SB2396 • 2026

Criminal Offenses

AN ACT to amend Tennessee Code Annotated, Title 29 and Title 39, relative to criminal offenses.

Crime Labor Taxes

Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor: Yarbro, Behn
Last action: 2026-02-05
Official status: Passed on Second Consideration, refer to Senate Judiciary Committee
Effective date: Not listed

Plain English Breakdown

The official source material does not provide specific details about the enforcement mechanism or procedures for determining restitution amounts.

Criminal Offenses for Unauthorized Employment

This bill makes it illegal for employers and managers to engage in systematic unauthorized employment of workers, with penalties including fines and imprisonment. It also increases the punishment for aggravated cases involving multiple violations or unsafe conditions.

What This Bill Does

Makes it a crime for officers, managers, or hiring agents to evade verification requirements or misclassify employees as independent contractors to avoid legal obligations.
Punishes general contractors who knowingly use subcontractors employing unauthorized workers on their projects.
Classifies systematic unauthorized employment as a Class E felony with penalties of up to six years in prison and fines up to $3,000.
Increases the penalty for aggravated systematic unauthorized employment involving multiple violations or unsafe conditions to a Class D felony, punishable by two to twelve years in prison and fines up to $5,000.

Who It Names or Affects

Employers, managers, and hiring agents who engage in systematic unauthorized employment practices.
General contractors who use subcontractors employing unauthorized workers.

Terms To Know

Unauthorized worker: A person who does not have legal permission to work in the United States.
Pattern of systematic evasion: Repeatedly failing to follow employment verification and reporting requirements, leading to unauthorized workers being employed.

Limits and Unknowns

The bill does not specify how it will be enforced or the exact procedures for determining restitution amounts.
It is unclear if there are any exemptions or exceptions for small businesses or specific industries.
The bill's impact on current labor practices and enforcement mechanisms remains to be seen.

Bill History

2026-02-05 Tennessee General Assembly
Passed on Second Consideration, refer to Senate Judiciary Committee
2026-02-05 Tennessee General Assembly
Assigned to s/c Banking & Consumer Affairs Subcommittee
2026-02-05 Tennessee General Assembly
P2C, ref. to Commerce Committee - Judiciary Committee
2026-02-04 Tennessee General Assembly
Intro., P1C.
2026-02-03 Tennessee General Assembly
Filed for introduction
2026-02-02 Tennessee General Assembly
Introduced, Passed on First Consideration
2026-02-02 Tennessee General Assembly
Filed for introduction

Official Summary Text

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.

Current Bill Text

Read the full stored bill text

HOUSE BILL 2524
By Behn

SENATE BILL 2396
By Yarbro
SB2396
011833
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 29
and Title 39, relative to criminal offenses.

WHEREAS, this act establishes criminal penalties for employers who:
(1) Facilitate labor trafficking of foreign workers;
(2) Exploit and profit from employing unauthorized workers through systematic
schemes;
(3) Systematically evade employment verification and reporting requirements,
resulting in lost tax revenues; and
(4) Undermine wage and labor standards for Tennessee workers; now,
therefore,
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 39-13-301, is amended by adding
the following as new subdivisions:
( ) "Employer" means a person, company, corporation, partnership, or business
entity that hires or employs one (1) or more persons in this state;
( ) "General contractor" means a person or entity that contracts for construction,
alteration, repair, or improvement of any structure or building and subcontracts any
portion of that work to another person or entity;
( ) "Pattern of systematic evasion of verification and reporting" means
repeatedly or systematically:
(A) Failing to complete or maintain employment eligibility verification
forms, such as an I-9, required by federal law;

