The Senate Judiciary Committee has just voted to reject a bill that would have allowed corporations and other employers to escape responsibility for punitive damages based on the reckless conduct of their employees.
SB2637 by Republican Senator Brian Kelsey (House version by Republican Rep. Vance Dennis), Tennessee would have held employers responsible for punitive damages only if (a) the reckless act was committed by someone employed in a management capacity; (b) the employer recklessly hired, retained, supervised or trained the reckless employee; or (c) the employer authorized, ratified or approved the reckless act or omission with knowledge or conscious disregard for the loss or injury.
The Bill defined "someone employed in a management capacity" as a management-level employee with the stature and authority to set policy and exercise control, discretion, and independent judgment over a significant scope of the employer’s business and where the alleged act or omission warranting punitive damages by such management-level employee was directly within the scope of such authority.
The legislation had passed the House Judiciary Committee.
The legislation would have virtually eliminated the collectability of punitive damage awards in cases involving careless truck drivers, nursing home employees, etc. Although punitive damage awards are very rare, the threat the punitive damages (even though the 2011 law places severe limits on the amount of those damages) encourages corporations and other employers to act responsibly.
The defeat of this Bill is a major victory for Tennessee consumers.