by Noel Bagwell
for ExecutiveLP™

June 28, 2016

On July 1, 2016, 82 New Laws Take Effect in Tennessee

Predictably, the media is focusing on some of the more salacious and flashy laws scheduled to go into effect in Tennessee in a few days. The new law permitting the Tennessee Alcoholic Beverage Commission to issue licenses for grocery stores to sell wine is getting a lot of play in the local news. And, of course, any of the laws dealing with sex crimes or the sex offender registry are primetime fodder for the hype-driven news industry, too.

Unfortunately, aside from publishing a list of the new laws going into effect, the press has done a lackluster job of informing Tennesseans about all the other new laws going into effect. There are 82 new laws in total, yet only half a dozen or so have been deemed “buzzworthy” enough to get a mention in local news. Many of the most important new laws aren’t being discussed at all!

That doesn’t sit right with me. I’m a business lawyer; so, I want to help entrepreneurs and businesses sort through the huge volume of information contained in all these laws to find what’s relevant and useful to them. That’s why I’ve put together this article, examining the laws taking effect on July 1 that I believe are going to have the most impact on entrepreneurs and businesses in Tennessee.

Click here for the full list of laws taking effect July 1, 2016.

If you have any questions or concerns about how these (or any other) laws impact your business, how to ensure your business’s compliance with Tennessee law, or other business law questions, please contact us. We will be happy to set up a consultation with you to assess your business legal needs and determine how we can help you reach your goals.
Let’s Chat.

Which Laws Will Most Impact Businesses In TN?

ExecutiveLP™ is a business law firm. So, in this article, we’re going to focus on the new laws that have the greatest impact on businesses. We’ve provided an index of quicklinks for your convenience.

Tobacco Retailers

Tennessee Senate Bill SB0786, as enacted, will prohibit recipients of public assistance benefits (welfare recipients) from using an EBT card at a tobacco retailer to purchase certain tobacco products. The bill also prohibits tobacco retailers from permitting the purchase of tobacco products or nicotine products with an EBT card.

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Online Sales Tax

Tennessee House Bill HB0644, as enacted, makes sweeping changes to a number of provisions of the Tennessee Code, including Tennessee Code Annotated (the “Code”), Title 67, Chapter 4, Part 20; Title 67, Chapter 4, Part 21; Title 67, Chapter 4, Part 7 and Title 67, Chapter 6, relative to taxation. This law is not sexy, but it makes a few huge changes aimed at “modernizing” the collection of revenue in Tennessee–a state with no income tax. The law dramatically expands the scope of individuals, businesses, and transactions which must collect and remit sales tax to the State of Tennessee, especially in the context of Internet-based transactions.

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Litigation Expenses

Tennessee Senate Bill SB1433, as enacted, is going to make it marginally more expensive for anyone–including businesses–to use a constable or sheriff for service of process by raising the cap on the fee for service of process from $26.00 to $40.00.

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Private Investigators / Window Tinting Businesses

Tennessee House Bill HB1471, as enacted, exempts licensed private investigators from window tint restrictions.

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Gun Owners / Businesses Prohibiting Weapons on Premises

Signage Relating to Prohibiting Weapons on Premises
AlertTennessee House Bill HB0682, as enacted, sets forth new, specific signage requirements for businesses that ban firearms on their premises, but individuals, corporations, businesses entities, and government entities that, as of January 1, 2015, used signs to provide notice of the prohibition against carrying firearms on the entity’s premises have until January 1, 2018–roughly 2 years, 60 months from the date the law shall have been made effective (Under the provisions of Section 2 of the bill, it’s back-dated to July 1, 2015)–to comply with the law. The phrase on the new signs must simply be, “NO FIREARMS ALLOWED,” but must be accompanied by the phrase, “As authorized by T.C.A. § 39-17-1359.” The old signs were required to read: “AS AUTHORIZED BY T.C.A. § 39-17-1359, POSSESSION OF A WEAPON ON POSTED PROPERTY OR IN A POSTED BUILDING IS PROHIBITED AND IS A CRIMINAL OFFENSE.”

The basic change to this law is that businesses are no longer required to notify patrons that they may be committing a criminal offense by carrying a weapon where prohibited by store policy, when that store policy overlaps with the law under T.C.A. § 39-17-1659. This law even applies to those who have handgun carry permits.

We believe the safest and best policy for gun owners is to refrain from doing business with any individuals, corporations, or businesses entities that prohibit firearms on their premises, and to refrain from carrying firearms on any posted government property. It is the opinion of this author that the best policy for individuals, corporations, and businesses is not to prohibit firearms on their premises. The only way to stop a bad guy with a gun is with a good guy with a gun. Criminals are going to ignore prohibitions on weapons; they’re criminals; ignoring rules and laws is what they do. Prohibiting law-abiding citizens from carrying weapons just makes your business and its patrons more vulnerable to armed criminals.

