Easily manage employment in Tennessee

Payroll management in Tennessee

Tennessee has a growing economy supported by industries such as manufacturing, healthcare, tourism, and technology. With state-specific payroll regulations, including no state minimum wage, no personal income tax, and right-to-work laws, employers in Tennessee must ensure compliance with both state and federal payroll laws. Understanding these regulations is crucial for smooth payroll operations and compliance.

Payroll breakdown in Tennessee

Employers in Tennessee must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum wage: Tennessee does not have a state minimum wage, so employers must comply with the federal minimum wage of $7.25 per hour.
• Overtime rules:
• Tennessee follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Some exemptions apply based on job classification and industry.

State income tax

• Tennessee does not impose a state income tax on wages, meaning employers are only responsible for federal income tax withholding.
• Tennessee does have a Hall Income Tax, which applies to interest and dividend income but does not affect wages.

Unemployment insurance (UI) tax

• Employers must contribute to Tennessee’s Unemployment Insurance (UI) program, managed by the Tennessee Department of Labor and Workforce Development.
• The UI wage base in Tennessee is $7,000.
• UI tax rates vary based on an employer’s experience rating and range from 0.01% to 10.0%.
• New employers typically pay a 2.7% UI tax rate.

Workers’ compensation

• Tennessee law requires most employers with five or more employees to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.
• Construction and coal mining businesses are required to carry coverage even if they have one or more employees.
• Coverage can be obtained through private insurance carriers or self-insurance programs.

Payroll tax filing and payment deadlines

• Employers must register for a Tennessee Employer Tax Account with the Tennessee Department of Labor and Workforce Development.
• UI tax reports must be submitted quarterly to the Tennessee Department of Labor and Workforce Development.
• Payroll tax payments can be made electronically through the TNPAWS (Tennessee Premium and Wage Reporting System).

Quick facts: Important considerations for employers

• State minimum wage compliance: Tennessee follows the federal minimum wage of $7.25 per hour as there is no state-specific requirement.
• Final paycheck rules:
• If an employee is terminated, employers must provide the final paycheck on the next scheduled payday.
• If an employee resigns, the final paycheck must be provided by the next scheduled payday.
• New hire reporting: Employers must report new hires to the Tennessee New Hire Reporting Program within 20 days.
• Paid sick leave: Tennessee does not require employers to provide paid sick leave, but employers may choose to offer it as a benefit.
• Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-work state: Tennessee is a right-to-work state, meaning employees cannot be required to join a union as a condition of employment.

Run payroll in Tennessee with Remote

Managing payroll in Tennessee requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be, book a demo with Remote today.