Employer Insights

Tennessee Labor Laws - The Complete Guide for 2020 / 2021

by Employer Pass, on Jun 23, 2021 7:42:00 AM

Tennessee labor and employment laws involve a broad area of law governing the employer and employee relationship. Proper compliance with Tennessee labor laws will span federal legislation and regulations as well as those specifically issued by the State of Tennessee. These can be similar or differ in distinct ways. Either way, employers must understand and comply with both. 

In this article, we’re going to dive into Tennessee’s labor and employment laws, giving employers a roadmap for both understanding and compliance.

Tennessee Recruitment & Hiring Laws

Several Tennessee labor and employment laws apply to recruiting and hiring. Let’s break them down here.

Pre-Hire Medical, Physical or Drug Testing

In Tennessee, employers have the right to ask job applicants to complete a pre-hire medical or physical test, as long as it’s job-related. In other words, the test must confirm that the job applicant is fit for duty based upon the position being applied for. Through these tests, an employer should be determining whether a potential employee can perform the job’s essential duties with or without accommodation.

However, specific to these exams, employers should not request any medical information that may be protected under specific privacy laws, like the Genetic Information Discrimination Act of 2008. As such, employers should not have access to a job candidate’s family history or any genetic information.

Additionally, employers may conduct pre-hire drug tests, if they are complying with Tennessee’s drug-free workplace program. To be compliant with state law, an employer may require a drug test, for candidates who have received a conditional offer of employment. Further, limited drug testing may be permitted based upon reasonable classifications of certain job positions, such as those requiring the use of heavy machinery.

The Tennessee Lawful Employment Act and E-Verify

The Tennessee Lawful Employment Act (TLEA) requires “all employers in Tennessee to demonstrate that they are hiring and maintaining a legal workforce.” Pre-2017, the TLEA required all private-sector employers to choose either use E-Verify or to maintain copies of identification or work authorization documents before a new employee could begin work. Effective January 1, 2017, all Tennessee private employers with 50 or more employees must use E-Verify for the employment verification process. Employers with less than 50 employees can still comply with the pre-2017 law.

New Hire Reporting

Employers are obligated to report Tennessee new hires to the state's Department of Labor and Workforce Development “within 20 days from the date they are hired.” New hire reporting helps the state reduce fraudulent unemployment and workers’ compensation payments. The new hire data allows the Tennessee Department of Labor and Workforce Development to match this data against its active unemployment claims and either stop payments or recover payments made in error.

Ban the Box Legislation

In 2016, Governor Bill Haslam signed Senate Bill 2440, enacting a Ban the Box law for Tennessee employers. This law prohibits employers from inquiring about a job candidate’s criminal history on the initial employment application. Although state employers can conduct background checks, they must do so later in the recruiting and hiring process, after they complete the initial screening of job applicants. 

Salary History Questions & Disclosures

Although 19 states and 21 cities have adopted some measure of banning salary history questions in interviews, Tennessee has yet to pass legislation prohibiting employers from asking about a candidate’s salary history in interviews. Additionally, none of Tennessee’s cities have adopted any ban to salary-related questions.

Tennessee Wages, Hours, and Benefits Laws

The Tennessee Wage Regulation Act “protects wage earners from unfair practices regarding pay.” Here, we’re going to discuss some of these protections, such as pay equity, payday regulations, paycheck deductions, breaks and meal periods, and more as a part of your guide to getting payroll right.

Equal Pay

Tennessee law has an equal pay act. Under Tennessee Code Annotated Section 50-2-202, employers may not pay men and women differently, based on sex. Specifically, the law states that employers may not “discriminate between employees in the same establishment on the basis of sex by paying any employee salary or wage rates less than the rates the employer pays to any employee of the opposite sex for comparable work on jobs the performance of which require comparable skill, effort and responsibility, and that are performed under similar working conditions.” However, an employer may create wage differentials “based on a seniority system, a merit system, a system that measures earnings by quality or quantity of production, or any other reasonable differential that is based on a factor other than sex.”

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Paychecks

When paid, employers may compensate employees in cash or by check. Additionally, if certain conditions are met, an employer may also pay an employee via direct deposit in Tennessee. For employers with five or more employees, the employer must issue paychecks at least once a month on a payday established in advance. Of course, employers may pay their employees more frequently. 

Deductions from Pay

Generally, in Tennessee, an employer may not deduct any expenses or other amount owed from an employee’s paycheck without the express permission of the employee. However, like many rules, there are exceptions. Here, an employer may deduct the following expenses without an employee’s authorization:

  • Uniforms;
  • Health insurance; or
  • Loans or salary advances.

This is another area where employers must understand which deductions are mandated under federal law without the employee’s permission in addition to the permissible Tennessee deductions mentioned above. 

