Compliance Watch:
Penalties for Breaking Tennessee Labor Laws

February 15th 2024

Boasting an impressive position at number 6 in CNBC’s prestigious Top States for Business in 2022, Tennessee has undoubtedly become an economic powerhouse, attracting employers from various industries. And as the state’s business landscape thrives, it’s become crucial for employers to navigate its labor laws with precision and adherence. This includes learning the key employment regulations and the penalties for breaking Tennessee Labor Laws.

Understanding Tennessee labor laws is not only essential for maintaining a fair and equitable workplace but also for avoiding the potential pitfalls that come with violations. In this article, we delve into the critical labor laws that employers must be well-versed in, shedding light on the penalties for non-compliance and providing valuable tips to ensure a harmonious and compliant working environment.

This Article Covers

Most Common Labor Law Violations in Tennessee
Penalties for Breaking Tennessee Labor Laws
How You Can Avoid Violating Tennessee Labor Laws

Most Common Labor Law Violations in Tennessee

Labor laws are crucial for protecting the rights and well-being of workers. In Tennessee, like in many other states, there are specific regulations in place to ensure fair treatment, proper compensation, and safe working conditions for employees.

Unfortunately, labor law violations still occur, and it’s important to be aware of them to address and rectify any potential issues. Here are some of the most common labor law violations that have been observed in Tennessee:

  • Not paying proper wages: One of the most frequent violations in Tennessee is failing to pay workers the wages they’re entitled to. This includes issues such as unpaid overtime, withholding pay, or paying below the minimum wage set by federal or state laws. In 2021, prominent players in Nashville’s restaurant industry, Strategic Hospitality and M Street Entertainment Group, settled separate lawsuits related to tip and wage theft for a total of $1.03 million. This is just a drop in the bucket and shows how common wage theft is, especially in the restaurant industry.
  • Misclassifying employees as contractors: Misclassification deprives workers of various legal protections, such as minimum wage, overtime pay, workers’ compensation, and unemployment benefits. In Tennessee, from September 2017 to October 2018, a total of 26 misclassification penalties were assessed, amounting to a whopping $3,029,963.29.
  • Failure to provide a safe workplace: In 2021, private industry employers in Tennessee reported 53,400 nonfatal workplace injuries and illnesses. According to the Bureau of Labor Statistics, this translates to an incidence rate of 2.5 cases per 100 full-time equivalent workers. The majority of these incidents, around 77 percent, occurred in three key sectors: trade, transportation, and utilities; education and health services; and manufacturing.

Photo by Sora Shimazaki:

Penalties for Breaking Tennessee Labor Laws

Breaking Tennessee labor laws can result in significant penalties for employers. These penalties aim to deter violations and protect the rights and well-being of workers.

FLSA Minimum Wage Laws

Tennessee is one of the five states that do not have their own minimum wage laws. The state instead follows the wage rates set by federal law under the Fair Labor Standards Act (FLSA).

According to FLSA, non-exempt employees should be paid a minimum wage of at least $7.25 per hour. This applies to most employees except for certain types, including:

  • Executive, professional, and administrative employees
  • Computer employees
  • Highly compensated employees
  • Farm workers
  • Employees in fishing industries
  • Seasonal/recreational workers

These exempt employees are typically paid a fixed salary and do not qualify for minimum wage or overtime pay.

Tennessee also follows federal rules regarding tip credits. This means employers can pay as little as $2.13 per hour to tipped employees as long as their total earnings (tipped minimum wage + tips) reach at least the federal minimum wage of $7.25 per hour. If it doesn’t reach the minimum wage, the employer must make up the difference.

Penalty for Violation

If employers break the rules about paying minimum wage, they can be fined up to $1,000 for each violation. And if they intentionally violate FLSA regulations in general, they may face criminal charges and be fined up to $10,000. A second conviction could even lead to imprisonment.

FLSA Overtime Laws

Aside from minimum wage, FLSA also sets overtime rules in the state of Tennessee. According to FLSA, employees who work more than 40 hours per week are entitled to overtime pay set at 1.5 times the regular hourly rate.

However, there are exemptions for certain job categories, such as executives, professionals, and administrative employees, who may be exempt from receiving overtime pay based on their job responsibilities and salary.

Learn more about Tennessee Overtime Laws in our detailed guide.

Penalty for Violation

The penalty for violating FLSA overtime laws is typically the same as the ones for FLSA minimum wage laws. If employers intentionally or repeatedly break the rules about paying overtime, they can be fined up to $1,000 for each violation. The state may also demand the employer to pay for all unpaid wages and other monetary damages.

Family and Medical Leave Act (FMLA)

The Family Medical Leave Act (FMLA) covers Tennessee employers with at least 50 employees for at least 20 weeks in the current or previous year.

Under FMLA, eligible employees can take up to 12 weeks of leave for various reasons, such as serious health conditions, bonding with a new child, or caring for a family member’s military service. Additional leave may be available if an employee needs to care for a family member who has been seriously injured on active military duty.

