Executive Summary: Tennessee has drastically changed the legal landscape of employment discrimination litigation under state law. For claims arising after July 1, 2014, plaintiffs will no longer have the ability to seek unlimited compensatory damages in discrimination lawsuits; the common law claim of retaliatory discharge has been eliminated; and restrictions have been adopted on whistleblower claims. In addition, no longer will a supervisor or agent of the employer be subject to individual liability. These changes were designed to make the state employment discrimination laws mirror the federal discrimination laws.
Damages: Before the passage of the new law, employees could seek unlimited compensatory damages for discrimination claims filed in state court. The new law limits an employer's potential liability for compensatory damages (those for emotional distress, mental anguish, etc.) depending upon the employer's size:
8 – 14 employees $25,000
15 – 100 employees $50,000
101 – 200 employees $100,000
201 – 500 employees $200,000
501+ employees $300,000
Punitive damages are not available under state law. However, like federal law, back pay, interest, front pay and equitable relief are not included in the caps.
Limitation on Simultaneous State Court Litigation: The new law expressly prohibits a plaintiff from simultaneously maintaining both state court and federal court lawsuits where the claims are based upon the same operative facts. The law provides that the state court shall dismiss any duplicative state court action.
Whistleblower (Retaliatory Discharge) Claims: Under the new law, to maintain a whistleblower action, the employee must have reported the alleged illegal activities to an individual or entity other than the employer or corporate affiliate (i.e., outside the company), and the report of illegal activities must be the sole reason for the termination. The new law eliminates the common law action for retaliatory discharge. Furthermore, damages for retaliatory discharge claims are subject to the same caps discussed above.
Individual Liability: No longer will a supervisor or agent of the employer have individual liability for claims of employment discrimination under the state law. Before the amendment, a supervisor could be individually liable if he or she aided or abetted the discrimination.
What does this mean for me?
The new law is welcome news for employers because it eliminates the potential exposure for unlimited compensatory damages and provides some protection to employers, especially smaller employers. In addition, employers will not be faced with defending simultaneous federal and state court lawsuits for the same claim. The law also changes the standards for proving retaliatory discharge claims and limits the damages available for those claims.