Economic and Community Development

Plain English Breakdown

Checked against official source text during the last sync.

Economic Development Incentive Wage Requirements

This bill sets wage requirements for employers seeking economic development incentives in Tennessee and requires annual adjustments based on living wage data.

What This Bill Does

• Requires employers to pay at least $21.99 per hour to employees working on projects that receive economic development incentives starting July 1, 2026.
• Adjusts the minimum wage rate annually based on the Massachusetts Institute of Technology's living wage calculator for the county where the project is located.
• Allows the commissioner to recover economic development incentives if an employer pays less than the required wage rate.
• Requires employers to submit payroll records or other documentation to verify compliance with the wage requirements.
• Publishes the adjusted wage rates and calculation methods on the department's website by February 1 each year.

Who It Names or Affects

• Employers seeking economic development incentives in Tennessee
• Employees working on projects that receive these incentives

Terms To Know

Economic Development Incentive

A grant or financial support provided by the state to attract or retain businesses.

Living Wage Calculator

A tool that calculates a wage needed for basic living expenses in a specific area.

Limits and Unknowns

• The exact fiscal impact of this bill cannot be determined due to multiple unknown factors.
• If the MIT living wage calculator is unavailable, the commissioner must use other government data sources to establish comparable wage rates.

Official Summary Text

In order t
o be eligible for an economic development incentive,
this bill requires
an employer
to
certify to the department of economic and community development
("department")
that the employer pays each employee performing work on the project for which the incentive is provided a wage that is no less than the rate established pursuant to
this bill. As used in this bill, an "e
conomic development incentive" means a FastTrack job training grant or economic development grant authorized under this part or a c
apital grant for economic development purposes provided to an employer to attract or retain the employer's physical presence in this state
.

INITIAL MINIMUM WAGE

O
n and after July 1, 2026,
this bill provides that
the minimum wage rate required to be eligible for an economic development incentive is
set at
$21.99 an hour.

FUTURE MINIMUM WAGE

On January 1, 2027, and on January 1 of each year thereafter,
this bill requires
the commissioner of economic and community development
("commissioner") to
adjust the wage rate based on the rate published by the Massachusetts Institute of Technology in its living wage calculator for the county in which the project is located for a household consisting of two adults, one of whom is working, and two children.

If the living wage calculator is no longer published or is otherwise unavailable for use, then
this bill requires
the commissioner
to
establish a comparable wage rate using data published by the United States department of labor, the United States department of housing and urban development, the United States department of commerce, or the United States department of agriculture.

This bill requires t
he commissioner
to
publish the adjusted wage rate and the methodology used to calculate the rate on the department's website by February 1 of each year. On and after February 1 of each year for which an adjusted wage rate is published, the wage rate
so
published is the minimum wage rate required to be eligible for an economic development incentive.

CLAWBACK

If the department determines that an employer who received an economic development incentive is paying an employee performing work on the project less than the wage rate established pursuant to
this bill, then this bill requires
the department
to
recover the amount of the economic development incentive provided to the employer.

The department
must
enforce
such provision
in accordance with the separate agreement entered into between the department and the employer
.

COMPLIANCE

This bill requires the
commissioner
to
verify compliance with this
bill
by reviewing payroll records or other documentation submitted by the employer upon request by the department.

Current Bill Text

HOUSE BILL 2455
By Pearson

SENATE BILL 2505
By Oliver
SB2505
012091
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 4 and
Title 50, relative to economic development.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 4, Chapter 3, Part 7, is amended by
adding the following as a new section:
4-3-740.
(a) As used in this section:
(1) "Commissioner" means the commissioner of economic and
community development;
(2) "Department" means the department of economic and community
development;
(3) "Economic development incentive" means a FastTrack job training
grant or economic development grant authorized under this part or a capital grant
authorized under chapter 15 of this title for economic development purposes
provided to an employer to attract or retain the employer's physical presence in
this state;
(4) "Employer" means a business entity that voluntarily pursues an
economic development incentive or enters into an agreement with this state for
the purpose of receiving an economic development incentive; and
(5) "Wages" means any remuneration owed to an employee for services,
including commissions, bonuses, incentive program rewards, and tips.
(b) To be eligible for an economic development incentive, an employer must
certify to the department that the employer pays each employee performing work on the

- 2 - 012091

project for which the incentive is provided a wage that is no less than the rate
established pursuant to subsection (c).
(c)
(1) Except as provided in subdivision (c)(5), on and after July 1, 2026,
the minimum wage rate required to be eligible for an economic development
incentive is twenty-one dollars and ninety-nine cents ($21.99) an hour.
(2) On January 1, 2027, and on January 1 of each year thereafter, the
commissioner shall adjust the wage rate based on the rate published by the
Massachusetts Institute of Technology in its living wage calculator for the county
in which the project is located for a household consisting of two (2) adults, one
(1) of whom is working, and two (2) children.
(3) If the living wage calculator is no longer published or is otherwise
unavailable for use, then the commissioner shall establish a comparable wage
rate using data published by the United States department of labor, the United
States department of housing and urban development, the United States
department of commerce, or the United States department of agriculture.
(4) The commissioner shall calculate the adjusted rate to the nearest
cent.
(5) The commissioner shall publish the adjusted wage rate and the
methodology used to calculate the rate on the department's website by February
1 of each year. On and after February 1 of each year for which an adjusted
wage rate is published, the wage rate published pursuant to this subdivision
(c)(5) is the minimum wage rate required to be eligible for an economic
development incentive.
(d)

- 3 - 012091

(1) If the department determines that an employer who received an
economic development incentive is paying an employee performing work on the
project less than the wage rate established pursuant to subsection (c), the
department must recover the amount of the economic development incentive
provided to the employer.
(2) The department shall enforce subdivision (d)(1) in accordance with
the separate agreement entered into between the department and the employer
pursuant to § 4-3-731.
(e) The commissioner of economic and community development shall verify
compliance with this section by reviewing payroll records or other documentation
submitted by the employer upon request by the department.
SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.