WHAT YOU NEED TO KNOW NOW: New Covid-19 Liabilities in TN

Date: November 13, 2021

Effective Nov. 12, Tennessee has a new COVID-19 law that deserves the attention of small businesses across the state. Much has happened the last few weeks at both the state and federal levels. 

Earlier this week, NFIB filed a federal lawsuit against OSHA’s vaccine mandate on America’s businesses. On Nov. 12, the United States Court of Appeals for the Fifth Circuit upheld a temporary stay of the emergency rule, which would have required employers with 100 or more employees to implement policies mandating that employees be vaccinated or provide documentation of a negative COVID-19 test at least every seven days. The federal rule will not be in effect unless an appeal is made and another court says otherwise. This is a big win for our members. 

We’re pleased to see many NFIB members are now out of legal jeopardy, between the conflicting federal rule and legislation in Tennessee that became law today, Nov. 12However, if your business has a COVID-19 mitigation policy in Tennessee, we highly recommend you review Tennessee’s new law thoroughly and seek expert legal advice to avoid any potential litigation  

None of the following is legal advice. Some legal experts are saying there are several unknowns and potential pitfalls for employers with Tennessee’s new law, including: 

  • It is very clear that “private businesses … shall not compel or otherwise take an adverse action against a person to compel the person to provide proof of vaccination if the person objects to receiving a COVID-19 vaccine for any reason.”  
  • Businesses that violate this section can be subject to a new private right of action, with compensatory damages and attorney’s fees.  
  • The term “adverse action” in the bill is broadly defined and deserves special attention for any business with a COVID-19 mitigation policy. 
  • It is unclear if businesses can incentivize vaccinations in Tennessee with impunity. 
  • Entertainment venues received a special exemption to allow “a person to voluntarily provide proof of vaccination or proof of COVID-19 antibodies instead of a negative COVID-19 test in order to gain admission,” but it is less clear if other types of businesses have the same protection.  
  • Any employee who voluntarily leaves a place of employment as a result of an employer’s COVID-19 policy will be eligible for unemployment benefits if they meet all other criteria. 

The following is NFIB’s original report to members on Nov. 3, with updates. 

Late last month, state lawmakers passed a sweeping 21-page omnibus bill relating to COVID-19 mitigation in the third extraordinary session of the 112th Tennessee General Assembly. NFIB actively opposed the bill, based on the proposed new private rights of action, which unfortunately stayed in the last version of the bill.  

NFIB consistently opposes new avenues to lawsuits, especially when so many of our members are dealing with a severe labor shortage, significant supply chain disruptions and rising inflation.  

NFIB was able to stop or delay other measures that would have hurt small business. While unanswered questions remain, here’s what we know now and what to expect next.  

COVID-19 Vaccine Mandates & Potential Liability 

The language in the bill states: “Private businesses, governmental entities, public schools or districts “shall not compel or otherwise take an adverse action against a person to compel the person to provide proof of vaccination if the person objects to receiving a COVID-19 vaccine for any reason.” [14-2-102]  

Notably, adverse action “means to: (A) Discriminate against a person by denying the person employment, privileges, credit, insurance, access, products, services, or other benefits; or (B) Discharge, threaten, or otherwise discriminate against an employee in any manner that affects the employee’s employment, including compensation, terms, conditions, locations, rights, immunities, promotions, or privileges.” [14-1-101] 

Unfortunately, small businesses may be liable if they require a vaccine passport or vaccinations, the latter of which may create a conflict for some businesses with OSHA’s federal emergency rule that NFIB opposes. “A person injured as a result of a violation of chapter 2 … of this title is entitled to maintain a private right of action for injunctive relief and to recover compensatory damages and reasonable attorneys’ fees against an alleged violator.” [14-6-103] 

There is at least one exception to the potential risk of liability. Entertainment venues specifically have limited protection [14-2-102(b)], but it less clear if other businesses have that same protection. 

Potential Federal Takeover of TOSHA Stopped Temporarily 

NFIB lobbied successfully to stem a likely federal takeover of our state occupational, health and safety framework, supporting a last-minute change sought by the Commissioner of Labor & Workforce Development. 

The legislation was amended at the last minute to give Tennessee OSHA (TOSHA) a temporary stay from enforcing emergency federal COVID-19 rules (Section 6 of the amendment, 14-6-101). As originally proposed, the commissioner was concerned Federal OSHA could have initiated proceedings to assume control of all occupational, safety and health compliance efforts in Tennessee. 