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(B) Failing to examine identity and work authorization documents
required by federal law;
(C) Failing to report employee wages and withholdings to state and
federal authorities as required by law; or
(D) Maintaining inadequate or false employment records for three (3) or
more workers within any twenty-four-month period, where such pattern or
systematic evasion facilitates the employment of unauthorized workers;
( ) "Unauthorized worker" means a person who does not have legal
authorization to work in the United States under federal law;
SECTION 2. Tennessee Code Annotated, Title 39, Chapter 13, Part 3, is amended by
adding the following as new sections:
39-13-317. Systematic unauthorized employment.
(a) A person commits systematic unauthorized employment who is an officer,
manager, or hiring agent with authority to act on behalf of an employer and:
(1) Recklessly engages in a pattern of systematic evasion of verification
and reporting requirements;
(2) Misclassifies a worker as an independent contractor rather than an
employee with intent to evade employment verification requirements;
(3) 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; or
(4) Knowingly uses or contracts with an independent contractor or
subcontractor whose business is substantially reliant on unauthorized labor.

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(b) A violation of subsection (a) is a Class E felony. Notwithstanding § 40-35-
115, the sentencing court may order a person convicted of violations of subsection (a)
involving multiple victims to serve the sentences for each conviction consecutively.
(c) It is an affirmative defense to a violation of subsection (a), 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 terminated the subcontractor upon
discovering any violation.
(d)
(1) In addition to any other amount of loss identified or any other
punishment imposed, the court shall order restitution to the victim, unless
otherwise designated, in an amount equal to the greater of:
(A)
(i) The gross income or value of the benefit received by
the defendant as the result of the victim's labor or services; or
(ii) The value of the victim's labor as guaranteed under the
minimum wage and overtime provisions of the Fair Labor
Standards Act (FLSA) (29 U.S.C. § 201 et seq.), or the minimum
wage required in this state, whichever is higher;
(B) The value of unpaid benefits that were legally required;
(C) Unpaid taxes and unemployment contributions, which must
be paid to the appropriate government entity;
(D) Workers' compensation premiums evaded; and
(E) Damages to a competing business if proven at the
defendant's sentencing hearing.

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(2) Defendants are jointly and severally liable with their subcontractors or
independent contractors for all restitution amounts related to a shared project or
work.
(e)
(1) A person may be held individually liable for the debts, obligations, and
liabilities of the employer under this section.
(2) An officer or director of a corporation or other business entity may be
held personally criminally liable for the corporation's or other business entity's
violation of this section if the officer or director directed, authorized, or knowingly
permitted the violation.
(3) In addition to any other penalty authorized by law, a defendant that is
a corporation or other business entity must be subject to:
(A) An additional fine of no less than fifty thousand dollars
($50,000) and no more than five hundred thousand dollars ($500,000);
and
(B) 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.
(f) The successor business of a business that is sold, transferred, or reorganized
to avoid prosecution under this section may be subject to:
(1) Pending criminal charges;
(2) Restitution orders; and
(3) Licensure revocation.

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(g) An employer who discriminates against an employee in violation of title 4,
chapter 21, part 3, while claiming compliance with this section may face separate
criminal charges and enhanced civil penalties.
39-13-318. Aggravated systematic unauthorized employment.
(a) An employer commits aggravated systematic unauthorized employment if the
employer violates § 39-13-317(a) and:
(1) Commits a pattern of ten (10) or more knowing violations within a
period of twenty-four (24) months;
(2) Pays the workers a wage that is below the federal minimum wage or
denies legally required overtime pay;
(3) Creates or provides false documents to workers;
(4) Maintains unsafe or substandard working conditions for workers;
(5) Maintains substandard or overcrowded housing for workers;
(6) Retaliates against workers who report violations or exercise
workplace rights;
(7) Threatens workers with deportation, law enforcement contact, or
immigration consequences;
(8) Withholds wages, final pay, or earned benefits from workers;
(9) Systematically evades employment tax obligations, including payroll
withholding, workers' compensation, and unemployment insurance;
(10) Has a prior conviction for violating this section or another criminal
offense related to labor, employment, or tax law;
(11) Confiscates or controls workers' identification documents or
immigration papers;

