E-Verify requirement — 35-employee threshold (effective January 1, 2023)
Under the Tennessee Lawful Employment Act, any private employer with 35 or more employees (as referenced in Tenn. Code Ann. § 50-1-703) must enroll in and use the federal E-Verify program to check the work authorization of all new hires made on or after January 1, 2023. The statute does not use "full-time equivalent (FTE)" but instead applies the threshold based on the number of employees under a single Federal Employer Identification Number (FEIN). The law's requirement for E-Verify is codified in Tenn. Code Ann. § 50-1-703(b), stating that employers must verify the employment eligibility of every employee hired on or after the compliance date.
Employers with fewer than 35 employees may either use E-Verify voluntarily or may comply by maintaining records of specified lawful resident verification documents for all new employees, as detailed in Tenn. Code Ann. § 50-1-703(a)(1)(A)-(B). The Department of Labor and Workforce Development administers enforcement and guidance, but the statutory requirements are the authoritative source.
Source: Tenn. Code Ann. § 50-1-703 Supplemental: Tennessee Department of Labor – Employment Verification
Criminal history inquiry restrictions — state employers only
Tennessee's "ban the box" law, correctly cited in Tenn. Code Ann. § 8-50-112, restricts when state government employers may inquire about a job applicant's criminal history, but does not apply to private employers. The statute defines "employer" to mean "the state and any agency, authority, branch, bureau, commission, corporation, department, or instrumentality of the state," specifically excluding contractors, subcontractors, political subdivisions, the Department of Education, the State Board of Education, and the Tennessee Bureau of Investigation (see § 8-50-112(a)).
For non-covered positions (those not requiring a criminal background check under federal law and not disqualified by law due to an offense), state employers may not inquire about an applicant's criminal history on the initial job application. Inquiry may only occur after the initial screening. When inquiry is made, the applicant must be given an opportunity to explain the circumstances (see § 8-50-112(b), (e)).
For covered positions (where a background check is required under federal law or an offense is disqualifying by law), the job announcement must state that a criminal background check is required and that applicants may need to provide criminal history information (see § 8-50-112(d)).
When considering an applicant's criminal history for a non-covered position, state employers must evaluate seven statutory factors under § 8-50-112(c):
- Duties and responsibilities of the position;
- Relevance of the criminal history to those duties;
- Time elapsed since conviction or release;
- Applicant's age at each offense;
- Frequency and seriousness of offenses;
- Rehabilitation and good conduct since the offense;
- Public policy regarding employment of those with criminal histories.
Criminal history information obtained is confidential, except as required by law. State employers are shielded from damages for refusal or failure to hire based on information obtained in compliance with the statute (see § 8-50-112(f)-(g)).
Private employers in Tennessee are not restricted by state law from inquiring about criminal history at the application stage. Some municipalities, like Memphis and Nashville, have adopted their own ban-the-box ordinances, but these apply only to public sector jobs within those jurisdictions.
Source: Tenn. Code Ann. § 8-50-112
E-Verify penalties under the Tennessee Lawful Employment Act
Tennessee imposes escalating civil penalties on private employers who fail to comply with the E-Verify mandate under the Tennessee Lawful Employment Act (TLEA), codified at Tenn. Code Ann. § 50-1-703. These penalties apply when an employer required to use E-Verify (generally those with 35 or more employees as of January 1, 2023) does not verify the work authorization of new hires or fails to maintain required verification records.
Civil penalties structure:
- First violation: $500 base penalty, plus $500 for each employee or non-employee for whom eligibility was not verified or documented appropriately.
- Second violation: $1,000 base penalty, plus $1,000 per unverified worker.
- Third and subsequent violations: $2,500 base penalty, plus $2,500 per unverified worker.
