Tennessee Employment Laws Guide
Employment laws in Tennessee govern the relationship between employers and employees, setting the standards for how employers must treat their employees and what rights employees have in the workplace.
In Tennessee, the most relevant employment law is that of at-will employment. Unlike many other states that have "just-cause" employment principles, Tennessee follows the at-will employment doctrine. This means that employment may, with or without cause or notice, be terminated by either the employer or employee at any time.
Even though Tennessee mandates at-will employment, there are a few exceptions. An employer cannot fire an employee because of their protected class status — such as their race , gender, age, national origin, citizenship, religion, or disability. This means that if you fire an employee solely based on any of these protected classes, you can be subject to a lawsuit for wrongful termination.
You also cannot fire an employee in violation of a contract. If you signed an agreement with the employee that promises them continued employment or states they cannot be fired without just cause, you would be in breach of that contract by firing them without cause.
Tennessee employment law provides guidance on the proper ways to terminate an employee and the appropriate reasons for doing so. If you violate these laws, you could face lawsuits from your employees or visitors to your business.
Reasons for a Termination Notice to be Legal
Tennessee, as an at-will employment state, permits employers to terminate an employee at any time for any lawful reason or for no reason at all; however, certain restrictions exist under Tennessee law. For instance, employers cannot lawfully discharge employees on the basis of race, gender, age, disability, religion, or other protected classes as discussed below. In addition, employers cannot terminate employees in violation of an employee’s contract, collective bargaining agreement, public policy, and the state’s Worker’s Compensation, T.C.A. § 50-6-201. An employer must also follow its own policies or handbook provisions with regard to termination or risk an unlawful discharge claim.
An employer may lawfully terminate an employee based upon a termination that is nondiscriminatory and non-retaliatory, and is based upon one of the following lawful grounds: 1) misconduct in the workplace. Misconduct includes a variety of actions, such as an employee’s failure to perform their job duties properly, violations of company policies, or inappropriate behavior. Discharge for misconduct is often the most common and legally defensible reasons for termination. However, an employer must ensure that it has documented such misconduct sufficiently to support a future claim that the discharge was for "misconduct." What constitutes "misconduct" will depend upon the specific situation and must be evaluated in every case; yet, there are broadly accepted terms and conduct that generally would constitute actionable misconduct. The term "misconduct" in the employment law context refers to an employee’s inappropriate behavior or violation of work rules. It includes, but is not limited to, crimes or acts of intentional violence occurring on the job. These crimes or acts of intentional violence may include, but are not limited to, the following: (1) Unlawful harassment or discrimination against co-workers, supervisors, or subordinates; including sexual harassment; (2) Theft or misuse of company property; (3) Falsification of documents or company records; (4) Drug and alcohol abuse at work; (5) Carelessness or neglect resulting in damage to property or injury to others; (6) Violation of company policies, procedures, or safety rules; (7) Reckless or careless conduct; (8) Absenteeism and tardiness; (9) Fighting, stealing, or profanity; (10) Fraud; (11) Insubordination; and (12) Conviction of a crime involving moral turpitude.
2) Underperformance. Underperformance or poor performance is based upon an employee’s failure to meet the objectives, standards, or goals set by the employer. This is generally shown through a performance review or record of objective goals established and agreed upon by the employer and employee in an employment contract or employee handbook. Similar to instances of misconduct, an employer must ensure that it has sufficient documentation to support a finding of poor performance. Job performance is evaluated by examining multiple facets of an employee’s job and should include: (i) Employment contract requirements; (ii) Company policies and procedures; and (iii) Individual performance factors.
3) Downsizing. Employers can also justify discharge with proof of alleged downsizing. The term "downsizing" encompasses a reduction of employees as a result of the reorganization of a company’s structure or a reduction in funding. This may also include a closure of a division or facility, a decrease in employees’ hours or pay, and a requirement that employees take unpaid leave. Permissible, lawful downsizing is dependent upon the circumstances of each individual company.
What a Wrongful Termination Looks Like
While Tennessee is an at-will state, employees are protected from discriminatory firings, retaliation for protected activity, and firings that violate public policy. This is codified at T.C.A. 50-1-304 (unlawful employment policy or practice) and T.C.A. 4-21-201 (discrimination in employment). Those who face discrimination at work or are retaliated against for opposing discriminatory employment practices may be able to pursue a claim against their employer. Claims for discrimination or potential violations of public policy should be carefully considered with regard to the statute of limitations. Most employment related claims in Tennessee have a one year statute of limitations. However, claims based on potential violations of public policy may have a cause of action with a longer statute of limitations.
Importance of Employment Contracts
Employment contracts, although not very common in Tennessee, can substantially impact the firing process. They can establish specific protocols for termination, define grounds for immediate dismissal, and set solid bases for recourse or recapture for both the employer and the employee.
For example, a contract may specify that an employee can only be fired "for cause" and then outlines what constitutes "cause," such as theft, violence, sexual harassment, repeated tardiness, etc. If the contract allows for some kind of appeal process in the case of a firing or a warning, the employee must be given the chance to appeal firing or discipline before it goes into effect.
