TBA Law Blog


Posted by: Edward Phillips & Brandon Morrow on Oct 1, 2014

Journal Issue Date: Oct 2014

Journal Name: October 2014 - Vol. 50, No. 10

These recent changes are worth paying close attention to whether you represent employees, employers or both.

The General Assembly recently made several changes to employment laws in Tennessee. Most would argue that these changes represent an attempt to improve the overall business climate for current and potential Tennessee employers. Some amendments involve major changes to employment discrimination/retaliation litigation, while others merely
clarify formerly vague points of law. In any event, these recent changes are worth paying close attention to whether you represent employees, employers or both.

Public Chapter No. 995
(SB 2126\HB 1954)

The majority of the changes arise out of Public Chapter 995 (2014), which took effect on July 1, 2014.

Removal of Individual Liability
Prior to the enactment of Public Chapter No. 995, Tennessee law allowed for claims against individual supervisors in cases of retaliation and aiding and abetting discrimination under the Tennessee Human Rights Act (THRA).[1] Asserting a claim against an individual supervisor was often used as a litigation strategy to defeat removal to federal court (i.e., destroying complete diversity).[2] Adding individual defendants to a discrimination or harassment case also injected a certain amount of extra emotion into the litigation, and was often a vehicle for plaintiffs to exact revenge against a supervisor who they felt had wronged them.

Under the new amendments, Tenn. Code Ann. § 4-21-301(b) now provides as follows: “No individual employee or agent of an employer shall be liable for any violation of part 4 of this chapter that any employer shall be found to have committed.” The elimination of individual liability under the THRA brings Tennessee law in line with federal Title VII standards.[3] Outside of the THRA context, however, individual supervisors can still be held liable for tort claims such as assault, battery and intentional infliction of emotional distress.

Damage Caps
The amendments add a new section to the THRA, Tenn. Code Ann. § 4-21-313, that established specific damage caps for discrimination and harassment cases. These damage caps apply to “non-pecuniary damages” such as pain, suffering, embarrassment, humiliation, mental anguish, and loss and enjoyment of life. The caps do not apply to back pay or front pay. The limitations are based on the federal caps adopted in 1991 at 42 U.S.C. § 1981(a)(b)(3). Prior to these amendments, strange “hybrid” situations arose in federal cases with state claims, where some causes of action were subject to caps and others were not. The caps are dependent upon the number of employees an employer has under
its control:

  • 8–15 employees is $25,000
  • 15–100 employees is $50,000
  • 101–200 employees is $100,000
  • 201–500 employees is $200,000
  • 500+ employees is $300,000

A couple of practical considerations are worth noting here. First, when determining the number of employees for the purposes of applying the appropriate damage cap, the court makes the determination based “on the date when adverse employment action giving rise to the employee’s claim occurred.”[4] Second, “the court shall not inform a jury of the [damage caps], but the court shall conform any judgment to comply with the limitations.”[5]

Elimination of Concurrent Lawsuits
The amendments provide that an employee may not maintain separate concurrently occurring causes of action in both state and federal court under the THRA, Tennessee Disability Act or the Tennessee Public Protection Act, if the actions are based upon the same set of operative facts. In such cases, the state court is required to dismiss the action brought under state law where the employee has filed suit based on the same set of facts in the federal court.[6]

Clarification of the Tennessee Disability Act
While the THRA is clear that it only applies to an “employer” with eight or more employees,[7] the Tennessee Disability Act (TDA) did not contain a similar provision.[8] While most courts assumed that the TDA utilized the same eight-employee threshold as the THRA, the TDA was nevertheless unclear on this particular point.[9] Now, as a result of the recent amendments, an “employer” under the TDA is classified as one that employs eight or more individuals.

Whistleblower Preemption
Prior to the recent amendments, Tennessee recognized both a common law whistleblower claim and a statutory whistleblower claim. The common law claim required a plaintiff to prove, inter alia, that his or her refusal to engage in illegal activity was a “substantial factor” in bringing about the adverse employment decision. The Tennessee Public Protection Act (TPPA) claim, however, required a plaintiff to prove that the refusal to engage in illegal activity was the “sole reason” for the adverse employment action.[10] The TPPA claim also provided for attorney fees, whereas the common law claim did not.[11]

As a result of the new amendments, the common law claim for whistleblowing is no longer a viable cause of action in Tennessee. Indeed, the amendments provide that the TPPA “abrogates and supersedes the common law with respect to any claim that could have been brought under this section.”[12] Now, whistleblower plaintiffs can only prevail if they can show that their protected activity was the sole reason for their discharge. The decision by the General Assembly to eliminate common law claim and thus the lower “substantial factor” standard and retain the “sole cause” standard appears to place a higher burden of proof on whistleblower plaintiffs than the “but for” federal standard in retaliation cases espoused in University of Texas Southwestern Medical Center v. Nassar.[13]

