Introduction to employment laws in Tennessee
Overview
With laws focused on key areas such as minimum wage, workplace safety, and anti-discrimination, it’s imperative that businesses hiring in Tennessee pay close attention.
Understanding the specific employment laws in the state is crucial to ensuring smooth operations. Here’s everything you need to stay updated on state-specific laws and implement correct HR practices.
Employing in Tennessee: Key employment laws and practices
Standard work hours
In Tennessee, full-time employment is typically between 30 and 40 hours per week. The Labor Standards Unit oversees work and overtime laws in the state.
For exempt employees who earn more than $684 per week, the state’s current threshold for exemption and the overtime rules may not apply. These employees often hold executive or managerial roles or work in certified or licensed professions such as law or accounting.
Minimum wage and overtime
As of 2023, Tennessee does not have a state minimum wage law in place, thus the federal minimum wage of $7.25 per hour is used.
Overtime is governed by the Fair Labor Standards Act (FLSA). If an employee works more than 40 hours in a week, the excess hours are considered overtime and paid at 150% of the regular pay rate.
Insurance and benefits
In terms of benefits, employers in Tennessee are required to contribute to unemployment insurance, FICA Social Security, FICA Medicare, and Federal Unemployment Tax Act (FUTA). The rates vary from 0.01% to 10.00% for unemployment insurance and 6.20% for FICA Social Security on salary up to $168,000 annually. FICA Medicare requires a contribution of 1.45%.
Benefit | Contribution | Details |
Unemployment insurance (state) | 0.01%-10.00% | Applied on salary up to $7,000 annually |
FICA Social Security (federal) | 6.20% | Applied on salary up to $168,600 annually |
FICA Medicare (federal) | 1.45% | – |
FUTA (Federal Unemployment Tax Act) tax | 0.60% – 6.00% | Applied on salary up to $7,000 annually |
Multiplier makes it easy to manage benefits for Tennessee employees.
Meals and rest periods
Tennessee employment laws have specific guidelines governing employee breaks and meal periods. Under the labor provisions of Tennessee employment law, employers are required to provide a 30-minute unpaid meal or rest break to employees who are scheduled to work six hours consecutively, except in workplace environments that, by their nature of business, provide ample opportunity to take an appropriate meal or rest period. This does not apply to workplaces that have less than five employees on duty.
It is important for HR teams to note that these breaks are unpaid and, therefore, do not count toward overtime calculations. Employers must clearly communicate meal period policies to employees and ensure adherence to these regulations to maintain HR compliance.
Anti-discrimination laws
Anti-discrimination laws in Tennessee aim to create a fair and inclusive workplace environment. Tennessee’s Human Rights Act prohibits employment discrimination based on race, color, creed, religion, sex, age, or national origin.
The Tennessee Disability Act prohibits discrimination based on disability and requires employers to make reasonable accommodations for employees with disabilities.
It is crucial to note that the state law applies to any employer with eight or more employees, which is broader coverage compared to federal anti-discrimination laws such as Title VII of the Civil Rights Act, which applies only to employers with 15 or more employees. Employers found in violation of these laws could face stiff penalties and legal action.
Leave policies
Employee leave policies specific to Tennessee law vary by type of leave and are generally lax for private employers. While there are no specific state-level statutes governing vacation time, it is common for employers to offer paid or unpaid vacation leave as per the guidelines outlined in the employment contract or collective bargaining agreements.
Leave type | Policy |
Vacation leave | Not governed by state statute |
Sick leave | As per FMLA |
Parental/Maternity leave | Up to six weeks (without complications) or four months (with complications) |
Bereavement leave | Not specified by state statute |
Jury duty | Paid time off required |
Military leave | Protection against discrimination |
Easily onboard employees in Tennessee?
Termination laws
Tennessee follows the “at-will” employment model where either the employer or employee can terminate the employment relationship without giving a reason or notice, provided it is not illegal or discriminatory. Exceptions apply in cases of mass dismissals or provisions stated in an employment contract or collective bargaining agreement.
Common practice dictates that employees provide at least two weeks’ notice prior to resignation. In cases of mass dismissal, the federal Worker Adjustment and Retraining Notification Act (WARN) mandates that employers give 60 days’ notice to affected employees.
Tennessee law does not require severance pay, but it may be provided according to the terms of the employee contract or at the employer’s discretion.
Safety and health
Tennessee’s Occupational Safety and Health Act mandates that employers provide a safe and healthy work environment. Employers are required to comply with state-specific safety regulations, which also include industry-specific workplace safety standards. They are also obligated to report work-related injuries to the relevant authorities.
Taxes in Tennessee
Tennessee is one of seven states that do not impose a state income tax, making tax implications for employers and employees easier to manage. Employers must still account for federal taxes and other contributions such as FICA Social Security and Medicare.
Employee contribution | Tax rate |
Social Security tax | 6.2% up to $160,200 annual salary |
Medicare | 1.45%; Additional 0.9% for income over $200,000 |
Unemployment insurance | 0.01%-10.00% on salary up to $7,000 |
FICA Social Security | 6.2% up to $160,200 annual salary |
FICA Medicare | 1.45% |
Managing Tennessee employees with an Employer of Record (EOR)
Ensuring labor law compliance when employing people in Tennessee doesn’t have to be difficult. Multiplier can provide you with a comprehensive Employer of Record (EOR) solution that allows you to employ full-time workers in the US without setting up local entities.
Our all-in-one platform allows you to manage your international employees and contractors from a single interface, handling local taxes, insurance contributions, and withholdings with ease. Our global payroll platform is designed to pay employees on time while taking care of local taxes, contributions, and withholdings.
For businesses looking to expand their reach with globally distributed teams, Multiplier’s offerings can simplify the process of engaging global talent while ensuring legal compliance. Book a demo today.
FAQs
Full-time employment in Tennessee is generally considered between 30-40 hours per week, according to state law. Specific designations can depend on the employer’s policy and the nature of the job role.
Yes, under the federal Fair Labor Standards Act (FLSA), non-exempt employees who work more than 40 hours per week are entitled to overtime pay at 1.5x their regular pay rate. However, some employees (earning more than $684 per week or those performing executive or managerial roles) may be exempt from overtime.
The minimum wage in Tennessee defaults to the federal one, which is $7.25 per hour.
Employers contribute between 0.01% and 10.00% towards unemployment insurance and 6.20% towards FICA Social Security on salaries up to $168,000 annually. Contributions towards FICA Medicare amount to 1.45%. Depending on compliance, the FUTA tax rate can range from 0.60% to 6.00%.
There is no state statute in Tennessee that requires employers to offer paid or unpaid vacation leave. The employer typically decides this, and it must comply with employment laws and be stipulated in collective bargaining agreements.