If there are no restrictions in a contract terms related to firing (such as "at-will"), the same basic rules apply as would otherwise apply to a firing by an employer with no explicit contract with the employee.
Importantly, however, contract provisions could limit the ability of an employer to contract with a new employer without risking a breach, and could even preclude certain types of work after separation. For example, a contract with limitations on working with competitors or for competing businesses could establish grounds for a lawsuit for breach of contract if an employee were to hire this employee (the new employer could be sued for tortious interference with a contract).
In contrast, if an employee approached your company and requested to work under a contract that established only an at-will relationship, you could agree to this agreement and force the employee to work under it and abide by the at-will relationship.
Ultimately, both employees and employers should consult a knowledgeable attorney about existing employee contracts or about the wisdom of using an employment contract in the first place.
Firing Notice and Final Pay
Employers must issue written separation notices to employees upon termination of employment. The notice should state the exact reason for separation in the employer’s opinion and, if the reason for separation is misconduct, a statement that it is the determination of the employer that the separation was for misconduct connected with the employment.
This separation notice must be issued to the employee within 31 days after determined by the employer that the employment has terminated . TC-40, Application for Unemployment Benefits contains information about how to apply for unemployment, as well as the required separation notice form that employers may wish to use to insure compliance with this law.
Unless the employer and the employee have made other arrangements regarding the timing of the final paycheck, the final paycheck should be paid according to the normal payroll cycle for the employer.
How to Contest Your Firing
An employee who believes that he or she has been wrongfully fired in violation of the law may wish to challenge the termination. In some cases, this involves filing a complaint with the Tennessee Human Rights Commission. In most cases, an employee of a private sector employer cannot sue his or her employer, but the plaintiff may file a complaint with the Equal Employment Opportunity Commission (EEOC) and/or the Tennessee Human Rights Commission (THRC). The respective agencies may then investigate the employee’s claims of unlawful termination or retaliation. If the federal law allegedly violated is Title VII, the Age Discrimination in Employment Act (ADEA), and/or the Americans with Disabilities Act (ADA), then the employee will need to file a charge with the EEOC. Any charge asserting discrimination or retaliation must be filed within 180 days of the alleged violation with the EEOC, or with a state agency like the THRC if the employer is a private company. If the employee wishes to preserve the right to sue, then he or she must obtain a Right to Sue letter from the EEOC or the THRC. This letter is a prerequisite to filing a lawsuit. It is also available when the agency has not issued its findings within 180 days of the complaint. It is critical for the employee to be aware of these deadlines, as any delay could result in the plaintiff losing his or her right to pursue the matter in court.
The process for challenging what the employee perceives as a wrongful termination is fairly straightforward: the separate agencies’ websites have information for employees wishing to file a charge of discrimination, including downloadable forms. The THRC will soon have an online interactive system for filing discrimination charges. In filing a lawsuit, the employee (who hires an attorney) files a complaint in Circuit or Chancery Court in the county in which the alleged termination took place. In a case involving a federal law like Title VII, ADEA, or ADA, the employee will initially file the complaint with the state or federal court, and either proceed with the wrongful termination case in state court or obtain the right to file in federal court.
An employee who wants to challenge a termination should keep a written record of as many facts and details as possible, including information about his or her status as a member of a protected class such as gender, pregnancy, religion, sexual orientation, age, ethnicity, race, disability, etc., the circumstances of the firing, and any evidence that the employee may have to substantiate the fact that the firing was due to discrimination, such as company e-mails, memos, and other correspondence or documentation.
Helpful Legal Resources
For employers, employers need to contact the Tennessee Department of Labor and Workforce Development. Their website contains information about various employment-related issues such as inquiries into unemployment benefits, wage claims, and charges of discrimination (Nashville Office). They also manage OSHA and wage and hour issues. Of course, employers or employees should contact their private attorney. A good source for finding attorneys that handle employment law issues is Martindale. Martindale is a national source that many in the legal profession and seeking to hire a lawyer often use. If you do not know what type of case is involved, one can search for a lawyer by selecting a area of practice. For example, I listed the area as "employment law", but you can also look for someone who specializes in labor law, labor-management relations, employment law litigation, or employment law management. After that, you can list any geographic area, such as Nashville, Tennessee or just Tennessee . The search will yield attorneys who are members of the bar in the geographic area and who specialize in what you are looking for. There will be a number of attorneys who come up if you search for employment law, so try to narrow it down if you can. Keep in mind that many lawyers specializing in employment law claim that they are located in Nashville to show that they are located in a metropolitan area, when in fact they are hundreds of miles away from Nashville. Once you get the results of your search, you can then read the profiles of the lawyers that come up to see if you want to see that specific lawyer for a consultation. It allows you to get an idea of what they focus on, where they went to law school, some of their biography regarding how long they have been practicing, whether they serve as a mediator, the deals they have done, the cases they have litigated, and if they have ever been published.