Legislation Seen Spurring Tennessee Job Growth
Published Apr 07, 2004
The Tennessee General Assembly ended this year’s legislative session with some favorable building blocks for Tennessee’s business climate.
The state now has meaningful workers’ compensation reform, improvements in the jobs tax credit and the resurrection of a program designed to position communities for greater economic development success – the Tennessee Main Street Program.
Honing in on the common focus of job growth in Tennessee, Gov. Phil Bredesen took on a very controversial issue with workers’ comp. But by using factual evidence in presenting his case, he was able to convince the legislature of the need for reform in the state’s workers’ compensation laws.
“This landmark legislation passed with overwhelming bipartisan support,” Bredesen says. “The reform package is designed to position Tennessee to be more competitive with neighboring states on workers’ comp costs to employers, while ensuring that Tennessee employees receive fair coverage and compensation for on-the-job injuries.”
The reform saves millions of dollars a year in the system, including a considerable amount through reduced legal fees. It also sends a strong message to expanding companies that Tennessee is “open for business,” which translates into more jobs for Tennesseans, Bredesen says.
Prior to passage of this reform, Tennessee had significantly higher workers’ comp costs to employers when compared to other states in the region – in part because Tennessee law allowed for an employee who returns to work at the same wage to be compensated for injuries resulting in permanent partial disability at a rate of up to 2 1/2 times the medical impairment rating. The new reform lowers the multiplier to 1 1/2.
At the same time, Tennessee law did not require mandatory mediation, which meant workers’ comp claims went directly to court – resulting in higher awards. Under the reform, the state will fund a new mediation system that will require an employee to participate with the employer in an impartial benefit-review conference before going to court to seek a judgment.
Tennessee was also one of only nine states in the nation without a medical fee schedule to control medical costs. The new reform requires the state Department of Labor and Workforce Development to develop a medical fee schedule to go into effect July 1, 2005.
Additionally, in the event an employer and employee disagree over the medical impairment rating, the reform grants the right to either party to request a review by an independent medical examiner.
Another important economic development improvement was to the jobs tax credit. The key improvement adjusts the definition of jobs that qualify for this tax credit, extending it to nontraditional manufacturing sectors such as electronics refurbishing and technology development. Additionally, it raises the credit per job – bringing it in line with the Jobs Skills Act – and raises the credit per job to $4,500 per job in counties with unique economic challenges and opportunities, to allow a quicker reaction to sudden changes like plant closings.
“This new law will have a profound impact on our ability to recruit industry and encourage expansion,” says Matt Kisber, commissioner of the Tennessee Department of Economic and Community Development.
Thanks to the changes in the jobs tax credit, along with a host of other Tennessee tax-based incentives – including franchise tax, excise tax and headquarters tax credit programs – Tennessee, along with the partnerships and resources of local governments, is able to offer attractive packages to businesses looking to relocate or expand.
Story by K. Dawn Rutledge Jones
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