Civil Liability Relating to Prohibition of Weapons on Premises
AlertTennessee Senate Bill SB1736, as enacted, provides immunity from civil liability to a person, business, or other entity that owns, controls, or manages property and has the authority to prohibit weapons on that property by positing, with respect to any claim based on the person’s, business’s, or other entity’s failure to adopt such a policy; and amends TCA Title 39, Chapter 17, Part 13.

“Present law authorizes persons in control of property to post a notice that prohibits firearms on the premises. This bill imposes a duty of care on any person who posts their property to prohibit firearms whereby such person will be responsible for the safety of any handgun carry permit holder while the permit holder is on the posted premises and traversing any area to and from the premises and the location where the permit holder’s firearm is stored. The duty of care created by this bill will extend to the conduct of other invitees, trespassers, employees of the person or entity, vicious animals, wild animals, and defensible man-made and natural hazards.

This bill creates a cause of action whereby any permit holder who is harmed while on posted premises or traversing any area to and from the premises and the location where the permit holder’s firearm is stored may bring suit against the person who posted the property. The full text of this bill specifies the burden of proof that a plaintiff must meet in order to prevail in a suit brought under this bill. In addition to damages, a permit holder who brings a suit under this bill will be entitled to attorney fees and costs. The statute of limitations for actions brought under this bill will be two years.

This bill requires that any person who posts their property to prohibit firearms on the premises must use a sign that includes language citing this bill and the duty of care that such person owes to permit holders.

This bill requires that it be given a liberal construction.

ON MARCH 16, 2016, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 1736, AS AMENDED.

AMENDMENT #1 rewrites this bill to provide immunity from civil liability to a person, business, or other entity that owns, controls, or manages property and has the authority to prohibit weapons on that property by positing under present law, with respect to any claim based on the person’s, business’s, or other entity’s failure to adopt such a policy. This amendment will not apply to a person, business, or other entity whose conduct or failure to act is the result of gross negligence or willful or wanton misconduct.”

We believe the safest and best policy for gun owners is to refrain from doing business with any individuals, corporations, or businesses entities that prohibit firearms on their premises, and to refrain from carrying firearms on any posted government property. It is the opinion of this author that the best policy for individuals, corporations, and businesses is not to prohibit firearms on their premises. The only way to stop a bad guy with a gun is with a good guy with a gun. Criminals are going to ignore prohibitions on weapons; they’re criminals; ignoring rules and laws is what they do. Prohibiting law-abiding citizens from carrying weapons just makes your business and its patrons more vulnerable to armed criminals.

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Administrative Dissolution

Tennessee Senate Bill SB1871, as enacted, changes the way Administrative Dissolution works in Tennessee. The new law adds a statute of limitations on reinstatement, providing, in a new section, to Title 48, Chapter 24, Part 2 of the Code:

“A corporation that has been administratively dissolved by the expiration of its period of duration may reinstate within three (3) years of the expiration of the period of duration by:

(1) Amending its charter to extend its period of duration or set the period of duration to perpetual; and

(2) Filing an application for reinstatement following administrative dissolution pursuant to [T.C.A.] § 48-24-203.”

A three-year (3-year) limitation on reinstatement has also been enacted with respect to nonprofit corporations and limited liability companies (LLCs). SB1871 also includes changes to the way corporations and LLCs may reduce or eliminate certain dissolution events, includes changes to the list of events which can trigger administrative dissolution, and limits the power of members to terminate their membership under certain conditions.

One final, notable provision of this bill is that T.C.A. § 48-245-101(d) remains unscathed; its language and requirements remain the same–specifically that a company that has been administratively dissolved is required to be “wound up and terminated.” As mentioned in our article on “zombie companies,” this is not automatic, but must be effected by the members in an LLC or shareholders and officers of a corporation. If your company has been administratively dissolved, whether you’re still doing business or planning to close for good, you need to contact a lawyer!

There are some other changes to the way Administrative Dissolution works in Tennessee, but these are the big ones; you are encouraged to read the full text of the bill to get all the details, and you are even more strongly encouraged to discuss this bill with your business’s General Counsel; you may want to update your company’s Operating Agreement or its Charter & Bylaws.

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Consumer Protection / Confidentiality / Identity Theft

Tennessee Senate Bill SB1871, as enacted, redefines the time period within which a business must notify a consumer if the consumer’s personal information that was held by the business was obtained by an unauthorized person from immediate notification to no later than 45 days; includes employees of the business who use the information in an unlawful manner as unauthorized persons, thus triggering the notice requirements.

