Tennessee Minimum Wage: Minimum Wage in Tennessee for 2024

April 1, 2024

Are you keeping up with the latest on minimum wage in Tennessee?

As restaurant owners, understanding how changes in the minimum wage affect your business is crucial. Whether you're hiring new staff or adjusting budgets, knowing the current minimum wage is essential.

So, what is the minimum wage in Tennessee for 2024, and how could it impact your operations? Let's get straight to the facts, shall we?

What is the Minimum Wage in Tennessee?

As of 2024, the minimum wage in Tennessee is $7.25 per hour, which matches the federal minimum wage. Tennessee does not have its own minimum wage laws; therefore, employers in the state must pay their employees at least the federal minimum wage.

Despite discussions and proposed legislation to increase this rate to $20 per hour, these initiatives did not pass. The proposal, introduced by Rep. Gloria Johnson, sought a significant increase from the current rate but was ultimately not approved by the necessary committees in March 2024. As it stands, the $7.25 rate will continue to apply, reflecting Tennessee's adherence to federal guidelines without any state-specific adjustments.

Tennessee Minimum Wage Exemptions

In Tennessee, certain job roles are exempt from the standard minimum wage and overtime provisions outlined by the Fair Labor Standards Act (FLSA). These exemptions are determined based on the employee's duties and are strictly interpreted. Employers must thoroughly assess an exemption's applicability based on an employee's actual job responsibilities.

Here are some commonly applied exemptions:

Commissioned Sales Employees: Retail or service employees earning over half their income from commissions, provided they average at least 1.5 times the minimum wage per hour.
Computer Professionals: Certain professionals paid at least $27.63 per hour, exempt from overtime under the FLSA.
Transportation Workers: Those employed by motor carriers affecting vehicle safety in interstate commerce, including drivers and mechanics.
Farmworkers on Small Farms: Exempt from minimum wage and overtime provisions, with specific regulations for young workers.
Automobile Dealership Employees: Salesmen, partsmen, and mechanics are exempt from overtime provisions.
Seasonal and Recreational Workers: Employees of certain establishments are exempt from both minimum wage and overtime rules.
Executive, Administrative, and Professional Employees: Those meeting Department of Labor criteria and paid on a salary basis are exempt from minimum wage and overtime.

Tennessee Minimum Wage for Tipped Employees

In Tennessee, the approach to tipped employees' wages follows the federal guidelines due to the absence of state-specific laws concerning tips and wages.

Tennessee employers must follow the federal tip credit rules, which dictate a minimum cash wage of $2.13 per hour for tipped employees. This is in line with the provisions of the federal Fair Labor Standards Act, ensuring that tipped workers' total earnings (tips plus cash wage) meet or exceed the general minimum wage of $7.25 per hour.

How Tip Credit Works

The tip credit is a mechanism that allows you, as an employer, to count a portion of the tips received by your employees towards meeting the minimum wage requirement. To apply this credit, you must first pay your tipped employees a direct wage of at least $2.13 per hour. If their tips, combined with this direct wage, do not add up to the minimum wage of $7.25 per hour, you must cover the shortfall.

Before using the tip credit, it's essential to inform your employees about this practice and ensure they understand how their wages are calculated. This openness helps maintain transparency and trust between you and your staff, ensuring everyone is clear on how their earnings are determined. Additionally, maintaining accurate records of wages and tips is crucial for demonstrating compliance with federal and state wage laws.

Overtime Pay in Tennessee

Overtime pay regulations in Tennessee adhere strictly to the Fair Labor Standards Act (FLSA), with no separate state laws affecting how overtime pay is calculated or distributed. According to FLSA guidelines, non-exempt employees are entitled to overtime pay at a rate of one and a half times their regular hourly rate for any hours worked beyond 40 in a single *workweek.

* The workweek is defined as any consecutive seven-day period as determined by the employer, allowing for flexibility in scheduling.

Calculation of Overtime Pay in Tennessee

Knowing how to calculate overtime pay accurately is vital for managing your restaurant's labor costs effectively. Here's how to ensure you're compensating your employees correctly for overtime:

Hourly Employees: To determine the overtime rate, multiply the employee's regular hourly rate by 1.5. For example, if employees earn $10 per hour, their overtime rate would be $15 per hour ($10 x 1.5).
Salaried Non-Exempt Employees: To calculate the overtime rate for a salaried non-exempt employee, first determine their equivalent hourly rate by dividing their weekly salary by 40 hours. Then, multiply this hourly rate by 1.5 to find the overtime rate.

