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Tennessee workers’ compensation law

Most Tennessee employers are required to carry workers’ compensation insurance. Workers’ comp ensures the availability of benefits to speed an injured worker's recovery and return to work.

Who needs workers’ comp insurance in Tennessee?

Tennessee mandates strict workers’ compensation insurance coverage for most employees. Every firm with five or more employees must provide workers’ comp insurance.

Family members, part-time workers, and corporate officers are included in determining employee count as long as they meet the state’s definition of employee.

Construction business or trades that have one or more employees must have workers’ comp. However, if a single employee is a sole proprietor, partner, corporate officer, or limited liability company (LLC) member of a construction firm, then that person can apply for an exemption. Coal mining firms with employees must also provide coverage.

Employers that don’t have to buy workers’ comp insurance due to their size can purchase it anyway. However, they must file the “Exempt Employers Notice of Acceptance of the Workers’ Compensation Act of Tennessee” (Form I-8) with the Tennessee Department of Labor & Workforce Development.

If an employer that opts in by filing Form I-8 decides to subsequently cancel its workers’ comp insurance, it must notify the state using the same form.

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Do small business owners have to provide workers’ comp insurance for themselves?

In most cases, small business owners who are their firm’s sole employee are excluded from workers’ comp coverage. This guideline applies to:

  • Sole proprietors
  • Partners
  • LLC members

All of the above may elect to be covered if they think it makes sense from a risk management and / or financial perspective. This requires filing a special form with the state.

However, once an owner’s firm meets the employee-number benchmarks listed earlier, then it must provide workers’ comp insurance for its workers.

How does the Tennessee workers’ comp system treat independent contractors?

Independent contractors are self-employed individuals, and do not qualify for workers’ comp coverage. As in many other states, Tennessee applies a complex process for determining whether someone is an independent contractor rather than an employee.

Here are some of the factors the state considers to qualify someone as an employee versus a contractor:

  • The employer has the right to control how the person conducts his or her work.
  • The employer can terminate the person.
  • The employer controls the method of payment.
  • The employer can select and hire others to assist the person with the work.
  • The employer provides the worker with tools and equipment.
  • The employer determines the person’s work schedule.
  • The person lacks the freedom or capability to offer services to other customers.

How does workers’ comp work in Tennessee?

Tennessee business owners can compare quotes and purchase a policy from private insurance companies. (Insureon offers this service with its online insurance marketplace.)

If you’re unable to purchase workers’ comp insurance through the voluntary market referenced above because of your firm’s age or high-risk status, you can purchase coverage from Tennessee’s assigned risk plan, which is managed by the National Council on Compensation Insurance (NCCI). This is the Tennessee workers’ comp provider of last resort.

Tennessee employers who qualify can also self-insure their workers’ compensation claims. This means they’ll pay for their own workers’ comp benefits rather than submit them to an insurance company.

To qualify for self-insurance, you must file an application with the Tennessee Department of Labor & Workforce Development.

What is the average cost of workers’ compensation insurance in Tennessee?

The estimated workers’ comp expense for Tennessee employers is $0.88 per $100 in covered payroll, according to the National Academy of Social Insurance [PDF].

What are the penalties for not having workers’ comp insurance in Tennessee?

The penalties for violating Tennessee’s workers’ compensation statute can be severe. They include:

A 25% penalty for not paying (or not paying in a timely fashion) the state’s mandated temporary disability benefits. The penalty goes to the worker involved, not to the state.

Up to $10,000 or more for failure to comply in a timely manner with a specialist’s or administrator’s designee’s order (for injuries before July 1, 2014). This penalty is capped at $5,000 for injuries that occurred on or after July 1, 2014.

A penalty for insurance companies or self-insured employers that don’t file claim forms on time with the state.

Workers’ compensation death benefits in Tennessee 

If one of your employees dies as a result of a job-related illness or injury, the person’s surviving dependents are entitled to receive death benefits. The insurance company or self-insuring employer pays for these benefits, which include wage replacement and burial expenses.

Wage replacement benefits depend on the circumstances of each case, including:

  • If the deceased employee had no dependents, the insurer will pay $20,000 to the person’s estate.
  • If the person leaves a surviving spouse, but no dependent child or children, the insurer will pay 50% of the person’s average weekly pay, not to exceed the maximum weekly benefit.
  • If the deceased worker leaves a surviving spouse and a dependent child or children, the insurer will pay 66.67% of the average weekly wage to the surviving spouse for the benefit of the worker’s family.

The burial-expense benefit depends on when the death occurred. If it happened on or after May 19, 2017, the insurer will pay a burial benefit of $10,000. If the death occurred before May 19, 2017, it will pay a benefit not to exceed $7,500.

Workers’ comp settlements in Tennessee

A workers’ compensation settlement is an agreement between the injured employee, employer, and insurer that terminates a workers’ compensation claim. This benefits both the employee and the employer.

The Tennessee Department of Labor & Workforce Development allows settlements of workers’ comp claims. However, state law requires a state workers’ compensation judge to review and approve the agreement (submitted on Form RSA).

In Tennessee, the workers’ comp settlement process is designed to ensure that employees receive the benefits to which they are entitled under state law and that they understand their rights.

Workers’ compensation statute of limitations in Tennessee

In Tennessee, employees must file a workers’ comp claim (Form C40B) within one year of the date of injury or illness.

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If you are ready to explore workers’ comp insurance options for your Tennessee business, start a free online application today to compare quotes from multiple carriers.

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