Tennessee requires a $2.13 cash wage for tipped workers, plus tip makeup to the federal minimum.
In Tennessee, employers are permitted to pay tipped employees a direct cash wage of $2.13 per hour, provided the employee's tips, when combined with this cash wage, meet or exceed the federal minimum wage of $7.25 per hour. This tip credit provision is governed by the federal Fair Labor Standards Act (FLSA), as Tennessee does not have its own state minimum wage or tip credit laws.
Tipped Wage + Tip Makeup
Validates $2.13 cash for tipped workers + tip makeup to $7.25. $30/month tip threshold under federal standard.
What those rules do as a Tennessee shift is created.
Teambridge automatically applies the federal tip credit provisions to ensure compliance for your tipped employees in Tennessee, calculating the required cash wage and performing the tip makeup test.
Initial Wage Setting
When onboarding a tipped employee, Teambridge flags their base hourly rate to ensure it is at least $2.13/hour. If below, a warning is issued, or the rate is automatically adjusted to meet the minimum cash wage requirement.
Tip Credit Calculation & Makeup
For each pay period, Teambridge aggregates reported tips and the employee's direct wages. If the combined amount falls below the federal minimum wage ($7.25/hour) for all hours worked, Teambridge automatically calculates and adds the necessary "tip makeup" to the employee's paycheck to meet the federal standard.
Tip Threshold Monitoring
Teambridge monitors whether the employee regularly receives at least $30 per month in tips. If an employee consistently fails to meet this federal threshold, they may no longer qualify as a "tipped employee" under FLSA, and Teambridge will flag this for review, potentially requiring a reclassification to receive the full minimum wage.
Stop stressing over Tennessee's wage laws.
Tennessee's minimal state-specific wage laws might seem simple, but federal overlays and specific local ordinances can create unexpected complexities. Let Teambridge handle the nuance, so you can focus on your business.
Tipped employees in Tennessee must receive a cash wage of $2.13/hour, with tips making up the difference to $7.25/hour.
Tennessee defers to the federal Fair Labor Standards Act (FLSA) for its tipped wage provisions. This means employers can take a tip credit against the federal minimum wage, but certain conditions must be met.
29 U.S.C. § 203(m)(2)(A) (Federal Fair Labor Standards Act)
"In determining the wage of a tipped employee, the amount paid such employee by the employee’s employer shall be deemed to be increased on account of tips by an amount determined by the employer, but not by an amount in excess of the value of the tips actually received by the employee. The amount paid such employee by the employee’s employer shall be not less than $2.13 an hour. The difference between the wage paid and the minimum wage established by subsection (a)(1) shall be made up by tips."
Understanding the Federal Tip Credit in Tennessee
Because Tennessee does not have its own state minimum wage law, the federal FLSA provisions directly apply. Employers in Tennessee may pay a cash wage as low as $2.13 per hour to employees who regularly receive more than $30 per month in tips. The remaining portion of the federal minimum wage ($7.25 - $2.13 = $5.12) can be satisfied by the employee's tips. If an employee's tips, combined with their direct cash wage, do not reach the federal minimum wage of $7.25 per hour for all hours worked in a workweek, the employer must make up the difference.
Employer Obligations and Documentation
Employers utilizing the tip credit must inform employees of the tip credit provisions, including the amount of the direct wage, the amount of the tip credit claimed, and that all tips received by the employee are to be retained by them (except for valid tip pools). Additionally, employers must maintain accurate records of tips received by each employee to demonstrate compliance with the tip credit requirements. Failure to meet these conditions means the employer cannot claim the tip credit and must pay the full federal minimum wage directly.
Teambridge ensures Tennessee's tipped wage rules are always applied correctly.
Teambridge's compliance engine is pre-configured with Tennessee's deference to federal tipped wage laws, automating calculations and alerts to keep your operations compliant without manual oversight.
Correct Wage Configuration
When setting up new hires in Tennessee, Teambridge automatically validates that any tipped employee's base cash wage meets the $2.13/hour federal minimum, preventing underpayment from the start.
Automated Tip Makeup
During each pay cycle, Teambridge monitors reported tips against hours worked. If an employee's total earnings (cash wage + tips) fall below the federal $7.25/hour minimum, Teambridge calculates and applies the necessary tip makeup.
Real-time Tip Threshold Alerts
Teambridge continuously tracks tip earnings to ensure employees meet the federal $30/month tip threshold. If an employee consistently falls short, the system alerts you, prompting a review of their tipped status.
Audit-Ready Records
All tip credit calculations, tip makeup payments, and employee acknowledgments are meticulously recorded and easily accessible, providing a clear audit trail for compliance verification.
People also ask.
What is the minimum cash wage for tipped employees in Tennessee?
The minimum cash wage for tipped employees in Tennessee is $2.13 per hour. This is set by the federal Fair Labor Standards Act (FLSA), as Tennessee does not have its own state minimum wage law or specific tipped wage law.
What happens if an employee's tips plus cash wage don't meet the federal minimum wage?
If an employee's tips, when combined with their direct cash wage of $2.13 per hour, do not reach the federal minimum wage of $7.25 per hour for all hours worked in a workweek, the employer is legally obligated to make up the difference. This ensures the employee always earns at least $7.25 per hour.
Is there a tip pool allowed in Tennessee?
Yes, tip pooling is generally allowed under federal FLSA rules, which apply in Tennessee. However, tip pools must only include employees who customarily and regularly receive tips, such as waiters, bussers, and bartenders. Employers and managers cannot participate in a tip pool.
What is the tip threshold for an employee to be considered "tipped" in Tennessee?
To be considered a "tipped employee" under federal law (and thus in Tennessee), an employee must customarily and regularly receive more than $30 per month in tips. If an employee consistently fails to meet this threshold, they may not qualify for the tip credit, and the employer would need to pay the full federal minimum wage directly.
Do employers need to notify employees about the tip credit?
Yes. Federal law requires employers to inform tipped employees of the tip credit provisions before they utilize the credit. This notification must include the amount of the direct cash wage, the amount of the tip credit, and that all tips received by the employee are to be retained by them (except for valid tip pools).
Does Tennessee have a state minimum wage?
No, Tennessee is one of several states that does not have its own state minimum wage law. Therefore, the federal minimum wage of $7.25 per hour applies to most employees in Tennessee, including the federal rules for tipped employees.