Minimum Wage

Tennessee’s current minimum wage is $7.25 per hour, which is the same as the federal minimum wage. A Senate bill was proposed in February 2021 suggesting an incremental increase in the state’s minimum wage, eventually landing at $11 in 2024. However, the bill failed in the Senate Commerce and Labor Committee on March 23, 2021.

Overtime Pay

Tennessee does not have any laws regarding overtime pay. To understand the federal overtime law, employers should review the overtime pay rules under the Fair Labor Standards Act (FLSA).

Tennessee "Mini-COBRA" / State Health Care Continuation 

Like health coverage continuation under the federally-enacted Consolidated Omnibus Budget Reconciliation Act (COBRA), Tennessee also offers a version of this continuation, often called “mini-COBRA.” Tennessee’s health coverage continuation law applies to employers with between 2 and 19 employees and can potentially cover affected employees for up to three (3) months after the employee’s group health insurance coverage stopped.

Meals and Breaks

Under Tennessee Code Annotated Section 50-2-103, “employees must be provided a thirty (30) minute unpaid meal or rest period if scheduled six (6) consecutive hours, except in workplace environments that by their nature of business provides for ample opportunity to rest or take an appropriate break.” 

Tennessee also has laws that support and protect breastfeeding mothers. For example, under Tennessee Code Annotated Section 50-1-305, employers must provide “a reasonable unpaid break time” to any employee that needs to express milk for her baby. However, according to the statute, “[a]n employer shall not be required to provide break time . . . if to do so would unduly disrupt the operations of the employer.”

Tennessee Leave, Absence, and Time Off Laws

Similar to other states, Tennessee labor and employment laws address time off and leaves of absence for employees. Here are some key Tennessee laws for requiring time off or leave for employees that you should know:

Here, employers need to be careful with the overlap of state and federal law. Typically, the more generous law will govern. For example, there is no Tennessee sick leave law that exists, but the Family and Medical Leave Act (FMLA) will require companies in Tennessee with 50 or more employees to provide eligible employees with up to 12 weeks of unpaid leave each year. 

Employers may also grant the following leaves or time off, which are generally governed by an employee handbook. These often include:

  • Bereavement Leave
  • Holiday Leave
  • Sick Leave
  • Vacation Leave

It’s becoming common practice for employers to grant employees with Paid Time Off (PTO), covering both sick and vacation leave. Whether required by law or not, employers must abide by their employee handbook or any other internal policies and procedures when granting or denying leave or time off.

Tennessee Health & Safety Laws

Several Tennessee labor and employment laws apply to the health and safety of employees in the workplace. Here’s what you need to know about Tennessee’s health and safety laws.

Smoke-Free Workplace

Tennessee’s Non-Smoker Protection Act, which became effective in 2007, prohibits smoking in most enclosed public places, including places of employment. To be compliant with the law, employers must post “no smoking” signs at the entrance of their place of business in addition to informing all employees of the prohibition.

Weapons in the Workplace

Under Tennessee law, employers have the right to prohibit weapons in buildings owned, managed, operated, or otherwise under the employer’s control. This prohibition applies to those employees, potential employees, clients, customers, vendors, and guests who may possess a legal carry permit. To legally ban these weapons, employers must post the appropriate notices of the prohibition. The one primary exception to this rule in Tennessee is that individuals may keep firearms locked away, out of sight in their vehicles, even if they parked in their workplace’s parking lot.

Occupational Safety and Health

Under the Tennessee Occupational Safety and Health Act (OSHA), most private employers must “assure safe and healthful workplaces by setting and enforcing standards, and by providing training, outreach, education, and assistance.” Excluded private employers include maritime; USPS contract workers and contractor-operated facilities; certain railroads; Tennessee Valley Authority; military bases; and certain aircraft cabin crew members.

Safe Driving Practices

Under Tennessee law, drivers are prohibited from texting while driving and talking on a handheld mobile device while driving. Adult drivers may use a hands-free device while driving.

Tennessee Fair Employment Laws & Practices

Tennessee has four major laws promoting fair employment practices. Here’s what you need to know about each. 

The Tennessee Human Rights Act (THRA)

Similar to Title VII of the Civil Rights Act of 1964, the Tennessee Human Rights Act declares that is illegal for an employer employing eight or more people to “fail or refuse to hire or discharge any person or otherwise to discriminate against an individual with respect to compensation, terms, conditions or privileges of employment because of such individual’s race, creed, color, religion, sex, age or national origin.” Title VII, a federal law, requires at least fifteen employees for the law to apply.

The Tennessee Disability Act (TDA)

Codified at Tennessee Code Annotated Section 8-50-103, the Tennessee Disability Act (TDA) mirrors the American with Disabilities Act of 1990, a federal law. The TDA prohibits an employer from discriminating against job applicants or employers because of a physical, mental, or visual disability. 

