business that has done everything right - registered, taxed, contracted, audited - and one mishandled separation, one misclassified contractor, or one unanswered EEOC charge can erase a year of margin. Texas is a friendly state for employers, but only if you actually operate inside the rules. The defaults are good; the deviations are punishing.

Sterling & Hayes is the small-business employment lawyer that gets the documents and the decisions right before they cost you. We are not a HR outsourcing firm and we are not a labor litigation shop - we are the lawyers you call when you are about to hire, about to fire, about to write a policy, or about to be sued, and we get you to the right answer fast.

What is included

Offer letters & employment agreements

Tiered templates from at-will offer letters for hourly staff up to executive employment agreements with equity, severance triggers, and post-termination obligations. All Texas-compliant on first read.

Employee handbook

Texas-specific handbook covering at-will, PTO, leave, harassment and discrimination, technology and data, social media, and remote-work policies. Drafted plain enough that employees will actually read it.

Contractor vs employee classification

The single most common - and expensive - mistake a small business makes. We run the IRS, DOL, and Texas Workforce Commission tests, document the conclusion, and structure the agreement so the classification holds up.

Wage & hour compliance

FLSA exempt vs non-exempt classification, overtime, recordkeeping, the new salary thresholds, and Texas Payday Law. The biggest hidden liability for small businesses scaling past 20 employees.

Non-competes, NDAs & IP assignments

Texas non-competes done correctly under the Covenants Not to Compete Act - ancillary to an enforceable agreement, reasonable in scope, and backed by consideration. Plus the non-solicit, confidentiality, and IP assignment language that actually holds.

Equity grants for employees

Restricted stock, RSUs, ISOs, NSOs, profits interests in LLCs, and the 83(b) elections that go with them. Coordinated with your formation documents and your accountant so the grant actually does what you want it to do.

Separations & severance

Performance management documentation, separation agreements, releases that comply with the Older Workers Benefit Protection Act, and the operational playbook for the actual conversation.

ADA, FMLA & leave compliance

Reasonable accommodation interactive process, FMLA designation and tracking, Texas-specific leave issues, and pregnant worker protections under the PWFA.

The Texas non-compete reality check

Founders moving from California are stunned that Texas enforces non-competes at all. The reality is more nuanced: Texas does enforce non-competes, but only when the agreement meets the Covenants Not to Compete Act - ancillary to an otherwise enforceable agreement, supported by real consideration like access to confidential information, and reasonable in time, geographic scope, and scope of activity. Texas courts will reform an unreasonable non-compete rather than strike it, which is friendly to employers but does not save a sloppy one. The 2024 FTC non-compete rule sits in active litigation, and we keep clients abreast of where it stands.

Austin small business team in an employment policy review meeting

Texas-Compliant from Day One

Common employment scenarios

The first ten hires

You are about to hire your fifth through tenth employee and you have been operating off a generic offer letter and a Google Doc handbook. We build a complete employment infrastructure - offer letter templates by role, handbook, classification analysis, and equity grant docs - in two weeks.

The contractor who is really an employee

You have a "contractor" who works 40 hours a week, exclusively for you, with equipment you provided. The Texas Workforce Commission or the IRS will reclassify them - the question is whether you fix it now on your terms or after a back-wage assessment. We run the analysis and either rebuild the relationship as compliant 1099 or convert them to W-2 cleanly.

The high-stakes separation

An executive or senior employee is leaving - voluntarily or otherwise. We draft the separation agreement, the release, the post-termination obligations (non-disparagement, confidentiality, IP), and we coach the conversation. Most separations close in a week with a release that holds.

Why Sterling & Hayes

You get an employment lawyer who has actually advised small businesses through the headcount band where this stuff gets dangerous - five to fifty employees. We are not a Big Law shop pricing for Fortune 500 clients, and we are not an HR-tech platform pretending to be a lawyer. We give you the documents, the calls, and the judgment that keep employment risk inside the business plan.

Frequently Asked

Employment law, answered.

Are non-compete agreements enforceable in Texas?

Yes, but only when they meet the specific requirements of the Texas Covenants Not to Compete Act. The non-compete must be ancillary to an otherwise enforceable agreement (typically an employment agreement supported by consideration like trade secrets or specialized training) and must be reasonable in time, geographic scope, and scope of activity. Texas courts will reform an unreasonable non-compete rather than strike it entirely, which is more employer-friendly than most states but still requires careful drafting.

What does at-will employment mean in Texas?

At-will employment means either the employer or the employee may end the relationship at any time, for any lawful reason, with or without notice. Texas follows the at-will doctrine strongly. The carve-outs are firing for an illegal reason - discrimination based on a protected class, retaliation for protected activity such as filing a workers compensation claim, or violation of a written contract that altered the at-will default.

How do I know if a worker is a contractor or an employee?

It is not your call - it is a legal test that the IRS, the Department of Labor, and the Texas Workforce Commission apply independently. The core question is control: who decides how the work gets done, when, where, with what tools, and on what schedule. Misclassification penalties include back wages, back employment taxes, interest, and statutory damages, so it is worth getting a legal opinion before bringing on anyone you think is a contractor.

What should I do if I receive an EEOC complaint?

Do not respond directly and do not let HR draft the position statement on your own. The EEOC will use your initial position statement as the foundation of any later lawsuit, and a sloppy first response is one of the most common reasons small businesses lose employment cases. Call counsel within 48 hours of receiving the charge so that the response, the internal investigation, and the document hold are all coordinated.

How often should I update my employee handbook?

Substantively review it once a year and on any major change in headcount or operating state. Federal and Texas employment law shifts constantly - 2024 alone brought changes to FTC non-compete rules, FLSA salary thresholds, and Texas privacy obligations that affect HR data. A handbook that is more than two years old is almost guaranteed to have at least one provision that is now unenforceable or affirmatively risky.

Can I require my employees to sign arbitration agreements?

In Texas, yes - mutual arbitration agreements are generally enforceable for employment disputes, with a major exception: the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2022 carves out those specific claims. Arbitration can speed up resolution and limit discovery costs, but it also forfeits the right to a jury. We help small businesses decide whether the trade-off makes sense for their workforce.

Related Work

Employment matters we have handled.

Handbook

Handbook rollout for a 35-person Austin SaaS

Built a Texas-compliant handbook and onboarded the policy with a half-day workshop for managers.

Classification

Reclassified 14 contractors without penalty

Voluntary classification correction for an Austin marketing agency before a TWC audit closed in.

Separation

Clean executive separation in five days

Closed a complex C-suite separation with a release and post-termination obligations that held.

Hiring, firing, or rewriting policy this quarter?

Talk to a Sterling & Hayes employment attorney before the documents go out. One call now is dramatically cheaper than one EEOC charge later.

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