Example Calculation:

Suppose you have a salaried, non-exempt employee earning a weekly salary of $480. To find the hourly rate, divide $480 by 40 hours, resulting in a $12 hourly rate. For overtime hours, the rate would then be $18 per hour ($12 x 1.5). If the employee works 45 hours in a week, they will earn $480 for the first 40 hours, plus $90 for the 5 hours of overtime ($18 x 5), totaling $570 for the week.

Accurately calculating overtime pay ensures your restaurant complies with federal regulations and supports your team by recognizing and compensating their hard work appropriately.

How is the Minimum Wage Determined in Tennessee?

The minimum wage in Tennessee is directly influenced by federal legislation due to the absence of a state-specific minimum wage law. This means changes to the minimum wage typically arise from adjustments at the federal level.

Tennessee Workplace Poster Requirements

Tennessee law mandates that all employers must display specific posters in the workplace to inform employees about their rights under employment laws. These posters should be placed in visible areas, like break rooms or near time clocks, ensuring easy access for all employees.

Required State Posters for Tennessee Employers

TOSHA Safety and Health Poster: Highlights safety and health regulations in the workplace.
TN Unemployment Insurance Poster: Provides details on unemployment benefits and filing claims.
Wage Regulation/Child Labor Poster: Outlines wage regulations and restrictions on child labor.
Workers' Compensation Posting Notice (Korean): Information on workers' compensation for Korean-speaking employees
Discrimination in Employment: Issued by the TN Human Rights Commission to address workplace discrimination

Required Federal Posters (USDOL)

Federal Minimum Wage Poster: Details the federal minimum wage requirements.
New USERRA Poster: Information on rights related to uniformed service.

If You Have Spanish-Speaking Employees or Employ Child Labor

TOSHA Safety and Health Poster
TN Unemployment Insurance Poster
Wage Regulation/Child Labor Poster
Workers' Compensation Posting Notice

Recommended, but Not Required

Human Trafficking Poster: Available in multiple languages, including Bulgarian, French, and Russian, from the TN Bureau of Investigation.
Right to Work Poster
Drug-Free Workplace
Fraud-Free Workplace

Understanding and adhering to these requirements ensures legal compliance and supports a transparent and informed workplace.

Implications for Restaurant Owners

With the Tennessee minimum wage remaining steady, you might be wondering how this affects your restaurant. This steadiness provides a stable financial environment for the moment, but it also means several things for your operation:

1. Labor Costs

With the minimum wage in Tennessee holding steady at $7.25, your labor expenses remain predictable. This predictability is crucial for effective budgeting and financial planning.

A stable labor cost allows you to accurately forecast expenses when setting menu prices or considering expansion, providing a solid foundation for your business's financial strategy.

2. Competitive Hiring

The challenge of attracting and retaining top-notch employees might intensify with the minimum wage staying the same. Other establishments might offer higher wages to attract skilled workers, making it imperative for you to explore additional incentives.

These could include career advancement opportunities, flexible scheduling, or unique benefits that set your restaurant apart as a desirable workplace, ensuring you retain a motivated and efficient team.

3. Restaurant Profit Margins

With no increase in the minimum wage, your restaurant has the opportunity to potentially improve profit margins. This stability allows for better control over expenses without immediate pricing or operational cost adjustments.

However, it's essential to continue exploring ways to enhance efficiency and reduce costs to maximize profitability, ensuring your restaurant remains competitive and financially healthy.

How Can I Prepare My Business for Future Minimum Wage Increases?

Although the minimum wage in Tennessee remains unchanged for now, it's wise to prepare for the possibility of future increases. Here are strategies to ensure your business remains resilient:

1. Review and Adjust Your Budget Regularly

It's vital to keep a vigilant eye on your financial situation to smoothly adapt to any wage increases. By regularly reviewing your budget and creating a financial cushion, you can make necessary adjustments without significantly impacting your operations. Establishing a reserve fund dedicated to absorbing future wage hikes can be a strategic move.

2. Invest in Employee Training

Elevating the skills of your team not only boosts their efficiency but also the quality of service your restaurant offers. This can lead to increased customer satisfaction and, consequently, higher revenue. Continuous training ensures your staff remains competitive and your business thrives even as wages rise.

