E-Verify requirements in Tennessee: the 35-employee line and the document alternative

As of September 2026, Tennessee requires employers with 35 or more full-time-equivalent employees to verify new hires through E-Verify, under the Tennessee Lawful Employment Act, Tenn. Code section 50-1-703. Employers below that threshold are not exempt from verifying work authorization altogether; they choose between using E-Verify voluntarily or keeping copies of specific identity and work-authorization documents the statute lists. Tennessee also layered a new requirement onto its own cities starting July 1, 2026, which is worth flagging for any recruiter working with a Tennessee municipality this year.

Who is covered

Full-time-equivalent counting matters here: a business with 50 part-time employees working half-time schedules is not automatically at 50 FTEs for this statute. An employer close to the line should calculate FTEs the way the statute defines the term rather than counting heads, since the two numbers can diverge significantly for an employer that relies on part-time staff.

What Tennessee employers must do, and by when

1. Calculate FTE count against the 35-employee threshold using the statute's definition, not a simple headcount.
2. If at or above 35 FTEs, register with E-Verify if not already enrolled, complete Form I-9 for each new hire, and create the E-Verify case once the I-9 is complete.
3. If below 35 FTEs, choose either E-Verify or the document alternative for each new hire, and apply that choice consistently rather than switching hire to hire without a documented reason.
4. If using the document alternative, request and keep a copy of one of the listed documents (generally a Tennessee driver's license or photo ID, or an equivalent such as a US passport or permanent resident card) establishing the employee's identity and work authorization.
5. Tennessee cities hiring their own employees must complete E-Verify before extending a hire starting July 1, 2026, a separate requirement from the private-employer threshold above.
6. Respond to a complaint promptly if one is filed with the Department of Labor and Workforce Development, since an unresolved notice and initial order becomes a final order, not subject to further review, after 45 days.

Records to keep

An employer using E-Verify keeps the case results as its verification record, following the standard federal I-9 retention period as a baseline. An employer under the 35-FTE threshold that chooses the document alternative keeps a copy of the specific document relied on for each employee, which is a broader retention duty than simply noting that a document was reviewed, the way a standard Form I-9 review typically works. Keep whichever record applies with the employee's personnel file, and be consistent about which option (E-Verify or documents) was used for which employee, since an inspector reviewing a sample of hires will expect that choice to be traceable.

Penalties

The Tennessee Department of Labor and Workforce Development enforces the Act through a notice-and-order process rather than an automatic fine. If the commissioner issues a final order finding a violation, civil penalties apply on an escalating, per-violation basis:

• Base penalty: $500 for a first violation, $1,000 for a second violation, $2,500 for a third or later violation.
• Per-employee penalty, added on top: $500 for each employee or nonemployee not properly verified on a first violation, $1,000 on a second, $2,500 on a third or later.
• Cure period: an employer that does not remedy the violation within 45 days of the notice and initial order has that notice become a final order automatically, closing off further review.
• Stacking: the statute specifies these penalties are not mutually exclusive and can be imposed together with other applicable penalties under separate law.

Because the per-employee penalty stacks on top of the base penalty, a single audit that finds several unverified employees at once can produce a materially larger total than the base figures alone suggest, even on what is technically still a first violation.

A worked example: a 32-FTE employer that keeps growing

This is an invented example to show how the threshold decision changes over time, not a real company. A Nashville call center runs 32 FTEs in early 2026 and has been using the document alternative for every hire, keeping a copy of each employee's driver's license on file. In March, the center adds a shift and crosses 35 FTEs.

From that point forward, new hires need to go through E-Verify rather than the document alternative; the center cannot keep using the document track simply because it started the year under the threshold. The 32 employees hired before the center crossed the line do not need to be retroactively run through E-Verify, since the statute's obligations attach at the time of hire based on the employer's status then, the same logic that applies in Florida and North Carolina's own threshold rules. If the center later drops back under 35 FTEs after a slow season, it can return to the document alternative for hires made while it is back under the threshold, but should recheck its FTE count at each new hire rather than assuming last quarter's status still applies.

How this sits on top of Form I-9

For employers at or above the 35-FTE threshold, E-Verify runs off the data already entered on Form I-9 and cannot be used before the I-9 is complete; Tennessee's statute adds the E-Verify duty on top of the federal I-9 process rather than replacing it. For an employer below the threshold using the document alternative instead, the federal I-9 is still required independently; the document Tennessee's statute asks the employer to copy and keep is generally the same kind of document already reviewed for Section 2 of the I-9, but the Tennessee statute requires retaining an actual copy, which federal I-9 rules do not always require on their own.

What a staffing agency placing workers into Tennessee must do

A staffing or recruiting agency is the employer of its own placed workers for purposes of this statute, so the agency's own FTE count, not the client's headcount, decides which track applies to the agency's Tennessee hires. A national staffing firm with well over 35 FTEs company-wide is covered by the E-Verify requirement for its Tennessee placements even if the specific Tennessee office or team is small, because the statute's threshold is not written as a Tennessee-only headcount the way North Carolina's is. A smaller, Tennessee-only agency under 35 FTEs can use the document alternative, provided it applies that choice consistently and keeps the required document copies for every worker it places. Either way, the client's own size and choice of verification method does not substitute for the agency's; the agency verifies its own hires under its own FTE count.

A compliance checklist for Tennessee employers

1. Calculate full-time-equivalent headcount using the statute's definition, not a simple body count.
2. At or above 35 FTEs, register with E-Verify and run every new hire through it once the I-9 is complete.
3. Below 35 FTEs, pick E-Verify or the document alternative and apply it consistently across new hires.
4. Keep copies of whichever documents the alternative track relies on, not just notes that they were reviewed.
5. If a notice and initial order arrives, respond within 45 days to avoid it becoming final automatically.
6. If placing workers with a Tennessee city, confirm the city's own E-Verify hiring requirement, effective July 1, 2026, separately from the private-employer threshold.
7. If using a staffing agency for Tennessee roles, confirm the agency's own FTE count and verification method, rather than assuming it mirrors the client's.
8. Recheck FTE count at each new hire rather than relying on a count taken earlier in the year, since crossing the 35-FTE line changes which track applies going forward.

For the paperwork sequence around a new hire more broadly, see the contractor onboarding checklist. For how Tennessee compares with the other states that mandate E-Verify, see E-Verify requirements by state.