Legal Update: Tennessee’s Lawful Employment Act

By admin|September 28, 2012|News|

The BasicsEffective January 1, 2012, Tennessee employers with five (5) or more employees will be required to verify the employment eligibility of their employees and other “non-employees”. “Non-employees” are defined as “any individual, other than an employee, paid directly by the employer in exchange for the individual’s services.”
It’s important to note that, although the Act does not require the use of the federal E-Verify program, it is strongly encouraged. In fact, employers who choose to utilize E-Verify will be provided a safe harbor if a worker is later found to be in the country illegally. An employer will not be found to have violated the Act if they receive a confirmation from E-Verify, or if the employee is appealing the tentative non-confirmation and the appeal has not yet been resolved. If an employer chooses not to use E-Verify, then they are not protected by the Act’s safe harbor provision.


Although the E-Verify system, which is operated by the Department of Homeland Security, verifies employment eligibility based on a Social Security number, it cannot verify that the person providing the Social Security number is the lawful owner of the number. To combat this issue, it’s important to continue to conduct Social Security number verifications through Application Researchers®. Our verification service is conducted through the Social Security Administration (SSA) and matches the name AND Social Security number to that on file with the SSA. We use this information as an identifier, and having incorrect information can result in inaccurate background screening information.

If an employer chooses not to use the E-Verify system, then they must verify employment eligibility status of employees and non-employees by obtaining one of the following documents from them:

• A valid driver’s license or other photo identification issued by the State;

• A valid certificate of birth;

• A valid, unexpired U.S. passport;

• A U.S. certificate of birth abroad;

• A certificate of citizenship;

• A certificate of naturalization;

• A U.S. citizen identification card;

• A lawful permanent resident card; or

• Other proof of immigration status and authorization to work in the United States.

Implementation Dates

The Lawful Employment Act is going to take effect in stages, as described below:

• January 1, 2012: effective for all governmental entities and private employers with at least 500 employees.

• July 1, 2012: effective for all private employers with 200 to 499 employees.

• July 1, 2013: effective for all private employers with 6 to 199 employees.

Records Retention

If E-Verify is used, then employers must keep those records for three years from the date of hire, or one year from the date of termination, whichever is later. If E-Verify is not used, then employers must retain the other required documentation for three years after receipt, or for one year after the worker ceases to provide services and/or labor, whichever is earlier.


If an employer knowingly violates the Act, then penalties will be assessed by the Tennessee Department of Labor and Workforce Development. A first-time offender may only be issued a warning, if they comply with the remedial action required by the Department of Labor (DOL) and only if they did not knowingly violate the Act. If an employer willfully violates the Act, they will be assessed a civil penalty of $500 for the first violation, $1,000 for the second violation and $2,500 for a third or subsequent violation. In addition, they will also be assessed an additional $500 for each employee or non-employee who was not verified through the program or for whom an identity / employment authorization document was not requested. If there are second and/or third violations, then the employer would be fined an additional $1,000 or $2,500, respectively, for each employee or non-employee. In addition, if an employer doesn’t provide evidence of compliance, as required by the DOL within 60 days of the final order, that employer will have its business license suspended until they are in full compliance. The DOL will also keep a list of those employers who have been issued a final order and make it available on its website.

Application Researchers® provides a simple, cost-effective method for our clients to ensure their compliance with the Act. Contact us for additional information regarding our I-9 Compliance System.

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