Tennessee Overtime Laws

September 15th 2024

It is common for employees to work beyond their normal hours of work. However, according to Tennessee Labor Laws, employers are required to compensate employees for their overtime.

In Tennessee, you are entitled to time-and-a-half for every hour worked over 40 in a week.

This article will provide information to successfully navigate Tennessee’s overtime regulations, whether you’re an employer aiming for compliance or an employee defending your rights.

This article covers:

Tennessee Overtime Rates

Overtime law in Tennessee is generally aligned with the federal Fair Labor Standards Act (FLSA). For any hours worked beyond a total of 40 in one work week, the majority of hourly employees in Tennessee have the right to an overtime pay rate.

Overtime in Tennessee is set at 1.5 times the regular hourly rate for workers who exceed 40 hours a week. 

The regular Tennessee minimum wage is $7.25 per hour, which makes Tennessee’s overtime minimum wage $10.88 per hour (1.5 times the minimum wage). 

Overtime Entitlement in Tennessee

According to Tennessee overtime laws, overtime pay is required for any non-exempt employees.

Employees who earn below $844 a week ($43,888 annually) and work in a non-exempt industry are entitled to overtime pay.

However, your overall eligibility for overtime pay will be based on what your job duties are as well as what type of business you are in.

Read more about Overtime Exceptions and Exemptions in Tennessee.

Overtime for Tipped Employees in Tennessee

A tipped employee in Tennessee is entitled to overtime compensation. However, their minimum wage is lower than the standard state minimum wage.

Before we continue, it is important to understand what a tip credit is. 

A tip credit is a system that enables employers to pay tipped employees a lower minimum wage. Simply take the standard state minimum wage minus what the tipped employee is paid. 

In this case, the Tennessee minimum wage is $7.25, and the minimum tipped employee wage is $2.13, which makes the tip credit $5.12.

If a tipped employee works overtime hours, their overtime rate will be calculated based on the full minimum wage, and not the lower wage that they are being paid.

The employer is not permitted to take a higher tip credit for an employee’s overtime hours as they do with regular hours.

Overtime for Salaried Employees in Tennessee

Employees who are on a fixed salary typically don’t get overtime pay, but there is an exception to this rule. The Fluctuating Workweek Method (FWW) allows fixed-salary employees to receive overtime pay of one-half (0.5) times their regular hourly rate. 

However, to be eligible for FWW, the employee must have a fluctuating workweek, meaning they work varying hours between weeks and earn at least $7.25 per hour.  

Calculating Overtime with Commission in Tennessee

Employees in Tennessee who receive commissions are eligible for overtime at a rate of 1.5 times their regular hourly rate. Their normal hourly rate must include the commissions earned as well. However, they will only be given half of that rate for every overtime hour.

For example, let’s say an employee works 45 hours a week at a rate of $10/hour and receives $100 in commissions for that week. We need to first calculate the new regular hourly rate.

To do so:

(Total hours x Hourly Rate) + Commission

= (45 x 10) + 100

= $550

Then, divide that by the total hours worked in the week.

= 550 / 45

=$12.22

To determine the overtime rate for the commissioned employees, we need to take that new regular hourly rate and halve it.

$12.22 / 2

= $6.11

Since the employee worked an extra 5 hours in the week, that makes his overtime compensation $30.56 ($6.11 x 5 hours).

The amount will vary according to the hours worked, hourly rate, and commission earned.

Mandatory Overtime in Tennessee

Tennessee state laws do not mention mandatory overtime, so that’s where the federal Fair Labor Standards Act (FLSA) comes in.

According to the FLSA, mandatory overtime is allowed, which means that employers are allowed to force their employees to work overtime hours. The federal law also allows employers to take disciplinary action against an employee who refuses overtime work.

Overtime Exceptions and Exemptions in Tennessee

It’s worth noting that not all employees are eligible for overtime pay. Those who fall under the exempt category are typically salaried employees who receive a fixed amount of pay – this means they’re not entitled to extra time pay. 

For an employee to be considered overtime-exempt, they need to earn at least $844 per week. Categories of exempt employees include:

  • Executive, administrative, and professional individuals
  • Computer employees who make $844 a week or $27.63 per hour
  • Outside sales employees
  • Agricultural or horticultural employees
  • Commissioned sales employees in retail or service establishments
  • Motor carrier employees are also considered exempt from overtime pay if they provide services in transportation on highways in interstate or foreign commerce

Statute of Limitations For Unpaid Overtime Claims in Tennessee

The statute of limitations for filing an overtime claim in Tennessee is 2 years. It can be increased to 3 years if an employer willfully fails to provide overtime pay.

Additionally, under the FLSA, employers cannot take disciplinary action against an employee who chooses to file an overtime complaint.