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Alcoholic Beverage Training for Hospitality Industry Professionals

Tennessee Senate Bill SB2012, as enacted, allows a student, who has completed at least 60 hours of coursework and is taking a required course for a bachelor’s degree designed to train industry professionals in the production of fermented or distilled food or beverage products, to taste alcoholic beverages as part of instruction in the required course, under certain circumstances.

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Unemployment Compensation / Seasonal Employment

Tennessee House Bill HB1552, as enacted, revises provisions governing seasonal employment; adds provisions regarding taxable wage base; revises other provisions. – Amends TCA Section 50-7-213; Section 50-7-306; Section 50-7-404 and Section 50-7-715.

Tennessee Senate Bill SB2481, as enacted, removes the random verification audit requirement; revises certain provisions governing disqualification for benefits and regaining eligibility after sickness, disability, or pregnancy.

Seasonal Employment

“Present law establishes requirements for an employer to qualify as a seasonal employer and establishes the benefits an employee of a seasonal employer will receive. These provisions do not apply to claims until July 1, 2016. This bill delays the implementation of the seasonal employment provisions until July 1, 2020, and makes certain revisions to the provisions.”1 If you are a seasonal employer, you should contact an attorney to discuss how these revisions affect your business.

Repayment of Unemployment Benefits

“Under present law, any person who has received unemployment benefits by knowingly misrepresenting, misstating, or failing to disclose any material fact, or by making a false statement or false representation without a good faith belief as to the correctness of the statement or representation, after a determination by the commissioner that such a violation has occurred, must repay the amount of benefits received. Present law provides for penalties in such situations, as follows:

(1) The commissioner will assess a penalty equal to 15 percent of the overpaid benefits, which monies are deposited into the unemployment compensation fund; and

(2) The commissioner will further assess a penalty equal to 7.5 percent of the overpaid benefits, which monies are used to defray the costs of deterring, detecting, or collecting overpayments.

This bill increase the penalty described above in (2). Under this bill, the commissioner will further assess a penalty equal to 15 percent for the first instance of overpaid benefits. The first instance means all consecutive claim weeks of unemployment benefits paid within a benefit year to any person when such benefits were received by knowingly misrepresenting, misstating, or failing to disclose any material fact. The commissioner will further assess a penalty equal to 35 percent for the second and each subsequent instance of overpaid benefits.” Id.

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Automotive Maintenance Industry / Environment & Conservation

Tennessee Senate Bill SB2544, as enacted, broadens the scope of the Used Oil Collection Act of 1993 to address the proper disposal of used antifreeze, transmission fluid, and power steering fluid. Click here for additional summary information.

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Workers Compensation

Tennessee Senate Bill SB1758, as enacted,  authorizes the bureau of workers’ compensation of the department of labor and workforce development to investigate complaints alleging certain disclosure and payment requirements related to rental and assignment of [Preferred Provider Organization] network rights; authorizes certain penalties. Click here for additional summary information.

Tennessee Senate Bill SB2582, as enacted, revises various workers’ compensation and drug-free workplace provisions; amends TCA Title 50, Chapter 6 and Title 50, Chapter 9. “This bill authorizes a workers’ compensation ombudsman to approve settlements in certain cases where the parties are not represented by an attorney and revises other various workers’ compensation and drug-free workplace provisions.” (Click here for source and extended Bill Summary.)

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Mandatory E-Verify Program Participation

Tennessee Senate Bill SB1965, as enacted, makes various changes to the Tennessee Lawful Employment Act, including requiring, beginning January 1, 2017, a private employer with 50 or more employees to enroll in the E-verify program; and amends TCA Title 36, Chapter 5, Part 11 and Title 50, Chapter 1, Part 7. Click here for additional summary information.

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Professions and Occupations

Tennessee Senate Bill SB2534, as enacted, revises various provisions regarding cemetery owners and companies, architects, insurers, shops licensed by the board of cosmetology and barber examiners, funeral directors, real estate firms, real estate brokers, affiliate brokers, time-share salespersons, and acquisition agents. Click here for additional summary information.

Tennessee Senate Bill SB2374, as enacted, revises various provisions governing licensure and certification for barbers and cosmetologists, including redefining “cosmetology” to include shampooing and natural hairstyling. Click here for additional summary information.

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Day Care Operators / Child Care Agencies

Tennessee Senate Bill SB2554, as enacted,  makes various changes to the disclosures, background checks, and training required for child care agencies, including requiring volunteers to disclose any criminal history and be subject to criminal history records checks.

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Wine Distribution / Wineries’ Self-Distribution Authorized

Tennessee House Bill HB1989, as enacted, permits the issuance of self-distribution permits to farm wine permit holders, subject to certain conditions. Click here for additional summary information.