3. Implement Technology Where Possible

Incorporating technology into your restaurant's operations can significantly reduce labor costs while improving efficiency. Here are some tech solutions to consider:

Restaurant Point of Sale (POS) Systems: Streamline order and payment processing, improving transaction speed and accuracy.
Online Ordering: Expands your service reach and provides customers with the convenience of ordering from anywhere.
Mobile POS (mPOS): Enhances tableside ordering and payment, reducing wait times and improving the dining experience.
Self-Ordering Kiosks: Allows customers to place their orders directly, reducing the need for front-of-house staff.
Handheld Ordering: Increases order accuracy and speeds up service, leading to a more efficient operation.
Tablet/iPad POS: Offers a flexible and efficient way to manage orders and payments.
QR Code Ordering: Utilizes QR codes for menu viewing and digital ordering, streamlining the ordering process.
Restaurant Loyalty Programs: Encourages repeat business through rewards and personalized offers.
Restaurant CRM with SMS Marketing Capabilities: Enhances customer engagement and promotes your restaurant through targeted messaging.
Restaurant Reservation: Simplifies the booking process and improves seat management.
Restaurant Waitlist Systems: Efficiently manages wait times and enhances the customer waiting experience.
Third-party Delivery Integration: Expands your delivery options and customer reach without needing in-house delivery resources.
Robot Assistants: Automates routine tasks, reducing the workload on your staff.

4. Explore Alternative Revenue Streams

Diversifying your restaurant's income sources can provide a buffer against the financial pressure of increased labor costs. Consider branching into catering, selling meal kits, or offering branded merchandise. Identifying and tapping into new revenue streams that align with your brand can stabilize your finances.

5. Focus on Retention

Employee retention is more cost-effective than frequent hiring and training. Creating a supportive and rewarding work environment, along with offering competitive benefits, can help you retain valuable team members. This approach not only saves on recruitment costs but also builds a more experienced and cohesive team, enhancing your restaurant's performance and customer experience.

By adopting these strategies, your restaurant can better manage current financial demands while preparing for any future increases in the minimum wage in Tennessee.

Conclusion

Staying informed and proactive about the minimum wage in Tennessee is crucial for managing your restaurant's labor costs and maintaining a competitive edge. With the minimum wage holding steady in 2024, understanding the implications and strategizing for the future is key to navigating the challenges and opportunities it presents.

At Chowbus POS, we understand the unique challenges that come with managing a restaurant's operations and finances. That's why we offer an all-in-one solution designed to enhance your restaurant's operational efficiency and increase revenue. Imagine cutting your monthly labor costs by over $8,000 and boosting your business growth by 25%. With our technology, it's more than possible.
Don't let financial constraints hold you back. Book a Free Demo/Consultation with Chowbus POS today, and take the first step towards optimizing your restaurant's performance. Save Your Time and Cost with us!

Frequently Asked Questions About the Minimum Wage in Tennessee

Here, you'll find answers to some of the most common questions regarding the minimum wage in Tennessee. This section aims to clarify any confusion you might have about wage standards, living wages, and employer obligations in the state.

Did Tennessee Raise Minimum Wage?

No, Tennessee did not raise its minimum wage. The state follows the federal minimum wage of $7.25 per hour, as it does not have its own minimum wage laws. This means Tennessee's minimum wage remains at the federal level. Although Rep. Gloria Johnson proposed increasing the minimum wage to $20 per hour in March 2024, it did not pass the necessary legislative hurdles.

What is TN Minimum Wage 2024?

In 2024, the minimum wage in Tennessee remains the same as the federal minimum wage, which is $7.25 per hour. Tennessee has not established its own state minimum wage, so the federal rate applies to most employees within the state, with certain exceptions.

What is a Livable Wage in Tennessee?

A livable wage in Tennessee depends on family composition and the number of income earners. For an individual without dependents, it's estimated at $20.77 per hour. This figure rises to $51.72 for a single parent with three kids. Couples with three children need $40.26 per hour if only one parent works, but this drops to $14.07 - $25.78 per hour per parent when both are employed. These figures provide a baseline for the income necessary to meet basic needs in Tennessee. More detailed information can be found through the MIT Living Wage Calculator.

Can an Employer Reduce Your Pay in Tennessee?

In Tennessee, an employer can reduce an employee's pay if they inform the employee before they begin any work. This ensures the employee knows the new wage rate in advance. However, the Tennessee Wage Regulation Act (Title 50-2-101 – 50-2-108) forbids employers from imposing penalties or fines by deducting from an employee's wages.

Does Tennessee Pay Double Time?

Tennessee does not have laws requiring employers to pay double time for hours worked. In Tennessee, overtime pay is governed by federal law, specifically the Fair Labor Standards Act (FLSA), which mandates that employees are entitled to overtime pay at a rate of 1.5 times their regular pay rate for hours worked over 40 in a workweek. There are no provisions under Tennessee state law or the FLSA that require double time compensation.

Disclaimer: The information provided here regarding the minimum wage in Tennessee and related labor laws is for general informational purposes only. It is not intended as legal advice. Laws and regulations are subject to change, and the accuracy of the information cannot be guaranteed. Employers and employees are encouraged to consult with legal professionals or government resources for the most current information and advice on compliance with labor laws.

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