Employees should be able to maintain their health insurance coverage during FMLA leave at the same cost as when working. While FMLA leave is unpaid, employees may be able to use their accrued paid leave during this time. And when the leave ends, employees have the right to be reinstated to the same or an equivalent position, with some exceptions.

Penalty for Violation

The Wage and Hour Division oversees and enforces the FMLA for private, state, and local government workers and some federal employees.

If violations cannot be resolved satisfactorily, the US Department of Labor can take legal steps to ensure compliance. And if the court decides in favor of the person filing the complaint, the employer may be required to allow them to take FMLA leave and provide financial compensation, including lawyer fees and court expenses.

Tennessee Human Rights Act (THRA)

The Tennessee Human Rights Act (THRA) is similar to the federal Title VII of the Civil Rights Act of 1964. It prohibits employers in Tennessee from discriminating based on race, creed, color, religion, sex, age, or national origin regarding hiring, firing, compensation, and employment terms. THRA applies to employers with eight or more employees, whereas Title VII applies to employers with 15 or more employees.

Penalty for Violation

If an employee is fired in violation of the THRA, they have the right to sue their employer. The employee can request to be rehired in their previous position, receive unpaid wages, regain lost benefits, and, if applicable, restore their seniority rights.

The employee has one year from the violation date to file a lawsuit.

Tennessee Public Protection Act (TPPA)

The Tennessee Public Protection Act (TPPA), also called the “Tennessee Whistleblower Act,” makes it unlawful to terminate an employee solely because they refuse to stay quiet about or engage in illegal activities.

Illegal activities can refer to actions that violate federal or state criminal or civil laws, as well as regulations aimed at safeguarding public health, safety, or welfare.

Unlike some other employment laws in Tennessee with a minimum employee threshold, the TPPA applies to all employers regardless of size. This law was enacted in 2014 to eliminate retaliatory discharge claims under common law.

Instances of potential TPPA violations can include an employee being fired for refusing to violate OSHA safety rules, reporting abuse of nursing home patients to a state agency, or raising concerns about fraudulent billing practices.

The TPPA plays a crucial role in protecting whistleblowers and ensuring employees can voice concerns about illegal activities without fear of retaliation or wrongful termination.

Penalty for Violation

A defendant who violates the Tennessee Whistleblower Laws may have to pay up to three times the actual damages to the state, in addition to civil fines for each violation.

Whistleblowers who report violations under the Tennessee Whistleblower Act may also receive awards based on the case outcome. If the government joins the case, whistleblowers can get 25-33% of the money recovered. If the whistleblower pursues the case independently, they may receive 35-50% of the recovered amount. However, if the whistleblower was involved in planning and starting the fraudulent activity, the court can reduce the award.

Tennessee Occupational Safety and Health Act (TOSHA)

TOSHA is responsible for ensuring safe and healthful workplaces in the state. Under the TOSH Act, employers have the duty to provide a workplace that is free from recognized hazards that may cause death or serious injury to employees. TOSHA’s mission includes setting and enforcing standards, offering training and outreach programs, and providing assistance to employers.

In cases where the state cannot effectively exercise jurisdiction, federal enforcement takes over. TOSHA covers state and local government workers but does not extend to federal government employers. Federal OSHA handles the issues not covered by the Tennessee State Plan and enforces the anti-retaliation provision of the Occupational Safety and Health Act for the private sector.

Penalty for Violation

Suppose an employer intentionally breaks any safety rules or orders established under state or federal occupational safety and health standards, and this violation leads to an employee’s death. In that case, they can be found guilty and face penalties.

The penalties include a fine of up to $10,000, imprisonment for up to six months, or both. However, if the employer has previously been convicted of a similar violation, the penalties increase to a fine of up to $20,000, imprisonment for up to one year, or both.

Recordkeeping Laws

There are several laws that govern recordkeeping in the state of Tennessee, and each of these laws has different requirements. Here are some key recordkeeping laws that are important to remember:

  • Under the Equal Employment Opportunity Commission (EEOC) Regulations, employers must retain personnel or employment records for one year. If an employee is involuntarily terminated, their personnel records should be kept for one year from the termination date.
  • Under ADEA (Age Discrimination in Employment Act) requirements, employers must keep payroll records for three years. They are also required to maintain records of employee benefit plans and written seniority or merit systems for the entire duration of the plan or system, plus one year after its termination.
  • Under the Fair Labor Standards Act (FLSA) requirements, specifically for the Equal Pay Act (EPA), employers must keep payroll records for three years. Additionally, they should retain all records, such as wage rates, job evaluations, seniority and merit systems, and collective bargaining agreements, that explain the reasons for paying different wages to male and female employees in the same workplace for at least two years.

These recordkeeping requirements apply to all employers covered by federal anti-discrimination laws, regardless of whether there is an ongoing charge filed against the employer.

Penalty for Violation

The specific penalties for violating these recordkeeping requirements can vary depending on the nature and severity of the violation. However, the penalties can include monetary fines, injunctive relief (court orders to comply with the requirements), and other appropriate remedies.

Willful violations of the FLSA provisions, in general, may result in criminal prosecution and the violator fined up to $10,000. A second conviction may result in imprisonment.

