- Employers must notify employees of their rate of pay either prior to or as of when the employee begins work for them.
- All wages and other compensation which are earned and unpaid prior to the 1st day of any month are due and payable by no later than the 20th day of the next month;
- All wages and other compensation which are earned and unpaid prior to the 16th day of any month are due and payable by no later than the 5th day of the next month;
- If the employer pays wages and other compensation through a physical check and the employee is not at work on the employer’s established pay day, the employee must be paid within a reasonable time following either his/her request for the same or return to work;
- All employers who are not part of the federal, state or a local government or who have more than five (5) employees must establish and maintain regular pay days based on items (2) and (3) above, and must post and maintain notices of these regular pay days, printed or written in plain type or script, in at least two (2) conspicuous places where they can be seen by employees as they go to and from work;
- The payment of wages and other compensation must be paid in lawful U.S. currency OR a sufficiently funded check or other bank draft which will not require the employee to pay any type of discount or fee to have it honored at a bank or other established place of business OR through an electronic automated fund transfer, again using lawful U.S. currency, OR through a credit to a prepaid debit card issued through a network system from which the employee is able to withdraw or transfer funds with at least one such withdrawal per pay period being completely free from any transaction or other fees. [Note that employers who choose to use a prepaid debit card wage payment system also must inform their employees that they have the option to choose to be paid through electronic automated fund transfers and then provide that wage payment option as well. Those employees who do not notify the employer of their preference for the electronic automated fund transfer option can then be paid using a prepaid debit card.];
- For restaurants, private clubs, bars, etc. whose employees earn tips, the tip amounts must be paid/distributed to those tipped employees either at the end of the work day the tip is paid OR on the tipped employees’ next regular pay day;
- Departing employees must be paid their full wages and other compensation earned as of their last day of employment or otherwise pursuant to an employment contract, etc. no later than the employer’s next regular pay day following the employee’s dismissal or quit date OR twenty-one (21) days following that date, whichever occurs later. [Employers cannot ask employees to agree to a later payment of such wages or other earned compensation even as part of a severance or other agreement.];
- Accrued but unused vacation pay or other PTO time does not have to be paid out to departing employees unless the employer has a policy or practice of doing so; and
- All employees must be provided with a thirty-minute unpaid rest or meal break for every six (6) consecutive hours they are scheduled to work, unless the nature of their workplace environment provides ample opportunity for rest or other breaks. These breaks may not be scheduled during the employee’s first hour of work. [Employees who work for tips in the food or beverage service industry may waive these breaks with appropriate written notice.]
Violations of these Tennessee wage payment law provisions constitute Class B criminal misdemeanors, punishable by a fine of not less than $100.00 or more than $500.00. Willful violations will also be subject to a civil penalty of between $500.00 and $1,000.00 at the discretion of the TDOL. Every violation will constitute its own separate and distinct offense for purposes of the assessment of these criminal and civil penalties, although both criminal and civil penalties cannot be pursued for the same violation. The TDOL can decide to issue a warning rather than any penalty for a first offense, if it decides that the violation was unintentional.
In closing, although the focus of today’s alert is Tennessee’s wage payment laws, we would be remiss if we did not also use this as another reminder that the federal Department of Labor as well as many plaintiffs’ law firms – yes, even here in little ol’ Tennessee – remain on the prowl for federal FLSA violations. Such violations include, but are not limited to, misclassification of employees as exempt from overtime based on their job duties and of employees as “independent contractors” based on the amount of control the employer is exercising over the work they perform among other factors.
If you have not performed an internal employee classification self-audit in at least the past two (2) years, you need to contact us this year to help you do so. Because federal wage and hour law violations involve strict liability (i.e., courts and/or the U.S. Department of Labor do not care/are not permitted to consider whether you “meant” to misclassify your employees or not in determining liability), as well as the payment of attorney fees and interest and penalties based on the failure to appropriately pay overtime to those to whom it is lawfully due, these are among the most expensive types of federal law violations you can commit as employers.
Thus, this is another area where an ounce of prevention (through a self-audit) can help you avoid a pound of litigation.
And again, unlike the Tennessee state law wage payment violations discussed above, federal FLSA violations remain subject to both U.S. Department of Labor prosecution and private lawsuits – including the dreaded class and collective actions in which all of the current and former employees who have been improperly paid in the past 2-3 years based on your misclassification of them can be joined in the same lawsuit against you. Not fun.