Misclassifying Employees in Tennessee

The Employee Misclassification Education and Enforcement Fun (EMEEF) Program investigates and penalizes employers who misclassify their employees. Employers who don’t want to provide overtime pay might misclassify an employee as self-employed or as an independent contractor.

If an overtime violation occurs, the EMEEF Program imposes civil fines in an amount that is equivalent to the amount that has been withheld from the employee.

Legal Cases Relating to Overtime Compensation in Tennessee

Below, we present law cases relating to fair overtime compensation for employees in Tennessee: 

1. Vacation Resort Employees Awarded $5M in Lawsuit for Claiming Overtime Back Wages

In the case of Pierce v. Wyndham Vacation Resorts, Inc., Jesse and Michael Pierce filed a collective action against Wyndham Vacation Resorts (Wyndham) for violating the Fair Labor Standards Act (FLSA) by not compensating sales employees for their overtime work hours.

Jesse and Michael Pierce claimed that Wyndham made their sales employees underreport their hours or manipulate their timesheets to avoid providing overtime pay. Wyndham had allegedly implemented a policy where employees had to clock out when they were not actively working. This led to some employees working more than 40 hours per week but not having their hours recorded in their timesheets.

The court found that the evidence presented by Jesse and Michael Pierce showed that Wyndham had also prohibited other employees from recording or recovering overtime pay. Additionally, Wyndham had instructed managers to edit employees’ timecards. 

The court granted judgment for in-house and front-line sales employees but excluded discovery salespersons. This is because discovery salespersons had different titles, sold different products, and even had different work schedules.

Ultimately, the court awarded the employees $5,025,925 in damages, which includes overtime pay and liquidated damages.

Key lessons from this case:
  • Employees can choose to bring a collective action (group legal action) under the FLSA on behalf of themselves and other employees who are similarly situated.
  • Representative evidence can be used as liability for employees who testify as well as non-testifying employees in a collective action.
  • Sales employees in Tennessee are entitled to overtime pay unless specifically stated otherwise.
2. Sushi Chef Appeals Court for Unclaimed Overtime Compensation

In the case of Mei Xing Yu v. Hasaki Restaurant, Inc., Mei Xing Yu filed a lawsuit against Hasaki Restaurant (Hasaki), alleging that the restaurant violated the Fair Labor Standards Act (FLSA) by not paying her overtime. Yu was a sushi chef at Hasaki for 2 years and often worked for more than 40 hours a week.

Hasaki filed for a summary judgment and it was granted by the district court, dismissing Yu’s claims. Yu decided to appeal the district court’s decisions to the Second Circuit Court of Appeals. The Second Circuit reversed the initial court’s ruling and decided that Hasaki was liable for Yu’s unpaid overtime wages.

It was found that Hasaki was considered an employer under the FLSA because it had over 20 employees. This meant that their employees were eligible for overtime pay if they worked over 40 hours a week.

The Second Circuit ordered Hasaki Restaurant to pay Yu overtime back wages, with interest and attorney’s fees. The final ruling and dismissal of the case were undetermined.

Key lessons from this case:
  • Employers with more than 20 employees must comply with the FLSA, which includes providing overtime compensation.
  • An employee has the option to appeal a court’s ruling if they believe that the outcome is unjust.
  • An employee needs to know their overtime rights and eligibility to avoid years of unclaimed overtime back wages.

3. Fire Department Sued for Failure to Provide Fire Captain with Overtime Pay

In the case of Barrows v. City of Chattanooga, Tenn., Ronald Barrows, a fire captain, filed a lawsuit against the City of Chattanooga for not providing him with overtime compensation. Barrows worked for the City of Chattanooga Fire Department (CFD) and claimed to work 24-hour shifts for about 9 days per month. Barrows also claimed that there would sometimes be holdovers, which meant working additional minutes or hours past his shift in emergencies.

The court found that Barrows did not have any work records or proof of overtime requests for his estimation of holdover hours. Despite that, the court applied the Fair Labor Standards Act (FLSA) and examined the exemptions for executive and administrative positions. The court determined that the first responder regulation under the FLSA specifically excludes firefighters from these exemptions.

Based on the FLSA exemption application, the court concluded that Barrows did not meet exemption requirements and was, therefore, entitled to overtime pay. However, since Barrows did not provide enough evidence for his damages (burden of proof), his recovery amount was only limited to reasonable attorney’s fees and the costs of the action.

Key lessons from this case:
  • The employee must bear the burden of proof to establish damages for overtime violations.
  • Although there was a lack of evidence, state or federal laws can still be relied on to determine an employee’s eligibility for claiming overtime back wages.
  • The FLSA specifically states that exemptions do not apply to firefighters and similar personnel.

Learn more about Tennessee Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.