Tennessee Senate Bill SB2300

Tennessee 2025-2026 Regular Session

• Introduced: 2/2/26

Caption

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

Summary

SB2300 would require private employers, unless covered by a collective bargaining agreement, to pay employees for any accrued but unused paid leave when the employee separates from service. The bill defines paid leave as annual leave or paid vacation leave that accrues over time, and it requires that the unused balance be paid out as wages at the employee’s final rate of pay in a lump sum within 30 days after separation. The bill also prohibits employer policies or contracts from causing forfeiture of accrued paid leave upon separation, while still allowing employers to cap the total amount of leave an employee may accrue before needing to use some of it to continue accruing. The measure applies prospectively to employment contracts executed, modified, or amended on or after the effective date. It excludes the state, local governments, and political subdivisions from the definition of employer, so it is aimed at private-sector employment arrangements rather than public employment.

Impact

SB2300 would change Tennessee employment law by creating a statutory right to payout of accrued vacation or annual leave for separating employees in covered private employment settings. It would limit employer discretion in drafting leave policies and employment contracts by barring forfeiture of accrued paid leave at separation, while preserving the ability to impose accrual caps. The bill would affect employers, employees, and payroll/HR practices, and would likely require updates to employee handbooks, contract language, and separation procedures.

Sentiment

No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available record. Based on the bill text alone, the measure appears employee-protective and straightforward, with a clear mandate for payout of earned leave and limited exceptions for collective bargaining and public employers. The absence of recorded legislative history makes it difficult to assess whether the bill was broadly supported or contested.

Contention

The main policy tension in SB2300 is between employee rights to receive compensation for earned leave and employer flexibility to design leave policies. Employers may object to the required payout of accrued leave and the prohibition on forfeiture, particularly if they currently use “use-it-or-lose-it” policies or rely on forfeiture rules to manage liabilities. Labor advocates and employees would likely support the bill because it protects earned compensation at separation. Another point of distinction is that the bill excludes government employers and defers to collective bargaining agreements, which may limit its reach and reduce conflict in unionized settings.