Specifically, the TDA states:

There shall be no discrimination in the hiring, firing and other terms and conditions of employment of the state of Tennessee or any department, agency, institution or political subdivision of the state, or of any private employer, against any applicant for employment based solely upon any physical, mental or visual disability of the applicant, unless such disability to some degree prevents the applicant from performing the duties required by the employment sought or impairs the performance of the work involved. Furthermore, no blind person shall be discriminated against in any such employment practices because such person uses a guide dog. A violation of this subsection (b) is a Class C misdemeanor. 

Unlike the American with Disabilities Act, the TDA does not require that employers make reasonable accommodations for disabled employees. 

The Tennessee Public Protection Act (TPPA)

Also known as the “whistleblowing statute,” the Tennessee Public Protection Act (TPPA) states that “[n]o employee shall be discharged or terminated solely for refusing to participate in, or for refusing to remain silent about, illegal activities.” Under the TPPA, “illegal activities” means “activities that are in violation of the criminal or civil code of this state or the United States or any regulation intended to protect the public health, safety or welfare.”

The Tennessee Pregnant Workers Fairness Act (TPWFA)

One of Tennessee’s newest laws, the Tennessee Pregnant Workers Fairness Act (TPWFA) was signed into law by Governor Bill Lee with an effective date of October 1, 2020. The TPWFA requires employers to evaluate accommodation requests for employees having “medical needs arising from pregnancy, childbirth, or related medical conditions.”

Tennessee Termination Laws

Here are some Tennessee laws that you should know relating to terminations for employees exiting the organization.

Final Pay

Under Tennessee Code Annotated Section 50-2-103(g), “[a]ny employee who leaves or is discharged from employment shall be paid in full all wages or salary earned by the employee no later than the next regular pay day following the date of dismissal or voluntary leaving, or twenty-one (21) days following the date of discharge or voluntary leaving, whichever occurs last.” There are no exceptions to this rule.

Severance

Tennessee law does not require that employers offer severance pay to terminating employees. However, if an employer chooses to offer severance benefits, these benefits must comply with the written severance agreement between the employer and the employee or with the employer’s internal policies and procedures.

Wrongful Termination

Tennessee, like many other states, is an “at-will” employment state, meaning that employers can fire employees at any time, for no reason, and without advanced notice. However, this “at-will” rule is not absolute. 

An employer cannot terminate an employee based on discriminatory factors or in retaliation if you, for example, lodged a complaint against your employer for wrongdoing. Further, if an employee entered into an employment contract with the employer, then that employee is not at-will. In the case of termination, the employer must abide by the terms of the employment contract, or else the employee may have a legitimate claim against the employer.

Mass Layoff Under the Tennessee Plant Closings and Reduction in Operations Act

Under federal law, the Worker Adjustment and Retraining Notification Act (WARN Act)protects workers, their families, and communities by requiring employers with 100 or more employees (generally not counting those who have worked less than six months in the last 12 months and those who work an average of less than 20 hours a week) to provide at least 60 calendar days advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment.”

The Tennessee Plan Closings and Reduction in Operations Act is similar to the WARN Act, some key differences exist. For example, Tennessee’s law applies to employers employing at least 50 to 99 employees, any relocation of workers more than 50 miles from their original workplace, workplace modernization resulting in the displacement of employees, full or partial closings, and any other management decisions that reduces a workforce by at least 50 employees over a three-month period.

Tennessee Required Postings & Notifications

To comply with many Tennessee labor and employment laws, employers must be sure to notify employees of their rights. Let’s look at a few examples.

Under Tennessee law, employers must make the following disclosures to employees:

  • An employer must inform an employee of his or her wage rate before that employee beginning work at such wage rate.
  • An employer must not misrepresent a wage rate, or total wages, that an employee is paid.
  • An employer “shall post and maintain notices, printed or written in plain type or script, in at least two (2) conspicuous places where the notices can be seen by the employees as they go to and from work, setting forth the regular pay day.”

Tennessee Labor Law Take-Aways and Future Outlook

Understanding labor and employment laws can be an all-encompassing task. Between the federal and state overlap, employers must understand what’s mandated, what’s discretionary, and what’s expected. Additionally, court cases at both the federal and state level can alter, create, or expand upon labor and employment laws.

Guidance on legislation can come and these types of labor laws can often be issued by federal authorities like the Department of Labor (DoL) or, in some cases, the Internal Revenue Service (IRS) when they pertain to taxes or tax credits. 

To learn more about how your Tennessee business can remain in compliance and reducing payroll errors, check out our whitepaper!

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Topics:PayrollComplianceTennessee Labor Laws

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