Tennessee Revises Pay Timing for Commission Workers

On April 6, 2026, Tennessee enacted Senate Bill 2024 (Public Chapter 617), changing when certain privately employed workers paid on a piecework or commission basis must receive monthly wages and final pay.

The law keeps Tennessee’s standard monthly pay and final pay rules in place for most employees, but creates different deadlines for workers paid on a piece-work or commission basis.

This update applies to covered Tennessee private employers, and the law takes effect on July 1, 2026, for wages and compensation earned on or after that date.

What Employers Need to Do

• Identify Tennessee workers paid on a piece-work or commission basis and determine whether their compensation systems are now subject to different payment deadlines.

• Update offboarding and final-pay procedures so final compensation for covered piece-work and commission employees is paid by the last day of the month following separation.

• Review payroll calendars and monthly close processes to ensure piece-work and commission compensation are paid by the last day of the following month when the employer pays monthly.

• Review commission and piece-rate plans to clearly define when compensation is considered earned, since the deadlines apply to compensation already earned.

Overview

Tennessee amended Tenn. Code Ann. § 50-2-103 through Public Chapter 617 to establish different wage-payment deadlines for employees paid on a piece-work or commission basis.

Ongoing Payroll (active employees)

• For employers that pay wages once a month, regular employees must still be paid no later than the fifth day of the following month.
• For employees paid on a piece-work or commission basis, compensation earned during employment is due by the last day of the following month.

Final Pay

• For most employees who resign or are discharged, Tennessee’s existing final-pay rule remains the same: final wages are due by the next regular payday or within 21 days after separation, whichever occurs later.
• For employees paid on a piece-work or commission basis, final compensation is due by the last day of the month following discharge or voluntary leaving.
• The law keeps the existing rule that employers cannot avoid or waive final pay requirements.

Scope and What Did Not Change

• The changes apply only to private employment.
• The act applies prospectively only to wages and compensation earned on or after July 1, 2026.
• The law does not change Tennessee’s requirement that private employers pay wages at least monthly, and employers must still post notice of regular paydays.

Why This Matters

This creates a different payment timetable for a specific group of workers (employees paid on a piece-work or commission basis) without changing the ordinary deadlines for most other employees.

Employers using variable-pay arrangements should expect to review payroll timing and offboarding practices rather than assume Tennessee’s standard monthly-pay rules still apply across all employees.

Another key consideration is that the law does not define “piece-work” or “commission basis,” and it does not add a new method for resolving disputes over when commissions are earned. That means employers using commissions, piece-rate pay, or hybrid compensation plans should ensure their plan documents clearly state when compensation is earned and when it is payable.

Key Risks for Employers

• Applying Tennessee’s standard monthly-pay deadline to piece-work or commission employees when their pay is actually due by the last day of the following month. 

• Failing to update final-pay practices for covered workers, especially where commissions or piece-rate amounts are still being calculated at separation.

• Using compensation plans that do not clearly define when commissions or piece-rate compensation are earned, increasing wage-payment disputes.

• Assuming the law changes Tennessee’s wage-payment rules across the board, when in fact the amendments are targeted to private employees paid on a piece-work or commission basis.

Additional Information

The Tennessee Department of Labor and Workforce Development’s Labor Standards Unit enforces the Wage Regulations Act, investigates wage complaints, and offers employer training classes on labor-law compliance.

Tennessee’s general wage guidance continues to state that unused PTO, vacation, and other fringe benefits are payable at separation only if the employer’s policy or labor agreement requires it; this legislation did not change that broader rule.

Source References

• Tennessee SB 2024 – AN ACT to amend Tennessee Code Annotated, Title 50, Chapter 2, Part 1, relative to employee compensation (Public Chapter No. 617)
• Tennessee HB 1958 – Companion Bill

Resources

• Tennessee – Labor Standards Unit
• Tennessee – Payday regulations, non-payment of wages, final paychecks
• Tennessee – Workplace Regulations and Compliance

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