Are employers allowed to pay tipped and non-tipped employees different wages?

In Tennessee, the answer to the question of whether employers may pay tipped and non-tipped employees different wages is yes, however, there are a few legal parameters to consider. Generally, all hourly employees must be paid at least the minimum wage rate, which is currently set at $7.25 per hour. Employers may pay tipped employees a lower hourly wage so long as the total wages, including tips, average out to at least the minimum wage. All employees, tipped and non-tipped, must receive overtime pay if they work more than 40 hours in a workweek. Currently, Tennessee overtime pay is 1.5 times the employee’s regular rate of pay. Tips are not considered wages under Tennessee law. While employers may not require tipped employees to contribute a portion of their tips to a tip pool, they are allowed to pool tips for sharing among employees. Tennessee employers are also prohibited from paying non-tipped employees less than the minimum wage in lieu of tips or other forms of commission, although an employer may pay a bonus or commission as an incentive. Overall, while employers may pay tipped and non-tipped employees different wages, they must abide by the Tennessee wage and hour laws regarding overtime, tip pooling, and minimum wage.

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Are employers allowed to pay tipped and non-tipped employees different wages?

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