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(12) Uses layers of subcontracting or misclassification schemes to
conceal unauthorized employment; or
(13) Acts as general contractor while knowingly utilizing multiple
subcontractors who employ unauthorized workers.
(b) A violation of subsection (a) is a Class D felony. Notwithstanding § 40-35-
115, the sentencing court may order a person convicted of violations of subsection (a)
involving multiple victims to serve the sentences for each conviction consecutively.
(c)
(1) In addition to any other amount of loss identified or any other
punishment imposed, the court shall order restitution to the victim, unless
otherwise designated, in an amount equal to the greater of:
(A)
(i) The gross income or value of the benefit received by
the defendant as the result of the victim's labor or services; or
(ii) The value of the victim's labor as guaranteed under the
minimum wage and overtime provisions of the Fair Labor
Standards Act (FLSA) (29 U.S.C. § 201 et seq.), or the minimum
wage required in this state, whichever is higher;
(B) The value of unpaid benefits that were legally required;
(C) Unpaid taxes and unemployment contributions to the
appropriate government entity;
(D) Workers' compensation premiums evaded; and
(E) Damages to a competing business if proven at the
defendant's sentencing hearing.

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(2) Defendants are jointly and severally liable with their subcontractors or
independent contractors for all restitution amounts related to a shared project or
work.
(d)
(1) A person may be held individually liable for the debts, obligations, and
liabilities of the employer under this section.
(2) An officer or director of a corporation or other business entity may be
held personally criminally liable for the corporation's or other business entity's
violation of this section if the officer or director directed, authorized, or knowingly
permitted the violation.
(3) In addition to any other penalty authorized by law, a defendant that is
a corporation or other business entity must be subject to:
(A) An additional fine of no less than fifty thousand dollars
($50,000) and no more than five hundred thousand dollars ($500,000);
and
(B) Mandatory compliance monitoring of future employment
practices as a condition of the defendant's sentence. The court may
appoint an independent compliance monitor at the defendant's expense.
(e) The successor business of a business that is sold, transferred, or
reorganized to avoid prosecution under this section may be subject to:
(1) Pending criminal charges;
(2) Restitution orders; and
(3) Licensure revocation.

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(f) An employer who discriminates against an employee in violation of title 4,
chapter 21, part 3, while claiming compliance with this section may face separate
criminal charges and enhanced civil penalties.
39-13-319. Revocation of professional or business license – Prohibition on
contracting with the state.
In addition to the criminal sentence authorized, a person or entity that is
convicted of violating § 39-13-308, § 39-13-317, or § 39-17-318 is subject to the
following:
(1) Revocation of any professional or business license. Upon conviction,
the clerk of court must 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 shall, upon receipt of
the conviction, revoke the person's or entity's professional or business license
for:
(A) One (1) year for a violation of § 39-13-317;
(B) Three (3) years for a violation of § 39-13-318; or
(C) A permanent revocation for a violation of § 39-13-308; and
(2) A prohibition on contracting with the state for:
(A) Five (5) years for a first violation of § 39-13-317;
(B) Ten (10) years for a second violation of § 39-13-317;
(C) A permanent prohibition for a third or subsequent violation of
§ 39-13-317;
(D) Ten (10) years for a violation of § 39-13-318; or
(E) A permanent prohibition for a violation of § 39-13-308.

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SECTION 3. Tennessee Code Annotated, Section 39-13-308, is amended by deleting
subsections (b) and (c) and substituting:
(b)
(1) Trafficking for forced labor or services is a Class C felony.
(2) Trafficking for forced labor or services is a Class A felony if the victim
was more than twelve (12) years of age but less than eighteen (18) years of age.
(3) Notwithstanding § 40-35-115, the sentencing court may order a
person convicted of trafficking for forced labor or services involving multiple
victims to serve the sentences for each conviction consecutively.
(c)
(1) In addition to any other amount of loss identified or any other
punishment imposed, the court shall order restitution to the victim, unless
otherwise designated, in an amount equal to the greater of:
(A)
(i) The gross income or value of the benefit received by
the defendant as the result of the victim's labor or services; or
(ii) The value of the victim's labor as guaranteed under the
minimum wage and overtime provisions of the Fair Labor
Standards Act (FLSA) (29 U.S.C. § 201 et seq.), or the minimum
wage required in this state, whichever is higher;
(B) The value of unpaid benefits that were legally required;
(C) Unpaid taxes and unemployment contributions to the
appropriate government entity;
(D) Workers' compensation premiums evaded; and

