by Lori Brown, on Dec 22, 2022 2:45:00 PM
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 legislation and compliance with it. For more help, businesses should contact a Tennessee payroll and HR services company or a labor law attorney.
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 on 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.
Tennessee Drug-Free Workplace Program
While Tennessee does not have any comprehensive laws regulating the use of drug or alcohol testing by private employers, businesses can implement a drug-free workplace program in order to qualify for workers' compensation benefits.
According to Tennessee’s drug-free workplace program, employers who decide to implement such a program must meet specific requirements in order to receive a premium credit on their workers' compensation insurance policies.
To be compliant with state law, an employer may require candidates and employees to submit a test for drugs or alcohol. Subjects who fail to pass the test must be terminated. Anyone who tests positive to do prescribed medications from the last six months are exempt from being terminated.
Employees must also be notified that, as a condition of employment, they must refrain from working or reporting to work with the presence of drugs or alcohol in their bodies. Employees who refuse to submit a test forfeit all legibility for workers' compensation medical and indemnity benefits.
The Tennessee Lawful Employment Act and E-Verify
The Tennessee Lawful Employment Act (TLEA) requires employers in Tennessee to hire and maintain a legal workforce. In other words, employers are required to ensure they are hiring employees that are legally allowed to work in the U.S.
Pre-2017, the TLEA required all private-sector employers to choose either to 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.
UPDATE: Starting January 1st, 2023, employers with 35 or more employees will need to use the Tennessee E-Verify employment verification process.
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.” Employers submitting electronically must do so twice a month, every 12-16 days.
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.
Employers who fail to submit newly hired information may be fined up to $20 per violation (aka per employee) and up to $400 depending on the exact nature of the violation. As a result, it is critical to maintain compliance with Tennessee New Hire Reporting in order to avoid hefty penalties from piling up.
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 on salary-related questions.
Tennessee Wages and Hour 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.
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 requires 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.”
Paychecks and Wage Payment Timing
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.
All private employers in Tennessee must also pay employees all wages or compensation no less than once per month, according to Tennessee Payday Regulations. Employers who use a monthly schedule must compensate employees no later than the 5th day of each month for all earned wages in the preceding month.
Employers who use two or more pay periods per month must compensate employees as follows:
- All wages or compensation earned and unpaid prior to the first day of any month shall be due and payable not later than the twentieth day of the month following the one in which the wages were earned.
- All wages or compensation earned and unpaid prior to the sixteenth day of any month shall be due and payable not later than the fifth day of the succeeding month.
With manual payroll processes, managing compliance with things like wage payment timing can be really tough. Businesses looking for an easier path forward should consider contacting a Tennessee payroll services company for help with modern payroll solutions or services.
Deductions from Pay
Generally, in Tennessee, an employer may not deduct any expenses or other amounts owed from an employee’s paycheck without the express permission of the employee. This must be agreed to in writing and signed by the employee.
However, like many rules, there are exceptions. Here, an employer may deduct the following expenses without an employee’s authorization:
- Health insurance premiums at the request of the employee; 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. For more information on Tennessee paycheck deductions, see the wages and breaks section of the Tennessee DOL website.
However, with the creation of House Bill 1577, it is possible that Tennessee could soon see a minimum wage of no less than $12 an hour, however, the bill has not yet been passed.
Tennessee does not have any laws regarding overtime pay, which means federal overtime laws apply. To understand the federal overtime law, employers should review the overtime pay rules under the Fair Labor Standards Act (FLSA).
Meals and Breaks
Under Tennessee Code Annotated Section 50-2-103 and according to Tennessee meal and rest breaks law, “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.”
There are also Tennessee 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.
This break must run concurrent with any break time already provided by the employer, when possible. Employers must also make reasonable efforts to provide a room or location in close proximity to the work area where an employee can express milk in privacy. This does not include a bathroom stall.
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 Benefits Laws
Tennessee employers must understand what is required of them when it comes to laws regarding employee benefits. This includes things such as continuation of coverage laws, laws regarding fringe benefits, and disability benefits.