Meal Break Laws

According to state law, employees must be provided with a 30-minute unpaid meal or rest period if scheduled to work six consecutive hours.

The law applies to employers with at least five employees. However, employers are not obligated to provide a meal break if the nature of the employee’s work allows for sufficient breaks throughout the workday. Examples of such industries include the food and beverage industry or security services.

If an employee voluntarily requests to waive the meal break and the employer consents, it can be waived. However, this must be done in writing, with the employee knowingly and voluntarily agreeing to the waiver. To utilize this exception, employers must have a written waiver policy in place. The policy should include a waiver form clearly stating that employees have the right to a break unless they choose to waive it. The policy should also specify the duration of the waiver and outline the process for either the employee or employer to revoke the waiver.

Penalty for Violation

Violating Tennessee Break Laws can be considered a Class B misdemeanor. This can lead to a fine between $100 and $500.

If an employer purposely breaks the rule, they may face an additional civil penalty between $500 and $1,000. Each violation is considered a separate offense.

If the violation is unintentional, a warning may be given for the first offense. However, for subsequent violations, the civil penalty may be imposed at the discretion of the commissioner or their representative.

Child Labor Laws

Tennessee child labor laws aim to protect minors under the age of 18. The Child Labor Act limits their work hours and prohibits them from working in occupations deemed too hazardous for minors.

For 16 and 17-year-olds:

  • They cannot be employed during school hours.
  • They cannot work between 10:00 pm and 6:00 am from Sunday to Thursday, preceding a school day.

However, if there is a valid Parental Consent Form on file, signed by the parent or guardian, these minors can work until midnight for a maximum of three nights per week from Sunday to Thursday.

For 14 and 15-year-olds:

  • They cannot work during school hours.
  • When school is in session, they are limited to working no more than 3 hours per day and 18 hours per week.
  • During breaks, they can work up to 8 hours per day and 40 hours per week.

All minors in Tennessee are also entitled to a 30-minute unpaid break for every six consecutive hours of work.

As for what kind of jobs minors are prohibited from performing in Tennessee, these include working in coal mines, driving vehicles, handling explosives, or working in sawmills, meatpacking, and so on.

Penalty for Violation

If employers break Tennessee Child Labor Laws, they can be fined up to $1,000 per violation and/or be charged with a Class A Misdemeanor.

FLSA, on the other hand, has heftier penalties with maximum fines of up to $10,000 per minor/per violation.

How You Can Avoid Violating Tennessee Labor Laws

To avoid violating Tennessee labor laws, it is essential to familiarize yourself with the state’s employment regulations and take proactive measures to comply with them. Here are some guidelines to help you navigate and adhere to labor laws in Tennessee:

Tip #1 Familiarize yourself with Tennessee labor laws

Start by thoroughly reviewing Tennessee’s labor laws, including both state and federal regulations. Familiarize yourself with key legislation such as the Tennessee Human Rights Act and the FLSA Minimum Wage and Overtime Regulations Act. Make sure you stay updated on any changes or amendments to these laws to ensure ongoing compliance.

Tip #2 Establish clear employment policies

Develop comprehensive employment policies and procedures that align with Tennessee labor laws. Clearly outline expectations regarding working hours, breaks, overtime, compensation, anti-discrimination practices, harassment prevention, and any other relevant aspects of the employment relationship. It’s also very important to ensure all employees receive and acknowledge these policies, providing them with a written copy for their reference.

Tip #3 Classify employees correctly

It’s essential to classify your employees correctly according to the guidelines set by the state and federal authorities. Know the difference between employees and independent contractors, as well as exempt and non-exempt employees for overtime purposes. Misclassifying employees can lead to legal trouble, so take the time to understand the criteria for each classification right from the start.

Tip #4 Ensure fair pay rates

Pay your employees in line with the state and federal standards. Tennessee’s minimum wage requirements are the same as the federal minimum wage so that could spare you from some confusion. Also, be aware of the rules governing overtime pay, including eligibility criteria and the rates for overtime hours worked.

Tip #5 Maintain accurate records

Maintaining accurate employment records is crucial for compliance. Consider using a time and attendance tracking software to keep track of your employees’ work hours, breaks, and any overtime they put in. This not only streamlines the process but also helps prevent wage and hour disputes. Accurate records also come in handy during audits or when you need to meet legal requirements.

Tip #6 Seek professional advice

When in doubt, don’t hesitate to seek guidance from employment attorneys or consultants well-versed in Tennessee labor laws. They can provide valuable insights tailored to your specific business needs and help you navigate any complex situations.

Important Cautionary Note

The penalties for breaking Tennessee labor laws mentioned in this article are potential consequences under the FLSA and related statutes. However, actual penalties will depend on the violation severity and the decision of the court or relevant authorities. The information provided in this article is intended to be informative but should not be considered legal advice.

Laws and regulations can change, so it’s advisable to consult employment attorneys or consultants for current and personalized guidance in your circumstances and jurisdiction. Learn more about Tennessee Labor Laws through our detailed guide.