Effective January 1, 2027, a significant amendment to the Tennessee Lawful Employment Act will broaden the scope of employers required to comply with state employment eligibility verification standards. This legislative change, introduced via H.B. 1194, shifts the definition of a “private employer” to include nearly all businesses operating within the state.
Understanding the Expanded Definition
Currently, the Act applies to private employers with six or more employees. However, the new amendment lowers this threshold significantly. Under the updated Tenn. Code Ann. § 50-1-702, a private employer is defined as:
“Any person who is required by federal law and regulations to report, for any purpose, remuneration paid to at least one (1) employee.”
This change effectively expands the applicability of Tennessee’s employment eligibility verification requirements to small businesses that were previously exempt, specifically those with one to 34 employees.
Key Compliance Implications
The primary goal of the Tennessee Lawful Employment Act is to ensure that every individual hired by a Tennessee employer is legally authorized to work in the United States. While federal law already requires all employers to complete the Form I-9, Tennessee law imposes specific state-level obligations and penalties for failing to verify authorization through approved methods (such as E-Verify or maintaining specific identity documentation).
By lowering the threshold to a single employee, the state ensures that even the smallest startups and family-owned businesses must adhere to the same rigorous documentation and reporting standards as larger companies.
Next Steps for Employers
To prepare for the effective date of January 1, 2027, employers, particularly those with fewer than six employees, should take the following proactive steps:
- Review Current Onboarding Procedures: Evaluate how your organization currently verifies employment eligibility and ensure that Form I-9 processes are consistent and compliant.
- Determine Verification Methods: Familiarize yourself with the state-approved methods for verification. If you are not currently using E-Verify, determine if adopting the system is the right choice for your compliance strategy.
- Audit Existing Documentation: Ensure that documentation for current employees is organized and stored according to both federal and state retention requirements.
- Stay Informed on Regulatory Guidance: Monitor updates from the Tennessee Department of Labor and Workforce Development regarding any additional reporting or record-keeping nuances introduced by this amendment.
- Consult with Legal Counsel: Work with an employment law expert to ensure your hiring practices meet the specific “lawful employment” definitions set forth in the amended Act.
