Small business is celebrating many victories, including comprehensive legal reform and significant workers’ comp and unemployment reforms. Several pro-jobs bills that passed near the end of session await the governor’s signature at this date.

Tort reform

Caps on certain damages adopted
Gov. Bill Haslam made comprehensive tort reform a priority and passed a bipartisan bill that gives employers better predictability and a way to quantify risk, while keeping Tennessee competitive with surrounding states that have already acted.

Specifics include capping non-economic and punitive damages, and placing a $750,000 limit on the award of non-economic damages in most personal injury lawsuits and health care liability actions, excepting certain catastrophic injuries in which a $1 million limit will apply. Caps will not apply when defendants had intended to inflict serious physical injury or had altered or destroyed records with the purpose of avoiding or evading liability, or when their judgment was substantially impaired by alcohol or drugs. Punitive damage awards will not exceed the greater of two times the total of compensatory damages awarded or $500,000.
 
Businesses also will receive product liability protection. Sellers of a product will not be liable for punitive damages, unless they exercised substantial control over the aspect of the product for which recovery is sought, altered or modified the product (which was a substantial factor in causing the harm for which recovery is sought), or had actual knowledge of the defective condition.

The governor will sign the bill June 16.

Summary judgment standard protected
In addition, the General Assembly passed another tort reform bill which was a major victory for small business. The bill overturns a recent Tennessee Supreme Court ruling that shifted the burden from the employee to the employer in summary judgment motions in employment discrimination and retaliatory discharge claims, in effect undermining the federal standard that had worked well for nearly 40 years. NFIB expects the governor to sign the bill. The General Assembly also passed a bill that addresses a similar problem concerning summary judgment motions in commercial transactions. 
 

Workers’ comp, unemployment and labor law reforms

Workers’ comp fraud and abuse addressed
Lawmakers tightened the definition of an injury under Tennessee’s workers’ compensation law. Our members have reported an increase of cumulative trauma and repetitive motion injuries that have been misrepresented or misdiagnosed as occupational in nature, when they have actually occurred from activity outside the workplace (i.e., hobbies and normal wear and tear over life). In addition, the bill lifts restrictions between treating physicians and employers’ counsel that arose from a state Supreme Court decision.

Improved drug-testing standard
The legislature also passed a bill making it easier for employers to defend against fraudulent workers’ comp claims concerning workplace accidents in which drugs or alcohol might have been a factor.  We encourage all members to participate in the Drug Free Workplace Program in order to receive this important protection.

Unemployment rights affirmed
NFIB spearheaded an effort to ensure employers are able to submit supporting documentation in unemployment hearings in every instance. The legislation ensures that proof of misconduct may include personnel records and other business records and such records shall be admissible and may constitute evidence of misconduct, regardless of whether such evidence is hearsay or whether corroborated by direct witness testimony. Employers will only need to certify the records with a signed affidavit, which will make testimony much easier and less costly.

Tennessee addresses card check
The legislature passed a bill protecting employers from “card-check” practices and employees’ rights to a secret ballot in union elections. The bill responds to the flawed national card check movement that would undermine tried-and-tested election procedures that have been in place for more than half a century.

Patchwork regulations opposed
Lawmakers passed a bill that protects private employers from potential patchwork regulations. NFIB supports the new law because it provides confidence to Tennessee businesses by ensuring local governments do not impose differing employment regulations where state and federal laws already exist – specifically in anti-discrimination statutes.  We will continue to support similar efforts to ban local living wages and other potential harmful local mandates on small business should they arise.

Tax reform

Constitutional amendment to ban income tax
NFIB supported a proposed constitutional amendment to prohibit an income tax, other than income derived from stocks and bonds, and to prohibit any employer payroll tax. The resolution must pass by a two-thirds majority in the next General Assembly and then would appear before voters on the 2014 November ballot.

Tax reforms on NFIB radar
We continue to support efforts that will bring greater consistency, transparency and fairness in state tax matters, including audits of businesses. After working with the Revenue Commissioner’s office, the legislation was postponed until 2012. In the interim, the commissioner has agreed to conduct a full review of his agency and to begin making letter rulings and revenue rulings issued by the Commissioner of Revenue to be made public. We appreciate your ongoing feedback on tax challenges you may be facing.

Other issues

Illegal immigration
The Tennessee Lawful Employment Act, which passed nearly unanimously at the end of session, will require businesses with more than five employees to use the federal E-Verify system or retain a copy of a valid Tennessee driver’s license. It will be phased in, effective: Jan, 1, 2012, for private employers with 500 employees or more; July 1, 2012, for private employers with 200 employees or more; and Jan. 1, 2013, for private employers with six to 199 employees. Please visit NFIB/Tennessee website in the fall for announcements on upcoming education and informational meetings on how this law will impact your business. Employers with six employees or more should begin familiarizing with details of this pending law and watching for updates from the state Department of Labor to ensure compliance.

Healthcare mandate – hearing aids
The General Assembly passed a mandate that small group and individual insurance policies cover hearing aids for dependent children. 
Many legislators who supported this legislation stated they are willing to review all of Tennessee’s 42 mandates to see what relief can be provided to small business. They are aware that fewer than half our members (44%) can afford any health insurance (2008 NFIB/TN survey).

Bad bills gone
We estimate more than 150 harmful bills to your business were defeated this year, many of which you’ll find on our bill review page.