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Original Author: Stokes, Richard
Date of Material: 04/02/2012

Personnel--Compensation--Laws and regulations

Compensation Policy Required by Law

Reviewed Date: 04/23/2021
MTAS was asked whether cities are required by law to have a compensation policy.

From: Stokes, Richard L
Sent: Monday, April 02, 2012 3:22 PM
Subject: RE: Compensation policy

The requirement to have a compensation policy is embedded in T.C.A. 6-54-123. It provides that the policy may include ... "benefits". Pay and compensation is considered a benefit. The law specifically provides the following:

6-54-123. Personnel policies.

On or before July 1, 1998, any municipality, incorporated before June 13, 1997 that has not adopted a personnel policy by ordinance, resolution, or otherwise, shall adopt such a policy that applies fairly, impartially, and uniformly, to the extent practicable, to each department of the municipal government. The policy may include, but not be limited to, hiring procedures, benefits, personnel rules and regulations, fair and reasonable complaint conferences and hearing procedures for employees dismissed, demoted, or suspended; procedures for compliance with federal laws such as, but not limited to, the Fair Labor Standards Act, compiled in 29 U.S.C. § 201 et seq., and the Americans with Disabilities Act, compiled in 42 U.S.C. § 12101 et seq.; drug and alcohol testing policy; and a sexual harassment policy. The policy may not grant a property right or contract right to the job to any employee. The municipality may work with the University of Tennessee Municipal Technical Advisory Service, in cooperation with the Tennessee Municipal League, in developing its policy. A copy of the resolution or ordinance adopting the policy, or its caption, shall be published in a newspaper of general circulation in the municipality before final adoption of the policy. A copy of the personnel policy as required by this section shall be kept in the office of the city recorder or clerk and made available to an employee on request. Any municipality incorporated after June 13, 1997 shall have two (2) years after incorporation to adopt and implement a personnel policy pursuant to this section.

I hope this information is helpful. Feel free to contact me if you have questions or I can be of any further assistance.

Richard L. Stokes, IPMA-CP, PHR
Office Manager/Human Resources Consultant
Executive Director - TN Chapter IPMA-HR
The University of Tennessee
Municipal Technical Advisory Service
226 Capitol Blvd. Bldg., Suite 606
Nashville, TN 37219
615/532-6827 (office)
615/532-4963 (fax)

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