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Forums For Adjudicating Employment Disputes

Federal courts have jurisdiction over disputes involving federal statutes and inter-state disputes of more than $75,000. State courts have jurisdiction over all other lawsuits. In addition, state and federal agencies, such as the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Commission, the Tennessee Human Rights Commission, and the State Employment Relations Board investigate charges of employer misconduct.


The Main Sources Of Employment Law

Tennessee is a common law jurisdiction. Employment contracts are governed by case law, but there are various statutes that also govern employment relationships. These include federal statutes such as Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), the Fair Labor Standards Act (FLSA), and the Family Medical Leave Act (FMLA), as well as state statutes such as Tennessee’s Human Rights Act and Disability Act.


National Law And Employees Working For Foreign Companies

The statutory rights under federal and state law will apply to all individuals physically working in Tennessee, regardless of their nationality, and regardless of the law governing their contract of employment.


National Law And Employees Of National Companies Working In Another Jurisdiction

Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), and the Americans With Disabilities Act (ADA) all apply to U.S. Citizens working in another jurisdiction. Tennessee’s Human Rights Act applies to employees of Tennessee employers that employ eight or more persons in the state.


Data privacy

Any entity that conducts business in Tennessee has to disclose any breach of the security of its data to any resident of Tennessee, including employees, whose personal information (including social security number, driver’s license number or credit card numbers in combination with the person’s name and passwords) was, or is reasonably believed to have been, acquired by an unauthorized person (which includes an employee of the information holder) who is discovered by the information holder to have obtained personal information and intentionally used it for an unlawful purpose.

Legal Requirements As To The Form Of Agreement

Most U.S. and Tennessee employees are employed at will and not subject to a contract of employment. Thus, there is no legal requirement as to the form of an employment agreement. However, there are federal and state laws governing certain terms and conditions of employment.


Mandatory Requirements
  • Trial Period
  • No mandatory trial period is required.

  • Hours Of Work
  • Federal law requires compensation of non-exempt employees at 1.5 times their regular rate of pay for all hours worked in excess of 40 hours per week. Additionally, Tennessee law limits the number of hours that minors (under age 18) can perform work.

  • Special Rules For Part-time Work
  • No special rules for part-time work.

  • Earnings
  • Tennessee has adopted the federal minimum wage rate of $7.25 per hour worked.

  • Holidays/Rest Periods
  • No mandatory holidays for private employers in Tennessee. Tennessee law requires employers in most cases to provide a thirty-minute rest period for every six consecutive hours worked. This rest period cannot be required to take place in the first or last hour worked.

  • Minimum/Maximum Age
  • In Tennessee, employers cannot employ minors aged 16 or 17 during school hours or between the hours of 10 p.m. and 6 a.m., Sunday through Thursday preceding a school day. Employers cannot employ minors aged 14 or 15 during school hours or after 7 p.m. or before 7 a.m. if the next day is a school day. Tennessee also limits the total number of hours all minors (individuals under age 18) can work. State and federal law prohibit discrimination against individuals who are age 40 and older.

  • Illness/Disability
  • Tennessee and federal law prohibit discrimination against employees with disabilities. The Family and Medical Leave Act (FMLA) requires covered employers to provide eligible employees with up to twelve (12) weeks of unpaid leave for their own serious health condition, or to care for a spouse, child or close family member with a serious health condition, or to care for a newly-born or recently adopted child. Tennessee law requires most employers to provide workers’ compensation benefits (including leave when appropriate) for on-the-job injuries.

  • Location Of Work/Mobility
  • There is no mandatory requirement for an employer to set out an employee’s location of work. An employer can require an employee to move work location at any time.

  • Pension Plans
  • Certain pension plans are regulated by the Employee Retirement Income Security Act (ERISA), a federal law.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
  • The federal Family and Medical Leave Act (FMLA) requires covered employers to provide eligible employees with up to twelve (12) weeks unpaid job-protected leave because of the birth of a child and to care for that newborn child, or because of the placement of a child with the employee for adoption or foster care. The federal Pregnancy Discrimination Act prohibits discrimination in employment due to an employee’s pregnancy. In Tennessee, qualified employees are entitled to up to four (4) months of unpaid leave for pregnancy, childbirth and care of a newborn. Tennessee employers are required to provide unpaid break time and privacy for female employees who are nursing an infant to express breast milk, unless doing so would unduly disrupt the employer’s operations. In addition, under the Tennessee Pregnant Workers Fairness Act employers must make reasonable accommodations for employees who have limitations related to pregnancy, childbirth, or a related medical condition. This includes changes to work duties, schedules, food and drink policies and other similar accommodations.

  • Compulsory Terms
  • There are no compulsory terms.

  • Non-Compulsory Terms
  • Parties are free to negotiate non-compulsory terms.