Knowingly failing to use E-Verify—daily penalties: If the Department of Labor & Workforce Development finds that an employer knowingly failed to use E-Verify for employees hired on or after January 1, 2023, it may impose an additional $500 penalty, plus $500 for each day the violation continues, starting 45 days after the employer receives a final order (§ 50-1-703(f)(1)(B)).
License suspension: If the employer does not provide written confirmation of compliance to the Department within 45 days of the final order, the Department is required to notify applicable local government agencies to suspend the employer’s business license until compliance is achieved (§ 50-1-703(f)(2)).
Practical notes: The department may assess all applicable penalties in tandem. These consequences are cumulative—not alternatives. There is no private right of action; penalties are enforced administratively by the state.
Source: Tenn. Code Ann. § 50-1-703(f) Source: Fiscal Review Committee memo, H.B. 1855/S.B. 1966, p.3
Tennessee Lawful Employment Act — Verification for Non-Employees via Business Entities
Under the Tennessee Lawful Employment Act (TLEA), a private employer must verify the identity and work authorization of each non-employee—defined as an individual, not on the payroll, who is paid directly by the employer for labor or services—before permitting them to begin work. The statute requires the employer to request and retain a copy of one acceptable identification document listed in Tenn. Code Ann. § 50-1-703(a)(1)(A). According to the statute, "The employer shall retain a copy of the documentation for three (3) years after the date of employment or for one (1) year after the date of termination of employment, whichever is later." (Tenn. Code Ann. § 50-1-703(c)). The TLEA verification duty applies regardless of whether the individual is classified as a contractor or sole proprietor, as long as the employer is paying the person directly.
Exception for business entities: The Tennessee Department of Labor and Workforce Development's Employment Verification FAQ clarifies: "If an employer contracts with another company, such as a staffing agency or other business entity, and pays that company for services, the business entity is responsible for verifying the work authorization status of its employees, not the employer that is contracting for the services." In practical terms, if the non-employee is engaged through and paid by a bona fide business entity—an LLC, corporation, or staffing firm—the entity with the direct employment relationship complies with the TLEA; the engaging employer does not shoulder the verification obligation for these workers.
The law does not provide a detailed process for vetting the "bona fide" status of a business entity, nor does it require the contracting employer to conduct diligence beyond confirming that the payment and employment relationship are with a separate company, not the worker as an individual. If engaging contractors directly (not through such a company), the verification duty squarely rests with the payer.
Source: Tenn. Code Ann. § 50-1-703(a)-(c) Source: Tennessee Department of Labor — Employment Verification FAQ
New hire reporting requirements and deadlines in Tennessee
Who must report: Every employer in Tennessee with a Federal Employer Identification Number (FEIN)—including private businesses, government entities, and nonprofits—must report newly hired and rehired employees, as required by Tenn. Code Ann. § 36-5-1102(a). The law’s employer coverage is determined by FEIN status, not size or sector.
Statutory definitions: A “newly hired employee” is defined as an individual not previously employed by the employer, or who has been separated from the employer for at least 60 consecutive days (§ 36-5-1102(c)).
What to report: Employers must report the employee's name, address, and Social Security number; the employer's name, address, and FEIN; and the employee’s date of hire. This is detailed in § 36-5-1102(b).
When to report: Reports must be made within 20 days of the employee’s hire date (the first day services for pay are performed), per § 36-5-1102(a), (c). For employers reporting electronically, submissions must occur at least twice monthly, with transmissions at intervals no less than 12 days and no more than 16 days apart (§ 36-5-1102(e)).
How and where to report: Employers may report electronically through the Tennessee Department of Human Services (DHS) Child Support Division’s online portal, or by mail or fax using the methods on the DHS agency website. While statute allows multiple formats, the state encourages electronic submission, especially for employers with high volumes.
Penalties for noncompliance: Employers who fail to comply may be subject to civil penalties, as set out in § 36-5-1102(g).
Source: Tenn. Code Ann. § 36-5-1102 Source: Tennessee Department of Human Services – New Hire Reporting