Overview. On May 11, 2017, Tennessee Governor Bill Haslam signed into law House Bill 419 (HB 419) which amends the frequency in which employers must pay employee wages.
Effective Date. May 11, 2017 (the law became effective on the date the bill was signed by the governor).
Details. Tennessee law previously required that all wages or compensation of employees in private employments is due and payable as follows:
1. All wages or compensation earned and unpaid prior to the first day of any month is due and payable not later than the twentieth day of the month following the one in which the wages were earned; and
2. All wages or compensation earned and unpaid prior to the sixteenth day of any month is due and payable not later than the fifth day of the succeeding month.
HB 419 amended the law as follows:
1. All wages or compensation of employees in private employment is due and payable not less frequently than once per month;
2. For each employer that makes wage payments once monthly to employees in private employments, all wages or compensation earned and unpaid prior to the first day of any month is due and payable not later than the fifth day of the succeeding month; and
3. For each employer that makes wage payments in two or more periods per month, all wages and compensation of employees in private employments is due and payable as follows:
a. All wages or compensation earned and unpaid prior to the first day of any month are due and payable not later than the twentieth day of the month following the one in which the wages were earned; and
b. All wages or compensation earned and unpaid prior to the sixteenth day of any month is due and payable not later than the fifth day of the succeeding month.
Additionally, HB 419 codified that final wages of a terminated employee must include any vacation pay or other compensatory time that is owed according to company policy or a labor agreement. However, employers are not required to provide paid or unpaid vacation leave and are not required to have vacation pay policies.
Call to Action. Employers considering a change in pay frequency should provide affected employees with written notice as far in advance as possible.
To review a copy of the Tennessee HB 419, please click here.
If you have any questions regarding this article, please contact your Relationship Manager or Service Team.