Types Of Agreement

Tennessee courts will enforce both oral and written employment agreements.


Secrecy/Confidentiality

In Tennessee, former employees have a general duty of loyalty to not disclose confidential or proprietary information or trade secrets belonging to their former employer. Parties in Tennessee can also negotiate and agree to stricter confidentiality agreements, which will be enforced by Tennessee courts.


Ownership of Inventions/Other Intellectual Property (IP) Rights

Generally, employers own intellectual property created by their employee as part of their employment or created using the employer’s information, equipment, or materials.


Pre-Employment Considerations

 


Hiring Non-Nationals

Employers should be aware that foreign nationals must be authorized to work in the U.S. and whether such employment is restricted in any way. U.S. laws, rules, and regulations governing the work authorization of foreign nationals are complex. Basically, U.S. Citizenship and Immigration Services (USCIS) regulations establish three classes of foreign nationals who are allowed to work in the U.S.: (1) aliens authorized to work incident to their immigration status, (2) aliens who are permitted to work for a specific employer incident to their status, and (3) aliens who must apply for and obtain permission from the USCIS in order to accept employment in the U.S. Tennessee law states that it is unlawful for any person, unless granted an exemption by the U.S. Department of Labor, to knowingly employ or refer to others for employment, an individual who has entered the U.S. illegally.

 

Hiring Specified Categories Of Individuals

Federal contractors have certain affirmative action obligations with respect to minorities, women, U.S. veterans, and persons with disabilities under Executive Order 11246. In Tennessee, employers cannot employ minors during certain hours.


Outsourcing And/Or Sub-Contracting

No specific rules, unless covered by a collective bargaining agreement.

Changes To The Contract

Common law contract principles apply to contract changes made by either party. Thus, an employer may not change any terms of the employee’s contract without the employee’s consent. Such consent may be express (by the employee agreeing to the change) or implied (by the employee continuing to work for the employer without protest for an appropriate period of time after being made aware of the change). Any change of terms to which the employee does not consent will amount to a breach of contract.


Change In Ownership Of The Business

There are no general rules pertaining to changes in business ownership. However, if the employees are organized in a collective bargaining unit, the successor owner may be required to bargain with the employees’ representative.


Social Security Contributions

Both employees and employers must make social security contributions. Employers are not required to contribute toward allowances payable to employees during their employment.


Accidents At Work

Both the Occupational Safety and Health Act (OSHA) and the Tennessee Occupational Safety and Health Act (TOSHA) apply to workplace accidents and reporting obligations. The laws also establish protective standards for workplaces in Tennessee. The Tennessee Workers’ Compensation statutes provide an exclusive remedy from the employer for an employee who is injured during the course and scope of his or her employment.


Discipline And Grievance

There are no laws on discipline or grievance procedures for private sector employers who are not bound by a collective bargaining agreement.


Harassment/Discrimination/Equal pay

Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), the Equal Pay Act (EPA), the Tennessee Human Rights Act (THRA), and the Tennessee Disability Act all prohibit employers from discriminating on the basis of race, sex, religion, national origin, color, age (over 40), disability or ancestry. The Genetic Information Nondiscrimination Act (GINA) prohibits discrimination based on an individual’s genetic information.


Compulsory Training Obligations

No specific laws.


Offsetting Earnings

Federal and state laws allow an employer to offset an employee’s debts against earnings. Additionally, in Tennessee an employer may offset any pay received by an employee for jury duty performed while on leave from work.


Payments For Maternity And Disability Leave

Under the FMLA, payments for maternity and disability leave are not required. However, employers may choose to pay employees their sick leave or disability benefits while the employees are on FMLA leave. This way, employees can be prevented from taking 12 weeks unpaid leave in addition to whatever sick leave they may be entitled to under their employment agreement.


Compulsory Insurance

Every Tennessee employer with five or more employees must carry workers compensation insurance.


Absence For Military Or Public Service Duties

The federal Uniform Services Employment and Reemployment Rights Act (USERRA) sets forth the requirements for military leave.

Tennessee employees are entitled to paid jury duty leave and voting leave (although pay for jury duty leave may be offset by any amount the employee received from the jury duty).


Works Councils or Trade Unions

Employees have rights for collective bargaining and acting in concert under the National Labor Relations Act (NLRA), a federal law.


Employees’ Right To Strike

See discussion of collective bargaining in the U.S. Federal Law Section.


Employees On Strike

See discussion of collective bargaining in the U.S. Federal Law Section.


Employers’ Responsibility For Actions Of Their Employees

Generally, an employer is accountable for the actions of its employee unless the employee was acting outside the scope of his or her employment.

Note that in the U.S., most employees are not subject to a contract, but are at-will. The entries below address at-will employees. To the extent that an employee has a contract with the employer, the terms of the agreement, including those related to termination, are governed by contract law.


