HB 2524

This bill criminalizes systematic unauthorized employment, which is when an officer, manager, or hiring agent with authority to act on behalf of an employer engages in any of the following conduct:  Recklessly engages in a pattern of systematic evasion of verification and reporting requirements.  Misclassifies a worker as an independent contractor rather than an employee with intent to evade employment verification requirements.  As a general contractor, employs a subcontractor, knowing that the subcontractor is employing unauthorized workers on the general contractor's project or in reckless disregard of obvious evidence of such employment.  Knowingly uses or contracts with an independent contractor or subcontractor whose business is substantially reliant on unauthorized labor. This bill provides that such offense is classified as a Class E felony , punishable by a term of imprisonment of no less than one year nor more than six years , and a potential fine not to exceed $3,000. The sentencing court may order a person with convictions involving multiple victims to serve the sentences for each conviction consecutively. This bill provides that i t is an affirmative defense, which must be proven by a preponderance of the evidence, that a general contractor required subcontractor compliance with employment verification laws in the subcontract, verified the subcontractor's compliance systems, and te rminated the subcontractor upon discovering any violation. AGGRAVATED SYSTEMATIC UNAUTHORIZED EMPLOYMENT This bill provides that a n employer commits aggravated systematic unauthorized employment if the employer violates systematic unauthorized employment and engages in any of the following conduct:  Commits a pattern of 10 or more knowing violations within a period of 24 months.  Pays the workers a wage that is below the federal minimum wage or denies legally required overtime pay.  Creates or provides false documents to workers.  Maintains unsafe or substandard working conditions for workers.  Maintains substandard or overcrowded housing for workers.  Retaliates against workers who report violations or exercise workplace rights.  Threatens workers with deportation, law enforcement contact, or immigration consequences.  Withholds wages, final pay, or earned benefits from workers.  Systematically evades employment tax obligations, including payroll withholding, workers' compensation, and unemployment insurance.  Has a prior conviction for violating this bill or another criminal offense related to labor, employment, or tax law.  Confiscates or controls workers' identification documents or immigration papers.  Uses layers of subcontracting or misclassification schemes to conceal unauthorized employment.  Acts as general contractor while knowingly utilizing multiple subcontractors who employ unauthorized workers. This bill classifies aggravated systematic unauthorized employment as a Class D felony, punishable by a term of imprisonment of no less than two years nor more than 12 years , and a potential fine not to exceed $5,000. The sentencing court may order a person with convictions involving multiple victims to serve the sentences for each conviction consecutively. TRAFFICKING FOR FORCED LABOR OR SERVICES Present law criminalizes trafficking for forced labor or services, which is when a person knowingly engages in either of the following conduct:  Recruits, entices, harbors, transports, provides, or obtains by any means, or attempts to recruit, entice, harbor, transport, provide, or obtain by any means, another person, intending or knowing that the person will be subjected to involuntary servitude.  Benefits, financially or by receiving anything of value, from participation in a venture that has engaged in an act described as involuntary labor servitude in present law. Present law classifies such offense as a Class C felony, punishable by a term of imprisonment of no less than three years nor more than 15 years , and a potential fine not to exceed $10,000. However, if the victim was older than 12 but less than 18, then the offense is raised to a Class A felony, punishable by a term of imprisonmen t of n o less than 15 nor more than 60 years , and a potential fine not to exceed $50,000. I n addition to any other amount of loss identified or any other punishment imposed, the court must order restitution to the victim or victims in an amount equal to the greater of either:  The gross income or value of the benefit received by the defendant as the result of the victim's labor or services .  The value of the victim's labor as guaranteed under the minimum wage and overtime provisions of federal law, or the minimum wage required in this state, whichever is higher. This bill authorizes the sentencing court to order a person convicted of trafficking for forced labor or services involving multiple victim s to serve the sentences for each conviction consecutively. CRIMINAL LIABILITY In addition to any other amount of loss identified or any other punishment imposed for the offenses described above , this bill requires the court to order restitution to the victim, unless otherwise designated, in an amount equal to the greater of:  The gross income or value of the benefit received by the defendant as the result of the victim's labor or services, or the value of the victim's labor as guaranteed under the minimum wage and overtime provisions of federal law, or the minimum wage required in this state, whichever is higher.  