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Health Clubs

Tennessee House Bill HB2037, as enacted, repeals registration requirement for certain health clubs; specifies that such clubs post a surety bond in the amount of $25,000 for each location conducting business in this state or certify their net worth of at least $10 million; removes the provision whereby a health club agreement is unenforceable against the buyer if the health club fails to obtain or fails to maintain a certificate of registration.

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Pawnbrokers

Tennessee House Bill HB2256, as enacted, enacts the “Pawnbroker Restitution Act”; clarifies that a pawnbroker is not required to relinquish an item to a claimant without a court order; revises other pawnbroker provisions.

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Nonprofit Organization Vehicles

Tennessee House Bill HB2411, as enacted, authorizes any nonprofit organization owning any vehicle that may be legally operated upon the streets or highways of this state with a regular vehicle registration to operate or move, through an authorized agent or employee, the vehicle upon any highway of the state without registering the vehicle; requires display of a special purpose plate issued to the owner. Click here for additional summary information.

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Dentists

Tennessee Senate Bill SB1214, as enacted, specifies that a person who authorizes the practice of teledentistry will be deemed to be practicing dentistry and subject to requirements governing dentistry; requires dentists who deliver services using teledentistry to establish protocols for the practice; enacts other provisions governing teledentistry. Click here for additional summary information.

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Physicians and Surgeons

Tennessee Senate Bill SB2443, as enacted, enacts the “Health Care Empowerment Act” (the “HCEA”), which authorizes “direct primary care membership agreements”, which are defined as written contractual agreements between a primary care provider and an individual patient, or the patient’s legal representative. The HCEA, as amended, requires physicians make certain important disclosures to patients, and provides that direct primary care membership agreements can include provisions in which:

“(1) The provider agrees to provide primary care services to the individual patient for an agreed fee over an agreed period of time;
(2) The direct primary care provider will not bill third parties on a fee-for-service basis;
(3) Any per-visit charges under the agreement will be less than the monthly equivalent of the periodic fee;
(4) The agreement describes the scope of primary service that is covered by the periodic fee;
(5) The agreement contains a statement that the agreement does not constitute health insurance;
(6) The agreement specifies the duration of the agreement, including automatic renewal periods; and
(7) The patient is not required to pay more than 12 months of the fee in advance.

This bill specifies that a direct primary care membership agreement is not insurance or the business of insurance and is therefore not subject to regulation by the department of commerce and insurance. This bill further specifies that a direct primary care membership agreement is not a discount medical plan and that a direct primary care provider or the agent of a direct primary care provider is not required to obtain a certification of authority or license to market, sell, or offer to sell a direct primary care membership agreement.

Under this bill, a direct primary care membership agreement must allow either party to terminate the agreement upon written notice to the other party; provided, that fees are not earned by the direct primary care provider until the month paid by the periodic fee has been completed; and provided, that upon termination of this agreement by the individual patient, all unearned fees are to be returned to the patient.”3

Click here for additional summary information.

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Economic and Community Development

Tennessee House Bill HB2570, as enacted, enacts the “Rural Economic Opportunity Act of 2016”; authorizes a job tax credit for qualified business enterprises located in tier 4 enhancement counties; specifies the minimum jobs criteria and requirements to qualify for the credit; establishes the propelling rural economic progress (P.R.E.P.) fund; establishes guidelines for making grants from the P.R.E.P. fund.

Tennessee Senate Bill SB0750, as enacted, creates the aeronautics economic development fund to be used by the department of transportation for program administration, marketing expenses, and program evaluation; authorizes the executive director of TWRA to use funds from the 1986 wetland acquisition fund to acquire the McCartt Tract and adjacent lands in Morgan County; authorizes certain fund expenditures.

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Taxes, Exemption, and Credits / Natural Gas

Tennessee House Bill HB0879, as enacted, exempts compressed natural gas from sales tax in the same manner that the present law exempts motor fuel and liquified gas from sales tax.

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Notes and Citations

1 Tennessee General Assembly (Ed.). (2016). Tennessee General Assembly » Legislation. Retrieved June 28, 2016, from http://wapp.capitol.tn.gov/apps/Billinfo/default.aspx?BillNumber=HB1552
2 Tennessee General Assembly (Ed.). (2016). Tennessee General Assembly » Legislation. Retrieved June 28, 2016, from http://wapp.capitol.tn.gov/apps/Billinfo/default.aspx?BillNumber=SB1736
3 Tennessee General Assembly (Ed.). (2016). Tennessee General Assembly » Legislation. Retrieved June 28, 2016, from http://wapp.capitol.tn.gov/apps/Billinfo/default.aspx?BillNumber=SB2443


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