Tennessee House Bill HB2004

Tennessee 2025-2026 Regular Session

• Introduced: 1/22/26
• Refer: 2/4/26

Caption

AN ACT to amend Tennessee Code Annotated, Title 8 and Title 50, Chapter 2, relative to employment.

Summary

HB2004 would require employers that offer accrued paid leave, such as annual leave or paid vacation leave, to pay employees for any unused accrued leave when the employee separates from service, unless a collective bargaining agreement provides otherwise. The payout must be made as wages at the employee’s final rate of compensation in a lump sum within 30 days after separation. The bill also prohibits employment contracts or employer policies from causing forfeiture of accrued paid leave upon separation. At the same time, it allows employers to cap the total amount of leave an employee may accrue before needing to use some leave in order to continue accruing more. The bill excludes the state, local governments, and political subdivisions from the definition of employer, so it applies to private-sector employers and other non-governmental covered employers.

Impact

HB2004 would amend Tennessee Code Annotated Title 50, Chapter 2, Part 1 by creating a new rule governing payout of accrued paid leave at separation from employment. It would change the legal treatment of vacation and annual leave from a benefit that may be forfeited under some employer policies to one that must be compensated as earned wages when an employee leaves, subject to collective bargaining agreements and the bill’s limited exceptions. The measure would affect private employers, employment contracts, and workplace leave policies, while expressly excluding state and local public employers.

Sentiment

With no committee transcripts or recorded votes available, the bill’s sentiment can only be inferred from its text and sponsorship. The measure appears employee-protective, aimed at ensuring workers receive compensation for earned leave rather than losing it upon separation. Its introduction as a straightforward employment-rights bill suggests a policy focus on wage fairness and predictability rather than broad controversy in the available record.

Contention

The main point of contention is likely the requirement that employers pay out unused accrued leave at separation, which could increase labor costs and limit employer flexibility in designing leave policies. Employers may also object to the restriction on forfeiture provisions in employment contracts or handbooks. On the other side, employees and worker advocates would likely support the bill because it protects earned benefits and prevents loss of compensation. The bill’s exception for collective bargaining agreements and its allowance for accrual caps appear to balance those competing interests.