The 112th Tennessee General Assembly adjourned sine die, or indefinitely, on Thursday, April 28.
The legislative session for small business was mostly successful with a few bumpy spots. Several good measures for pharmacists, retailers, manufacturers and doctors passed, but important work remains for attorneys, financial advisers and others.
We’ve divided our recap list into “The Good,” “What’s Ahead,” and “Worth Noting.” Your human resource, legal and tax experts are good sources to weigh the potential impact of these new laws and developments.
The Good
Tangible Personal Property Tax Under Study
At NFIB’s urging, the state has begun a comprehensive study of the tangible personal property tax, an inefficient levy that our members would like eliminated or reformed. Later this year, the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) is expected to release findings and recommendations after interviewing interested parties including many small businesses and local governments. The study could lead to a substantive proposal next year to reform the burdensome tax. Read more here, and stay tuned for details.
Agency Influence Checked
SB 2285/HB 1749 removes judicial deference of agency interpretations of statutes and rules in contested court cases. Known as the anti-Chevron doctrine bill, it requires judges to read statutes and rules “de novo” (from the beginning), ensuring the scales of justice are equal for our members and all Tennesseans. One tax practitioner said the law will have “a very positive impact on all Tennessee business” by ensuring state agencies “only get one bite at the apple.”
Victory for Retailers – Vendors’ Compensation Restored
NFIB supported SB 500/HB 536, a win for Tennessee retailers. The legislation offers modest compensation (up to $300 for each location filing separately) for retailers who collect and remit sales tax for the state, beginning July 1 for one year. Retailers have been unpaid tax collectors for Tennessee since 2000, when “vendors’ comp” was removed during a budget shortfall. The bill will help defray some costs retailers incur – including time, manpower and software investments. NFIB will fight for a more permanent solution next year.
Victory for Manufacturers – R&D Expenses Deductible
By passing SB 2397/HB 2144, Tennessee became the first state to allow companies doing business in our state to continue fully deducting all research and development-related expenses when filing their state excise taxes. The “decoupling” legislation was necessary because of expiring provisions in the Tax Cuts & Jobs Act, the 2017 federal tax reform bill.
Victory for Pharmacists – PBM Reform Passes
NFIB supported SB 2458/HB2661, which addresses below-cost reimbursement rates from pharmacy benefit managers (PBMs) to pharmacies and the issue of patient steering. It is expected to improve patient choice significantly. The law will help independent pharmacies be reimbursed fairly, enable customers to choose their pharmacy and avoid delays obtaining life-sustaining medicines.
Victory for Physicians – Privilege Tax Eliminated
As part of the No Taxation on My Occupation coalition, NFIB advocated for complete repeal of the professional privilege tax for seven remaining professions. Fortunately for doctors, lawmakers agreed; unfortunately for financial advisers and attorneys, lawmakers left Nashville without including them, despite a significant revenue surplus and 90 co-sponsors of the bill. This is the last year doctors must pay the $400 tax.
NFIB will continue efforts to eliminate the discriminatory tax on remaining professions. Our members believe it is a RIGHT, not a privilege to do business, and no one should be taxed to go to work.
COVID-19 Liability Protection Extended
On the last day of session, the legislature extended COVID-19 liability protection, which was set to expire this summer, for one year to July 1, 2023. The original House proposal was only for six months, which would have exposed many of our members to potential frivolous lawsuits before the 113th General Assembly convenes next January.
Bad Bills Fail
NFIB lobbied against many bad bills that would have created hardships for small business, including paid leave and wage mandates. Other bills that were defeated include:
SB 2611/HB 2398 – Would require employers of a certain size to reveal salary ranges they pay
SB 1858/HB 1873 – Would mandate the use of cash in business transactions and make it a crime to be a cashless business. Many businesses have gone cashless for safety purposes and to eliminate theft.
SB 2538/HB 2598 – Would authorize a labor union or employee organization to collect an agency fee, undermining Tennessee’s right-to-work law.
SB 1762/HB 1929 – Would reverse the statewide prohibition on local governments’ ability to require employers to establish certain leave policies for employees as a condition of doing business with those local governments.
What’s Ahead
Yes on 1 Vote This Fall
Voters will have an opportunity to enshrine our right-to-work law in the state constitution this November. The Yes on 1 effort, if successful, will add additional protection to our 1947 law that protects Tennesseans’ choice to join a union or not.
Union Labor Under Scrutiny in West TN
Last October, lawmakers authorized a significant incentive package to attract Ford Motor Company to build a 3,600-acre mega campus called Blue Oval City on the Memphis Regional Megasite. Production of all-electric F-Series trucks is scheduled to begin in 2025. Some NFIB members in West Tennessee have expressed concerns that Ford is planning to require union participation on construction projects, which may be in conflict with Tennessee law. Lawmakers passed legislation at the end of session that will require Ford to report regularly union participation on these projects.
Worth Noting
Data Privacy Bill Fails
A sweeping data privacy bill, SB 1554/HB 1467, failed 3-6 in the Senate Commerce & Labor Committee. NFIB was neutral after our two biggest concerns (removal of a private right of action and unfavorable thresholds) were addressed. Committee members were wary of certain definitions and the new compliance burden on some businesses.
E-Verify Mandate Threshold Lowered
The House and Senate agreed to lower the requirement for employers to use E-Verify from 50 employees to 35 fulltime equivalents. The original House proposal was 25 employees. Employers did receive some protections by establishing that no employee has a civil cause of action for alleging wrongful or retaliatory discharge against their employer if the employee is not authorized to work in the United States under federal immigration laws and the employer was not aware the employee was not authorized to work here. It also establishes that any discharge of an employee due to positive results through the E-Verify program cannot have a cause of action for discrimination based on national origin.
DACA Licensing Loophole Addressed
Tennessee joined 17 other states, including Arkansas, Mississippi and Florida, to enable students in the Deferred Action for Childhood Arrivals (DACA) and Temporary Protective Status (TPS) programs to obtain a professional license. The workforce initiative passed with strong bipartisan support and will help address the severe labor shortage in many professions, including nurses, doctors, electricians, accountants, plumbers and architects.
Modified CROWN Act Passes
After much debate and several rewrites, the Create a Respectful and Open World for Natural Hair (CROWN) Act passed the legislature. The original bill would have created a new protected class for natural hair. The amended bill allows for the state to issue a warning to an employer that instructs an employee to change their hair but does not allow for a private right of action. The approved legislation also protects employers that must adhere to “common industry safety standards, maintain reasonable safety measures, or comply with federal or state laws, rules, or regulations relative to health or safety.”
Subminimum Wage Banned
Tennessee no longer will allow employers to pay a “subminimum wage” through a federally authorized program since the 1930’s. Lawmakers concurred the program is outdated and that disabled individuals, student-learners and others shouldn’t be paid below the federal minimum wage.
Workshare Program Authorized
Lawmakers voted to establish “a shared work unemployment benefit program” (similar to Missouri’s) designed to help reduce layoffs for state-approved employers when faced with a reduction in available work. It also allows an affected group of employees the ability to collect unemployment benefits while working reduced hours.
Please do not hesitate to contact State Director Jim Brown at 615-874-5288 or [email protected] with any questions.
