Major tax, labor and tort reforms are highlights of the 2024 session
The 113th General Assembly adjourned sine die last Thursday, completing its business by passing a balanced $52 billion budget and significant tax, labor and tort reforms that will impact many small businesses positively.
Please thank the sponsors of the bills below for their work to protect your business.
Tax Reforms
Franchise Reform
Gov. Bill Lee pushed successfully for an overhaul of our constitutionally suspect franchise tax with the Senate and House agreeing to a last-minute compromise.
This bill will impact about 100,000 businesses (81,000 in state) that have been using the property measure, also known as the alternative minimum measure, when calculating their franchise & excise (F&E) taxes. These taxpayers not only will see a $400 million tax cut going forward but will also be able to apply for refunds for any overcollections (3½-year lookback, $1.5 billion set aside) of these payments.
Going forward, all taxpayers doing business in Tennessee will use the net worth measure to calculate the tax; existing net worth filers will see no impact from the bill.
We recommend that you contact your tax professional as soon as possible to see what impact, if any, this new law will have on your business. Read all the details here.
Sponsors: Rep. William Lamberth (Portland) and Sen. Ken Yager (Kingston). NFIB thanks Sens. Bo Watson (Hixson) and Jack Johnson (Franklin) for their work on this bill, as well.
State Property Tax Ban
The Senate concurred with the House’s 2023 action and passed HJR 81 by a vote of 26-6, the first step toward a constitutional amendment banning a state property tax, which is still on our books as an option.
A new resolution must pass both chambers in the next General Assembly by two-thirds votes before it can be considered in the 2026 election by voters. This initiative is an NFIB priority based on our 2024 Ballot. Sponsors: Rep. Tandy Darby (Greenfield) and Sen. Frank Niceley (Strawberry Plains)
Other Tax Bills of Note
NFIB successfully opposed HB 2633, which would have increased annual LLC fees from $300 to $500. It also would have taken corporate ($20) and LLP ($250) fees to $500 a year, which would have been 2nd highest in the nation behind California.
NFIB successfully opposed HB 2043, which would have eliminated the grocery tax while requiring a tax on every business of 0.75% ($800M) and establishing a “Worldwide Combined Reporting Act” (mandating taxes on offshore accounts).
Labor Reforms
Statute of Limitations – Unpaid Wages
HB 2113/SB 2017, an NFIB priority bill, makes the statute of limitations on unpaid wage claims three years, which is the same as under the Fair Labor Standards Act. The legislation is important because more Tennessee businesses have been experiencing class-action lawsuits going back an exorbitant six years. Businesses are required to keep only three years of these records. Sponsors: Rep. Dennis Powers (Jacksboro) and Sen. Shane Reeves (Murfreesboro)
Clarification of Work
SB 2027/HB 2110 makes clear the term “work” has the same meaning as interpreted by the U.S. Supreme Court for purposes of the Fair Labor Standards Act and the Portal-to-Portal Act of 1947. It says “de minimis” activities like going through security or walking to the office are not compensable work. Sponsors: Rep. Clark Boyd (Lebanon) and Sen. Shane Reeves
Other Labor Bills of Note
Several minimum wage and wage theft mandates failed again this year.
NFIB successfully opposed SB 2575, which would have prohibited a merchant from taking adverse employment action against an employee based solely on the employee reporting theft of merchandise or organized retail crime to law enforcement. We opposed it due to a new cause of action and pledged to work with the sponsors of the bill over the summer to address the increase in organized retail crime in our state.
NFIB successfully opposed SB 2781, which would have created a new cause of action for employers that aren’t policing/monitoring their bathrooms properly. If passed, many of our members would have faced significant legal risk.
NFIB successfully opposed HB 2725, which would have undone the law prohibiting local governments from implementing inclusionary zoning mandates.
NFIB successfully opposed HB 417, which would have: prohibited an employer from asking for or requiring a prospective employee to provide the prospective employee’s compensation history; required an employer to provide notice to the employer’s employees of employment advancement opportunities and openings; and established substantial fines for any violations.
Tort Reform
NFIB successfully advocated for SB 2221/HB 1658, which clarifies that businesses can use technology in this state without facing significant liability in the ordinary course of business. It ensures that Tennessee’s “wiretapping” criminal statute from 1994 is enforced only by criminal authorities and bars a private right of action that some unelected, unappointed plaintiffs’ lawyers have been using to abuse this law.
Some trail lawyers have been claiming that every time a person visits a website that uses third-party technology — like Facebook pixels or Google cookies — that’s an “interception” and that website operator in Tennessee owes the visitor an astonishing $10,000 per click. One business already has been sued for $100 million.
The new law will protect businesses small and large from these abusive lawsuits. Sponsors: Rep. William Lamberth and Sen. Bill Powers (Clarksville)
Other General Bills of Interest
NFIB successfully opposed HB 2204, which would have required license plates for box trucks having a gross weight of 26,000 pounds or less to be attached to the rear of the vehicle.
HB 2057: The Comptroller’s Bill to revise the schedule of required property reappraisals by county property assessors from a three- to six-year cycle to a one- to four-year cycle stalled in the House.
HB 886: A bill to study restoration of vendors’ compensation and interchange fees is headed for a comprehensive summer study.
Questions? Contact State Director Jim Brown at [email protected] or (615) 874-5288.
