Tennessee small businesses that experienced the largest increases in the number of employees over the past five years are exempt from the requirement to ensure that their employees are not illegal aliens through the use of the federal government’s e-verification system.
At the federal level, E-Verify is a voluntary program.
At the state level, however, employers are required to use the E-verify program to confirm work authorization status, but only if they have 50 or more employees.
That’s a loophole Rep. Bruce Griffey (R-Paris) and Sen. John Stevens (R-Huntingdon) sought to fix through HB 0801 and SB 0902, respectively.
The proposed legislation would have made the application of the E-verify requirement more fair to all employers by reducing the threshold from 50 employees to just six. It would also serve to protect the disproportionately impacted poorest in the state who have to compete against illegal immigrants for lower-wage jobs.
Griffey’s bill was killed in its first stop last week by the House Banking and Consumer Affairs Subcommittee at the hands of five Republicans, The Tennessee Star reported.
As it turns out, the segment of small businesses in the state that is exempt from E-verify has been the fastest growing in terms of the number of employees over the past few years.
The U.S. Small Business Administration’s Office of Advocacy issues a small business profile on businesses employing fewer than 500 employees on an annual basis. The profiles include numerous pieces of data on small businesses in the state, which reflect statistics over previous years.
In SBA’s reports for 2016 to 2020, four out of five years the small businesses that had the largest gains in the number of employees were those with less than 50 employees.
Consistently over the five reports, about one million employees work for small businesses with less than 500 employees, representing more than 42 percent of Tennessee’s private workforce.
Also common to all five reports is that employers with fewer than 100 employees make up the largest share of small business employment.
In the 2016 report, of the 13,937 new jobs created by small business, 4,506 or 32 percent of those were in businesses with 20 to 49 employees.
In the 2017 report, of the 25,067 new jobs created by small businesses, 17,800 of those were in businesses with less than 250 employees.
In the 2018 report, of the 36,683 new jobs created by small businesses, 17,741 or 48 percent of those were in businesses with fewer than 20 employees.
In the 2019 report, of the 43,308 new jobs created by small businesses, 25,410 or nearly 59 percent of those were in businesses with fewer than 20 employees.
In the 2020 report, of the 40,374 new jobs created by small businesses, 24,370 or 60 percent of those were in businesses with fewer than 20 employees.
SBA statistics show that as of 2017 there are nearly 82,000 small businesses in Tennessee that have 1 to 19 employees.
The 50-employee threshold for the E-Verify requirement in state law does not align with SBA’s categorization of the two smallest businesses of 1 to 19 employees and 20 to 99 employees.
However, SBA’s 2020 report does show that there are hundreds of thousands of employees of businesses with 1 to 19 employees, all of whom have been excluded from the E-Verify requirement.
Laura Baigert is a senior reporter at The Tennessee Star.