Tennessee Legislature Enacts Pro-Employer Legislation

Tennessee Legislature Enacts Pro-Employer Legislation

In late May and early June, Tennessee Governor Bill Haslam signed into law several bills that should positively impact Tennessee employers. This pro-employer legislation reinstates a favorable legal framework that will make it easier for judges to dismiss employment discrimination claims before trial, prohibits local governments from enacting anti-discrimination laws that offer broader protection than the Tennessee Human Rights Act, and caps punitive damages. The following is a summary of this recent legislation:

Tennessee Human Rights Act Amendment (HB 1641 and SB 94)

This legislation reinstates the burden-shifting scheme utilized in federal employment litigation, as originally established in the case McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). In McDonnell Douglas, the U.S. Supreme Court established a framework where a plaintiff employee must establish a prima facie case of discrimination. The employer then has the ability (with a much lower proof threshold) to rebut this inference of discrimination by providing a legitimate non-discriminatory reason for its actions toward the employee. The employee then has the burden of proving that the employer’s stated reason is pretext for discrimination. In Gossett v. Tractor Supply Co., 320 S.W. 3d 777 (Tenn. 2010), the Tennessee Supreme Court rejected the McDonnell Douglas framework because it found the scheme inconsistent with Tennessee’s summary judgment standard as articulated in Hannan v. Alltell Publishing Co., 270 S.W.3d 777 (Tenn. 2008). Mirroring McDonnell Douglas, the Tennessee Human Rights Act Amendment expressly provides that at all times it remains the employee’s burden to prove discrimination and/or retaliation and allocates the burden of proof as follows: (i) the employee must establish a prima facie case of intentional discrimination/harassment or retaliation; (ii) if the employee satisfies the burden, the employer must produce evidence (not a burden of persuasion) of one or more legitimate, non-discriminatory reasons for the employment action in question; and (iii) if the employer produces this evidence, the employee must then prove that the reason provided by the employer was not the real reason for the employment action and the stated reason is instead a pretext for discrimination or retaliation.

Tennessee Civil Justice Act of 2011 (HB 2008 and SB 1522)

As it pertains to employment litigation, this legislation imposes limitations on the amount of punitive damages that a plaintiff may recover to the greater of (1) two times the total amount of compensatory damages, or (2) $500,000. The Act also limits non-economic damages in a “personal injury action” to $750,000 and defines non-economic damages to include, among other damages, emotional pain, mental anguish, emotional distress, humiliation, and injury to reputation. However, the Act fails to define a “personal injury action.” Accordingly, employers may also benefit from the $750,000 cap for non-economic damages if the employment litigation qualifies as a “personal injury action.”

Equal Access to Intrastate Commerce Act (HB 600 and SB 632)

This Act prohibits local governments from enacting ordinances or laws affecting the general public that re-define “discriminatory practices” or extend protection from discriminatory bias to individuals not protected by state-wide discrimination laws. The bill is retroactive, and thus nullifies an ordinance passed by the Council of the Metropolitan Government of Nashville and Davidson County prohibiting discrimination based on sexual orientation or gender identity. The statute carves out an exception for local laws that apply to employees of the local government.

The practical effect of this new legislation is that Tennessee law is in closer parity with Title VII and other federal anti-discrimination laws. Although this pro-employer legislation may reassure Tennessee employers that there will be greater protections and predictability of liability in the future, employers should continue to maintain and disseminate their discrimination, harassment, and retaliation policies and regularly train employees on these policies.