Small Tennessee Employers: Review Your Payroll Onboarding Before 2027

Small Tennessee Employers: Review Your Payroll Onboarding Before 2027

If your business has employees, this is a good time to review your payroll onboarding process.

Beginning January 1, 2027, Tennessee’s Lawful Employment Act will apply more broadly to private employers. The updated definition of “private employer” includes any person required by federal law and regulations to report remuneration paid to at least one employee. Tennessee’s General Assembly records identify this change as Public Chapter 622, with an effective date of January 1, 2027.

For small businesses, the practical takeaway is simple: make sure your hiring, payroll, and employee recordkeeping process is organized before someone is added to payroll.

A good onboarding process helps answer questions like:

• Has the employee completed the required hiring paperwork?
• Has the business confirmed who is responsible for employment verification?
• Are payroll details complete before the first paycheck is processed?
• Are employee records stored securely?
• Are payroll, bookkeeping, and management following the same checklist?
• Can the business quickly locate the documents it would need if questions came up later?

This is not something to panic over, but it is something worth preparing for before year-end.

As a bookkeeper, I often see how quickly payroll onboarding can become rushed, especially in small businesses where the owner is wearing several hats. A clean process protects the business, keeps records organized, and helps prevent avoidable payroll problems later.

Business owners should review official guidance from the Tennessee Department of Labor and Workforce Development and speak with a qualified HR or employment-law professional if they have questions about legal compliance.

The bookkeeping takeaway is this:

Do not wait until the first payroll run to find out that employee records are incomplete. Build the checklist now.