NFIB strongly opposes any effort that would result in federal regulators replacing state inspectors. Federal fines are double state fines, and willful violations are $140,000 under the federal scheme. NFIB believes TOSHA runs an excellent program that allows for collaborative measures to address potential violations and that ensure Tennessee workplaces are safe for employees. Lawmakers are expected to review the extension when session reconvenes in January.  

NFIB Stops Other Harmful Fast-Moving Bills 

NFIB worked successfully to scuttle two labor-related bills separate from the omnibus bill. One bill by Rep. Bud Hulsey (Kingsport) would have added a new cause of action with punitive damages, not just compensatory, and potentially eroded Tennessee’s no-fault workers’ compensation system, as drafted, a concern raised by House Majority Leader William Lamberth in committee. We thank the leader for pointing this out. Of note, the omnibus legislation specifically states the bill does not “affect workers’ compensation claims under … title 50, chapter 6, including the exclusive application of such law.” 

Another bill by Rep. Brandon Ogles (Franklin) would have defined religious exemptions differently and potentially put new terminology for creed in state code. NFIB opposes any creed definitions, which likely would lead to new causes of action under the Tennessee Human Rights Act. 

2020 COVID Liability Business Protections to Sunset Next July 

NFIB and other business groups supported an extension of the COVID-19 liability protections to July 1, 2023, but the provision was removed in the conference committee by the House at the last minute. Passed in 2020, this legislation is still set to expire on July 1, 2022. NFIB will advocate for an extension in the regular session in January. 

New Unemployment Benefits to Be Extended 

Any employee who voluntarily leaves a place of employment as a result of an employer’s COVID-19 policy will be eligible for unemployment benefits, if they meet all other criteria. The legislation is retroactive, which will open eligibility to those who recently left their job in these circumstances. The impact to the unemployment trust fund is unknown, but the business community will be monitoring the number of such unemployment claims to ascertain the possible impact on unemployment insurance taxes that Tennessee businesses pay. [14-3-101] 

Private Employers Can Have Mask Policies 

NFIB did not engage on language in the bill related to mask mandates. The original draft sought to ban private employers (and Tennessee residents) from requiring masks in any situation. The adopted bill exempts private businesses, allowing them to determine mask policies for employees and customers. Homeowners also were exempted in the final bill, but government entities and public schools can no longer require masks, unless severe conditions arise. [14-2-103]  

What We Are Hearing and What’s Next 

Business groups like NFIB were put in a difficult position during the special session. We fully understand the varying viewpoints on COVID-19 mitigation efforts, but our team must read the language in all bills and see if undue harm to small businesses will be created. During a very hectic three-day session, with almost no testimony allowed, we spotted much of that harm, some of which we were able to address and some that will now expose some of our members to potential liability.  

NFIB members who have read the final legislation already have shared concerns around likely conflicts between pending state law and federal policies, potentially putting them in legal jeopardy (Update: this is now not currently the case with the upholding of the federal stay on Nov. 12). Others are concerned with the new avenue to receive unemployment benefits, which they believe may further exacerbate the labor shortage in Tennessee and hurt the trust fund. Others remain concerned lawmakers are still contemplating a federal takeover of TOSHA. Others are concerned some Tennessee businesses will be unaware of the complexity to comply with the legislation, which we encourage our members to read completely.  

Other provisions in the bill may impact your business. We include some of them here so you can review more thoroughly, if necessary: 

  • Requires licensing boards to develop a set of rules, subject to state Government Operations Committee’s approval if they wish to discipline medical professionals for COVID-19 treatments 
  • Allows health care professionals to use independent judgment to prescribe monoclonal antibody treatments 
  • Allows the health commissioner exclusive power to design quarantine guidelines 
  • Bans use of public funds for COVID-19 mandates
  • Allows those at risk of losing federal funds to issue mask and vaccine mandates, and use public funds for mandates, if they receive approval from the comptroller’s office 

The legislation allows the governor to suspend any provision in the bill if he declares a state of emergency. [14-1-104] 

The House voted 58-22 for the final bill, with 19 abstentions and absences, while the Senate voted 22-4 for the final bill, with seven abstentions and absences. 

 

 

 

 

Related Content: Small Business News | Tennessee

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