Many changes were on the horizon when the 107th General Assembly convened in January for the first meeting of a two-year legislative session. New chief executive Governor Bill Haslam (R-Knoxville) settled in at the Capitol, while Speaker Beth Harwell (R-Nashville) became the first woman to lead the House of Representatives. The Senate re-elected Ron Ramsey (R-Blountville) as the Lieutenant Governor and Speaker of the Senate.

With the closure of the session on May 21, 2011, sweeping changes were made to almost every area of state law and policy. In addition to changes in the areas of tort law, summary judgment standard and healthcare law - as described separately in this issue of the FBT TN Topics eNewsletter, changes were made, among others, to laws related to workers’ compensation, education, elections/ campaign finance, labor, immigration and mortgage brokers.  These changes will be of particular interest to lawyers, business owners, and individuals living and working in the State of Tennessee.

Workers’ Compensation

In passing SB 932/SB1503, 2011 PC 416, the legislature redefined “injury”, modified communication procedures as set forth by the Tennessee Supreme Court decision in Overstreet v. TRW Commercial Steering Division, 256 S.W.3d 626 (Tenn. 2008), and made changes to future medical benefits.  The Tennessee Department of Labor and Workforce Development summarizes the recent changes:

This bill allows the parties to a workers' compensation case to settle a claim, subject to the approval of a trial judge or a workers' compensation specialist, without future medical benefits. It modifies the Overstreet communication procedures regarding contact between the authorized treating physician and employers on the workers' compensation injury. This bill clarifies the definition of an injury and occupational disease. It clarifies that hearing loss, carpal tunnel and repetitive injury claims are compensable only if the condition primarily arises out of and in the scope of employment. This bill is effective for injuries occurring on or after June 6, 2011.

Labor     

Courtesy of SB 1808/HB 1819, 2011 PC 273, employers are now allowed to deduct from an employee’s wages money that an employer has loaned or advanced that employee. This is completely new to employers and employees in Tennessee.  An employer is allowed to offset wages for advances or loans if the employer and employee entered into a written agreement prior to such advances or loans. The employer must provide 14 days’ written notification before making the deduction. Finally, provisions are provided in the new law to resolve disputes over the amount owed.

Immigration

The Tennessee Lawful Employment Act, SB 1669/HB 1378, 2011 PC 436, requires Tennessee employers to obtain a copy of an employee’s driver’s license or utilize the E-Verify system to ensure new hires are legally in the country. E-Verify is an electronic program through which employers verify the employment eligibility after hire.  It is administered by the U.S. Department of Homeland Security, USCIS Verification Division, and the Social Security Administration.

Education

Governor Haslam passed changes to the tenure law while the House and Senate passed an overhaul of collective bargaining rights of public education school teachers and an aggressive change in policy with the passage of the Virtual Public Schools Act.  Both of these changes were signed into law by the Governor. 

As part of the Governor’s legislative package, SB 1528/HB 2012, 2011 PC 70, public school teachers who have not acquired tenure status prior to July 1, 2011, will only be eligible for tenure after serving five school years within a seven year period as a probationary teacher, and receiving evaluations demonstrating an overall performance effectiveness level of “above expectation” or “significantly above expectations” during the last two years of her/his probationary period, as defined by the evaluation guidelines from the state board of education.

The hot button issue filling the Capitol hallways and galleries was SB 113/HB 130, 2011 PC 378, which substituted the 1978 Education Professional Negotiations Act with the Professional Educators Collaborative Conferencing Act (PECCA), effectively ending teacher associations’ engagement in collective bargaining on the school district level and replacing it with collaborative conferencing without representation of a third party.  PECCA also precludes payroll deductions for political purposes, such as the Tennessee Educators’ Association political action committee.

The Virtual Public Schools Act (SB 714/HB732, 2011 PC 288) opens the market to private and non-profit corporations to open and operate “virtual schools” in Tennessee.

Mortgage Brokers

The Tennessee Residential Lending, Brokerage, and Servicing Act is amended by SB 1158/HB 758, 2011 PC 228, changing the exemptions from licensure requirements. Contractors, home improvement contractors, and other people who supply materials and render services in improvement of real property are prohibited from engaging in “mortgage services.” “Mortgage services” includes the business of making residential mortgage loans and being a mortgage loan servicer for a mortgage loan broker in Tennessee.

The other change made by the legislation referenced above clarifies licensed attorney exemptions from licensure requirements under the Act. It removes qualifying language, making the attorney subject to requirements when compensated by the mortgage lender, mortgage loan broker, mortgage loan originator, or by any agent of the mortgage lender, loan broker, or loan originator.

Elections and Campaign Finance

Photo identification is now required at the voting booth with the passage of SB 1666/HB 1443, 2011 PC 423.  It also permits those who cannot afford a photo ID card for the purpose of voting to receive one free of charge if an affidavit is signed stating she/he meets certain requirements. 

In light of the U.S. Supreme Court decision in Citizens United v. Federal Election Commission, 130 S. Ct. 876 (U.S. 2010), which reversed 20 years of restrictions on corporate campaign contributions, the Tennessee General Assembly approved SB 1915/HB 1003, 2011 PC 389, allowing direct corporate contributions to candidates. It also increases the size of donations that can be made under state law by approximately 40 percent, allowing for increases in maximum contribution limits as the consumer price index rises.  PAC (Political Action Committee) contribution limits to state Senate and Governor candidates was raised from $7,500 to $10,700 per election cycle (which includes the primary election and the general election).  PAC contribution limits to state House candidates increased from $5,000 to $7,100 per election cycle.  Individuals may also contribute more to legislative races (state House and state Senate) per election cycle: $1,400 instead of $1,000; and individuals may contribute $3,600 instead of $2,500 to statewide candidates, i.e. Governor, per election cycle.

In short, by the closure of the session, there were substantive changes made to many areas of law that did not make the headlines of the newspapers but are worth knowing.