Procedures For Terminating the Agreement

In Tennessee, employees are at-will, meaning they can be terminated at the will of either the employer or the employee for any lawful cause, or for no cause at all. If there is an employment contract in place, then general principles of contract law will apply to terminating that agreement.


Instant Dismissal

See above. An employer can terminate the employment at any time and for any reason not in conflict with the above. Additionally, Tennessee law requires an employer to furnish a completed Notice of Separation form to a terminated employee (this form assists the employee in filing for unemployment compensation benefits).


Employee's Resignation

A voluntary resignation can serve to terminate the employment relationship.


Termination On Notice

No advance notice of termination is generally required, unless mandated by the parties’ employment agreement. However, under federal and state law employers of a certain size must provide advance notice of any mass layoff or plant closing.


Termination By Reason Of The Employee's Age

Generally, not allowed, except in limited cases where retirement is required by law or pursuant to a bona fide occupational qualification under the Age Discrimination in Employment Act (ADEA).


Automatic Termination In Cases Of Force Majeure

Yes, under the principles of termination described in the preceding sections.


Collective Dismissals

No specific rules unless required by a collective bargaining agreement. However, under federal and state law employers of a certain size must provide advance notice of any mass layoff or plant closing.


Termination By Parties’ Agreement

The at-will relationship may be terminated by either party for any reason or for no reason. No court or regulatory body approval is needed for the termination to be effective.


Directors Or Other Senior Officers

No specific rules.


Special Rules For Categories Of Employee

Employees who are represented by a labor union or are part of a collective bargaining agreement may only be terminated pursuant to the terms of that bargaining agreement.


Whistleblower Laws

Tennessee has a general whistleblower protection statute that protects employees who report illegal activity. Also, Tennessee has adopted narrow statutory protections for other activities. Employees who engage in protected activities under laws in the following subject areas are protected from retaliation: discrimination, equal pay (wage discrimination), hazardous chemicals, and occupational safety and health.


Specific Rules For Companies in Financial Difficulties

If applicable, the notice requirement required for certain employers for mass layoffs or plant closings (see above) may be waived.


Special Rules For Garden Leave

No specific rules.


Restricting Future Activities

Non-competition agreements are not favored in Tennessee but may be enforced if deemed reasonable under the facts of the case. Non-solicitation agreements (e.g. for current employees or customers) may likewise be enforced.


Severance Payments

No specific rules requiring severance payments. However, such payments would be taxable as regular income.


Special Tax Provisions And Severance Payments

See above.


Allowances Payable To Employees After Termination

There are no allowances payable to employees after termination.


Time Limits For Claims Following Termination

Federal

Employees must file a charge alleging discrimination with the Equal Employment Opportunity Commission (“EEOC”) within 300 days after the unlawful discriminatory practices alleged in the charge were committed. The employee’s right to sue in federal court is contingent upon filing a charge of discrimination with the EEOC. A suit in federal court alleging violation of Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act and/or the Age Discrimination in Employment Act must be filed within 90 days of receipt of the EEOC’s Dismissal and Notice of Rights. Suits alleging violation of the federal Equal Pay Act (EPA) must be filed in federal or state court within 2 years (3 years for wilful violations) of the alleged EPA underpayment. Suits for claims of unpaid overtime or violations of minimum wage under the Fair Labor Standards Act (FLSA) must be filed within two years (three years for wilful violations) of the alleged violation.

Tennessee

An employee has one year to file a lawsuit alleging discrimination under the Tennessee Human Rights Act (THRA). That employee may file a charge with the Tennessee Human Rights Commission but is not required to do so prior to filing suit under the THRA. Filing a charge with the THRC does not toll the one-year statute of limitations on filing a lawsuit alleging discrimination under the THRA. An employee injured at work has one year to file a workers’ compensation claim in Tennessee.

Specific Matters Which Are Important Or Unique To This Jurisdiction
    1. Employers in Tennessee may mandate that employees receive their pay through direct bank deposit.
    2. Tennessee is a right to work state, meaning an employee cannot be denied employment because of affiliation or non-affiliation with a labor union.
    3. Employees who work with hazardous materials are protected by “right to know” laws.
    4. Employees who smoke are protected from discharge from employment as long as he/she complies with all applicable employer policies regarding smoking during times at which the employee is working.
    5. In Tennessee, an employee cannot be terminated for absences caused by attending military training.
    6. Employers are required to provide employees who are separated for any reason with a Notice of Separation.


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Contact a Contributing Author:
Mekesha H Montgomery
Frost Brown Todd LLC
United States


Disclaimer:

© 2021, Frost Brown Todd LLC. All rights reserved by Frost Brown Todd LLC as author and the owner of the copyright in this chapter. Frost Brown Todd LLC has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021