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(E) Damages to a competing business if proven at the
defendant's sentencing hearing.
(2) Defendants are jointly and severally liable with their subcontractors or
independent contractors for all restitution amounts related to the project or work.
(d)
(1) A person may be held individually liable for the debts, obligations, and
liabilities of the employer under this section.
(2) An officer or director of a corporation or other business entity may be
held personally criminally liable for the corporation's or other business entity's
violation of this section if the officer or director directed, authorized, or knowingly
permitted the violation.
(3) In addition to any other penalty authorized by law, a defendant that is
a corporation or other business entity must be subject to:
(A) An additional fine of no less than fifty thousand dollars
($50,000) and no more than five hundred thousand dollars ($500,000);
and
(B) 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.
(e) The successor business of a business that is sold, transferred, or
reorganized to avoid prosecution under this section may be subject to:
(1) Pending criminal charges;
(2) Restitution orders; and
(3) Licensure revocation.

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(f) An employer who discriminates against an employee in violation of title 4,
chapter 21, part 3, while claiming compliance with this section may face separate
criminal charges and enhanced civil penalties.
SECTION 4. Tennessee Code Annotated, Title 39, Chapter 13, Part 3, is amended by
adding the following as a new section:
39-13-320. Civil action for unfair competition.
(a) A business may file a claim for unfair competition against a competitor
business if the competitor business:
(1) Has been convicted of a violation of § 39-13-308, § 39-13-317, or §
39-13-318; or
(2) Is proven by preponderance of the evidence to have violated § 39-13-
308, § 39-13-317, or § 39-13-318.
(b) In order to bring a claim under this section, the plaintiff must:
(1) Be in the same industry and geographic market as the competitor
business; and
(2) Demonstrate competitive harm, including, but not limited to, lost
contracts, price disadvantages, or market share loss.
(c) A plaintiff may recover:
(1) Injunctive relief requiring the competitor business to cease employing
unauthorized workers;
(2) Actual damages, including, but not limited to, lost profits, lost
contracts, and price differential damages;
(3) Disgorgement of profits attributable to unauthorized labor;
(4) If the plaintiff can prove that the defendant knowingly violated the
criminal statute, treble damages; and

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(5) Attorney's fees and reasonable costs.
(d) A criminal conviction for a violation of § 39-13-308, § 39-13-317, or § 39-13-
318 is prima facie evidence of unfair competition.
(e) An action under this section must be brought no more than three (3) years
from the date of discovering the unfair competition; provided, however, that a claim shall
not be brought more than five (5) years from the date of the violation.
SECTION 5. This act does not authorize:
(1) Discrimination based on national origin, race, ethnicity, or accent;
(2) Demanding more or different documents based on appearance or name; or
(3) Selective enforcement based on protected characteristics.
SECTION 6.
(a) If any provision of this act or its application to any person or circumstance is
held invalid, then the invalidity does not affect other provisions or applications of the act
that can be given effect without the invalid provision or application, and to that end, the
provisions of this act are severable.
(b) This act is independently enforceable under state criminal law authority and
does not require federal immigration enforcement cooperation, investigation, or
prosecution.
(c) This act exercises Tennessee's concurrent authority to criminalize conduct
that violates both state interests and federal law.
SECTION 7. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
SECTION 8. This act takes effect January 1, 2027, the public welfare requiring it.