Navigating hourly employment in Tennessee presents unique challenges, particularly with minimum wage rules.
State requirements can interact with federal standards, and in some areas, local rules may layer on additional obligations for employers.
Tennessee is one of several states without its own minimum wage or paid sick leave laws, which means employers must primarily rely on federal standards and their own internal policies.
While the state’s labor framework is less complex than many others, employers are still responsible for ensuring compliance with the Fair Labor Standards Act (FLSA) and maintaining clear documentation around wages, breaks, reimbursements, and worker classification.
Whether you hire employees directly or through an Employer of Record (EOR) like HireArt, understanding Tennessee’s wage and hour rules is essential to operating responsibly and lawfully.
This blog is based on information available to HireArt as of October, 2025. HireArt does not provide tax, accounting or legal advice. This material has been prepared for informational purposes only, and should not be relied on for, tax, legal or accounting advice. Consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.
Tennessee does not have a state minimum wage law, so the federal rate applies.
Employers must pay at least $7.25 per hour, the federal minimum wage under the FLSA. While local governments in some states set higher wage rates, Tennessee law preempts localities from enacting their own minimum wage ordinances.
Employers must follow the higher applicable rate between state and local law.
Tennessee does not require employers to provide paid sick leave.
Paid time off and sick leave policies are determined by the employer. Businesses that choose to offer paid sick leave should clearly define accrual, usage, and carryover terms in a written policy or employee handbook.
Employers should also review any local ordinances that might apply, though Tennessee generally restricts cities from enacting their own leave laws.
Tennessee law prevents local governments from creating independent wage or leave standards, resulting in uniform labor requirements across the state.
This simplifies compliance but places the responsibility on employers to establish consistent, transparent internal policies to attract and retain employees.
Tennessee does not have a general statewide requirement for meal or rest breaks for adult employees.
Employers should follow company policy, collective bargaining agreements (CBAs), and FLSA guidance. While not mandatory, providing regular breaks can help support worker safety, morale, and productivity.
Whether unused vacation or paid time off is paid at separation depends on the employer’s written policy or employment contract.
Tennessee law does not mandate payout of unused PTO unless a company’s policy treats it as earned wages. Employers should ensure their policy clearly addresses how accrued time is handled when an employee leaves the organization.
Tennessee has no general statute requiring reimbursement for business expenses.
Employers are encouraged to reimburse for necessary, work-related expenses such as mileage, remote work costs, or tools, to prevent disputes and maintain fairness. Written reimbursement policies can help reduce confusion and support compliance with federal wage laws.
Employers must issue itemized wage statements and pay final wages promptly.
Accurate wage documentation and timely payment are essential for maintaining compliance and employee trust.
Tennessee applies federal and state economic-realities tests to determine whether a worker is properly classified as an employee (W-2) or independent contractor (1099).
If an employer exerts significant direction or control over how, when, and where the work is performed, the individual should generally be classified as an employee. Misclassification can result in fines, tax liability, and back pay under both state and federal law.
HireArt acts as an Employer of Record (EOR) to help companies maintain compliance with both federal and state labor laws. Through HireArt, employers can:
By leveraging HireArt’s compliance infrastructure, employers can reduce administrative risk and manage their Tennessee workforce efficiently and confidently.