The value of unpaid benefits that were legally required.  Unpaid taxes and unemployment contributions, which must be paid to the appropriate government entity.  Workers' compensation premiums evaded.  Damages to a competing business if proven at the defendant's sentencing hearing. This bill provides that d efendants are jointly and severally liable with their subcontractors or independent contractors for all restitution amounts related to a shared project or work. Business Criminal Liability This bill authorizes a person to be held individually liable for the debts, obligations, and liabilities of the employer. An officer or director of a corporation or other business entity may also be held personally criminally liable for the corporation' s or other business entity's violation if the officer or director directed, authorized, or knowingly permitted the violation. In addition to any other penalty authorized by law, a defendant that is a corporation or other business entity must be subject t o:  An additional fine of no less than $50,000 and no more than $500,000.  Mandatory compliance monitoring of future employment practices as a condition of the defendant's probation. The court may appoint an independent compliance monitor at the defendant's expense. Further, this bill authorizes t he successor business of a business that is sold, transferred, or reorganized to avoid prosecution to be subject to pending criminal charges, restitution orders, and licensure revocation. This bill also authorizes a n employer who discriminates against an employee in violation of human rights law, while claiming compliance with this bill to face separate criminal charges and enhanced civil penalties. Revocation of Licensure – Prohibition on Contracting with the State In addition to the criminal sentence s authorized, this bill subjects a person or entity that is convicted of violating the offenses described above to revocation of professional or business licensure and a prohibition on contracting with the state. Upon conviction, this bill requires the clerk of court to forward a certified copy of the conviction to any state or local government agency under which the person or entity has a professional or business license. The state or local government agency, upon receipt of the conviction, must revoke the person's or entity's professional or business license for one of the following periods:  One year for a violation of systematic unauthorized employment.  Three years for a violation of aggravated systematic unauthorized employment.  A permanent revocation for a violation of trafficking for forced labor or services. Such convictions may also results in a prohibition on contracting with the state for any of the following periods:  Five years for a first violation of systematic unauthorized employment.  10 years for a second violation of systematic unauthorized employment.  A permanent prohibition for a third or subsequent violation of systematic unauthorized employment.  10 years for a violation of aggravated systematic unauthorized employment  A permanent prohibition for a violation of trafficking for forced labor or services . CIVIL ACTION FOR UNFAIR COMPETITION This bill authorize s a business to file a claim for unfair competition against a competitor business if the competitor business either:  Has been convicted of a violation for a criminal offense described above.  Is proven by preponderance of the evidence to have violated the offenses described above. In order to bring a claim, this bill requires the plaintiff to be in the same industry and geographic market as the competitor business, and demonstrate competitive harm, including lost contracts, price disadvantages, or market share loss. A plaintiff may recover any of the following:  Injunctive relief requiring the competitor business to cease employing unauthorized workers.  Actual damages, including lost profits, lost contracts, and price differential damages.  Disgorgement of profits attributable to unauthorized labor.  If the plaintiff can prove that the defendant knowingly violated the criminal statute, treble damages.  Attorney's fees and reasonable costs. This bill provides that a criminal conviction for a violation of the offenses described above is prima facie evidence of unfair competition. An action must be brought no more than three years from the date of discovering the unfair competition, however, a claim must not be brought more than five years from the date of the violation. APPLICABILITY This bill does not authorize any of the following:  Discrimination based on national origin, race, ethnicity, or accent.  Demanding more or different documents based on appearance or name.  Selective enforcement based on protected characteristics. This bill is independently enforceable under state criminal law authority and does not require federal immigration enforcement cooperation, investigation, or prosecution. This bill also exercises Tennessee's concurrent authority to criminalize conduct t hat violates both state interests and federal law.