Public Chapter No. 815
(SB 276/HB 1109)

In addition to the various changes brought about by Public Chapter No. 995, the General Assembly also enacted Public Chapter No. 815, which provides some cover for employers that hire employees with a criminal record. However, Public Chapter No. 815 does not take effect until Jan. 1, 2015. Public Chapter No. 815 provides a mechanism for individuals with criminal records to secure a “certificate of employability” from a court when petitioning for a restoration of their rights of citizenship. The petitioner must prove to the court by a preponderance of the evidence that: (1) the petitioner has good and decent character traits, (2) the certificate will “materially assist” the petitioner in obtaining employment, (3) the petitioner needs the certificate in order to live a law-abiding life, and (4) granting the certificate would not pose an unreasonable risk to the safety of the public or any individual.[14] If the petitioner meets his burden of proof and a certificate of employability is issued, then an employer that hires that individual will be immune from claims of negligent hiring or supervision based on such individual’s conduct unless he/she engaged in behavior after being hired that indicates the individual may be dangerous or inclined toward other criminal conduct.[15]

Conclusion

The recent changes from the General Assembly are, on the whole, beneficial for Tennessee employers. Tennessee employment law practitioners should keep these amendments in mind whether prosecuting or defending future claims.

Notes

  1. Emerson v. Oak Ridge Research Inc., 187 S.W.3d 364, 377 (Tenn. Ct. App. 2005) (“In this case, the allegation is retaliation rather than aiding and abetting, both of which practices fall under Tenn. Code Ann. § 4-21-301, so individual liability may be had for either violation.”).
  2. Lincoln Prop. Company v Roche, 546 U.S. 81, 84 (2005) (“Defendants may remove an action on the basis of diversity of citizenship if there is complete diversity between all named Plaintiffs and all named Defendants and no named Defendant is a citizen of the foreign state.”).
  3. Akers v. Alvey, 338 F.3d 491 (Sixth Circuit 2003 at 500) (“Title VII does not create individual liability for individuals in supervisory positions.”).
  4. Tenn. Code Ann. § 4-21-313(d).
  5. Tenn. Code Ann. § 4-21-313(c).
  6. Tenn. Code Ann. § 4-21-314.
  7. Tenn. Code Ann. § 4-21-102(5).
  8. See Tenn. Code Ann. § 8-50-103.
  9. See, e.g., Gifford v. Premier Mfg. Corp., 1989 Tenn. App. LEXIS 524 (Tenn. Ct. of App., Aug.t 1, 1989) (“although the handicapped statute, § 8-50-403, does not itself specifically define employer, proceedings under the statute were placed under the statutes governing the Tennessee Human Rights Commission.”).
  10. Sims v. Sears, Roebuck & Co., 984 F. Supp. 2d 855, 869 (E.D. Tenn. 2013) (“The statutory and common law causes of action for retaliatory discharge are very similar, with the essential difference being that the common law cause of action requires a plaintiff to show that his or her activity was a substantial factor in bringing about plaintiff’s discharge, whereas the statutory cause of action requires a plaintiff to show it was the sole reason for his or her discharge.”).
  11. Tenn. Code Ann. § 50-1-304(c)(2).
  12. Tenn. Code Ann. § 50-1-304(h).
  13. 133 S. Ct. 2517 (2013) (rejecting the “motivating factor” standard and adopting the “but for” standard in retaliation cases). For a more in-depth discussion of Nassar, see “Retaliation Claims: More Difficult Standards Under Nassar and Ferguson,” Tenn. B. J. June 2013.
  14. Tenn. Code Ann. § 40-29-107(i).
  15. Tenn. Code Ann. § 40-29-107(n).

Edward G. Phillips EDWARD G. PHILLIPS is a lawyer with Kramer Rayson LLP in Knoxville, where his primary areas of practice are labor and employment law. He graduated with honors from East Tennessee State University and received his law degree from the University of Tennessee College of Law in 1978 with honors, and as a member of The Order of the Coif. He is a former chair of the Tennessee Bar Association’s Labor and Employment Law Section.

BRANDON L. MORROW is an associate with Kramer Rayson LLP in Knoxville where his primary areas of practice are labor and employment, and litigation. He earned a bachelor’s degree from the University of Tennessee and a law degree from UT College of Law in 2012.