HR Management & Compliance

New Tennessee wrongful discharge law favorable to employers

by David Johnson

A new Tennessee law going into effect on July 1 puts a cap on damages employees can collect in wrongful termination claims.

Public Chapter 995 affects the Tennessee Human Rights Act (THRA), the Tennessee Public Protection Act (TPPA), and the Tennessee Disability Act (TDA). The new law imposes a cap on compensatory damages aggrieved employees can recover under all three statutes for future monetary losses, emotional pain and suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonmonetary losses.

The caps depend on the number of employees an employer has. The caps range from $25,000 for employers with eight to 15 employees to $300,000 for employers with more than 500 employees. The caps don’t apply to back pay, interest on back pay, front pay, or equitable relief.

Also, the new law eliminates individual liability. Previously, individual supervisors could be held personally liable for violating the THRA, Tennessee’s version of Title VII of the Civil Rights Act of 1964. Under the new law, however, individual employees and other agents of a business will be immune from liability for an employer’s unlawful discriminatory acts under the THRA.

The new law also affects whistleblower lawsuits by eliminating the separate common-law claim for retaliatory discharge. Although the two claims overlap in many ways, it’s generally easier for an employee to prevail on a common-law retaliatory discharge claim. In particular, the TPPA requires an employee to prove that his protected activity was the “sole reason” for his termination, while an employee who files a common-law claim needs to prove only that the protected activity was a “substantial factor” in his termination.

The new law presents an interesting twist for very small employers. The law immunizes private employers with fewer than eight employees from liability under the TDA (which was already the case under the THRA), but it doesn’t do the same for the TPPA. Therefore, small employers will continue to be liable under the TPPA. Also, the lowest damages cap ($25,000) applies to employers with eight to 15 employees, but the law contains no damages cap for employers with fewer than eight employees.

For more information on Public Chapter 995, see the June issue of Tennessee Employment Law Letter.

David Johnson is an attorney with Butler Snow LLP in Nashville, Tennessee. He can be reached at

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