While Tennessee may not have laws requiring or regulating certain aspects of benefits, it is important that employers hold true to any policies or offerings they have established, in order to reduce legal risk.
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.
There is no Tennessee law that requires or regulates fringe benefits, such as paid time off. There is also no law requiring that an employer pay out an employee for any unused fringe benefits that the employer may offer. However, it's important to keep in mind, employers must comply with what the company's employee handbook says.
There is also no Tennessee law requiring that employers provide disability benefits to employees.
Tennessee Leave, Absence, and Time Off Laws
Similar to other states, Tennessee's 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:
- Emergency responder leave
- Jury duty leave
- Military leave
- Maternity leave (for employers with more than 100 employees); and
- Voting leave
- Family Medical Leave
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 Paid Time Off (PTO), covering both sick and vacation leave. Whether required by law or not, employers must abide by the employee handbook or any other internal policies and procedures that are in place when granting or denying leave or time off.
Military Veteran's Leave
In Tennessee, employers must grant leave to any veteran in their employment for the day of November 11th (Veteran's Day) according to Tennessee Senate Bill 2879. The day is considered an unpaid holiday for veterans only.
However, a veteran must provide their employer with at least one month's written notice of their intent to take the holiday off, as well as provide proof of veteran status. The leave must also not cause the employer significant economic or operational disruption.
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.
Tennessee’s Non-Smoker Protection Act, also known as Smokefree Tennessee, became effective in 2007, and 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 (TOSHA), 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 that employers need to know outside of federal equal opportunity employment law. 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.” The law is maintained by the Tennessee Human Rights Commission.
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 much of the Americans 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 Americans 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.
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 payday 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.
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.
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, for example, an employee lodged a complaint against an employer for wrongdoing. Alternatively, 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 Limitations
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 fewer 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.”
Tennessee Plan Closings and Reduction in Operations Act
The Tennessee Plan Closings and Reduction in Operations Act is similar to the WARN Act, but some key differences exist. For example, Tennessee’s law applies to employers employing at least 50 to 99 employees that lay off 50 employees or more over three months.
Aside from just layoffs, this legislation encompasses:
- Any relocation of workers more than 50 miles from the employees' original workplace
- Workplace modernization resulting in the displacement of employees
- Full or partial closings
- Any other management decisions that reduce a workforce by the 50 employee or more 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 begins work at such wage rate.
- An employer must not misrepresent the 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.”
For simple and easier compliance, employers are encouraged to consider a labor law poster subscription service.
Tennessee Required Labor Law Posters
Tennessee requires that employers post the following labor law posters in all places of work, in an easy and accessible location:
- TOSHA Safety and Health Poster
- TN Unemployment Insurance Poster
- Wage Regulation/Child Labor Poster
- Workers' Compensation Posting Notice
- Discrimination in Employment
- Various Federal Posters
- Minimum Wage Poster
Tennessee also recommends posting the following posters for greater legal protection, though they are not required:
- Human Trafficking Poster
- Right to Work Poster
- Drug-Free Workplace
- Fraud Free Workplace
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.
Get Help With Tennessee Labor Law Compliance
Managing compliance is very hard, and the smallest mistake can lead to huge ramifications, penalties, and / or fines. That is why it is critical to get compliance right.
For all the trouble labor laws and compliance management can give employers, modern human capital management (HCM) solutions can be of tremendous help in both speeding up and improving the accuracy of HR compliance and management in Tennessee.
To learn more about Tennessee payroll and HR solutions, contact a provider today.
Guest Author: Lori Brown
Lori Brown is the CEO of PayNW, a leading Washington payroll and HR services company with a plethora of business experience for Tennessee payroll and HR as well. She took the reins in September 2021 from founder Mike Anderson. Growing PayNW from $500K to $8M in annual revenue, Lori has maintained a 96% client retention rate, year over year. She is a talented leader, with extensive experience in payroll, Human Capital Management, Employee Retention Credit (ERC) efforts, and more. Lori was elected to the board of the Independent Payroll Processors Association in 2021 and is a Puget Sound Business Journal 40 Under 40 honoree. She is a mom of three and has been happily married for the past 20 years.