How do you calculate overtime pay in Tennessee?

Calculating overtime pay in Tennessee is crucial for ensuring fair compensation and compliance with labor laws. Accurate overtime calculations protect employees’ rights to fair wages for extra work hours while helping employers avoid potential legal issues and penalties. Understanding the overtime pay regulations is essential for employers and employees to maintain a transparent and equitable work environment.

This article provides a comprehensive guide on calculating overtime pay, covering eligibility, exemption, and specific calculations required for different types of employees.

Which Overtime Laws Apply in Tennessee?

In Tennessee, overtime laws are primarily governed by the Fair Labor Standards Act (FLSA). The FLSA requires employers to pay overtime at a rate of 1.5 times an employee’s regular rate of pay for any hours worked over 40 in a workweek, applicable to all non-exempt employees. This means non-exempt employees are entitled to overtime pay for hours worked beyond this threshold.

The FLSA also outlines specific exemptions from overtime pay based on job duties and salary levels. These exemptions include executive, administrative, professional employees, and certain highly compensated employees. However, for those who are non-exempt, overtime pay is mandated.

It is important to note that hours worked on weekends or holidays are not automatically considered overtime; instead, overtime pay is only required if these hours exceed the 40-hour threshold within the workweek.

How Much is Overtime Pay in Tennessee?

Overtime pay in Tennessee is calculated according to the FLSA regulations. Employees are entitled to receive overtime pay at a rate of one and a half times the employee’s regular rate of pay for any hours worked beyond 40 in a workweek.

If an employee’s regular pay rate is $20 per hour, their overtime rate would be $30 per hour. For any hours worked beyond 40 in a workweek, the employee should receive $30 per hour for those additional hours.

To learn more, check out our guide on Tennessee Overtime Laws. 

Who is Eligible for Overtime Pay in Tennessee?

Eligibility for overtime pay in Tennessee primarily follows the guidelines set forth by the FLSA. Employees who are eligible for overtime pay include those who are paid on an hourly basis and who are salaried but do not fall into specific exempt categories. These employees should receive 1.5 times their regular hourly rate for any hours worked beyond 40 in a workweek.

Check out our guide on Overtime Rights in Tennessee.

For hourly employees in Tennessee, overtime is calculated at 1.5 times the employee’s regular hourly rate for any hours worked beyond 40 in a workweek. To calculate the overtime pay:

• Determine the regular hourly rate: This is the employee’s usual hourly wage.
• Calculate the overtime rate: Multiply the regular hourly rate by 1.5.
• Calculate overtime pay: Multiply the overtime rate by the number of overtime hours worked.

If an hourly employee earns $15 per hour and works 50 hours in a week, the employee’s regular pay is $15. The overtime rate is $22.50 per overtime hour. For the ten overtime hours, the overtime pay would be $225 ($22.50 x 10).

Read our guide on Your Rights as an Hourly Employee in Tennessee to learn more.

Overtime pay is calculated differently for salaried employees. The process involves determining the employee’s regular hourly rate based on their weekly salary and then calculating the overtime rate. To calculate the overtime pay:

• Determine the weekly salary: This is the total salary the employee earns per week. Non-exempt employees earn less than $844 weekly.
• Calculate the regular hourly rate: Divide the weekly salary by 40 (the standard number of hours in a workweek).
• Calculate the overtime rate: Multiply the regular hourly rate by 1.5.
• Calculate overtime pay: Multiply the overtime rate by the number of overtime hours worked.

If a salaried employee earns $800 per week and works 50 hours in a week, the regular hourly rate is $20 ($800 / 40), making the overtime rate $30 per hour ($20 x 1.5). For the ten overtime hours, the pay would be $300 ($30 x 10).

Check out our guide on Your Rights as a Salaried Employee in Tennessee.

How do you Calculate Overtime for Tipped Employees in Tennessee?

For employees who earn commissions, the regular rate of pay is calculated based on their total compensation and the number of hours worked. Here’s how to calculate overtime for commission employees:

• Determine total weekly compensation: Combine the base salary and commission earned in the week.
• Calculate the regular hourly rate: Divide the total weekly compensation by the number of hours worked in the week.
• Calculate the overtime rate: Multiply the regular hourly rate by 1.5.
• Calculate the overtime pay: Multiply the overtime rate by the number of overtime hours worked.

If a commission employee earns $600 in commissions for a 50-hour workweek, the regular hourly rate would be $12 ($600 / 50). The overtime rate of $12 per hour is $18 ($12 x 1.5). If the employee worked 50 hours, the employee worked ten overtime hours. For 10 overtime hours, the pay would be $180 ($18 x 10).

Piece rate employees are paid based on the number of units they produce or complete. To calculate overtime:

• Determine the piece rate: Identify how much the employee is paid per unit of work completed, such as per item produced or task completed.
• Calculate the total earnings: Multiply the number of units completed by the piece rate to find the employee’s weekly earnings.
• Calculate the regular hourly rate: Divide the total earnings by the total number of hours worked in the workweek.
• Determine the overtime rate: Multiply the regular hourly rate by 1.5.
• Determine the number of overtime hours worked in the week: All hours worked beyond 40 in a workweek are considered overtime.
• Calculate overtime pay: Multiply the overtime hours by the overtime rate.

For example, if a piece rate employee earns $700 for a 45-hour workweek, the regular hourly rate is $15.56 ($700 / 45). The overtime rate is $15.56 x 1.5 = $23.33. For five overtime hours, the pay would be $116.67 ($23.33 x 5).

In Tennessee, the statute of limitations for claiming unpaid overtime is governed by the FLSA for federal claims. Under the FLSA, employees have two years from when the overtime pay was due. If the employer’s violation is found to be willful, the statute of limitations is extended to three years.

Tennessee employers must keep specific records to ensure compliance with overtime wage regulations, which include:

• Number of hours worked each day and each workweek for each employee. This includes recording start and end times for each shift.
• Wages paid to employees, including the total amount of wages and the rate of pay for both regular and overtime hours.
• Employee information, such as names, addresses, and job titles.
• Detailed payroll that includes deductions or additions to pay.

Employers can use various methods for recording hours worked, including manual timesheets, electronic time clocks, or automated time and attendance software. Maintaining these records helps ensure compliance with state and federal wage and hour laws. They must be kept for at least three years, as they are crucial in audits or wage disputes.