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Most employers in Tennessee need to have a workers’ compensation policy, but keeping track of all the requirements can be a little tricky. In this guide, we’ll cover the basics of who should receive coverage, what exceptions exist, and how businesses can obtain a policy.
Why should employers in Tennessee take a look at workers’ compensation?
When a company carries a workers’ compensation policy (also known as workman’s comp), there can be benefits that both the employer and employee experience. For example, should a worker experience an injury or develop an occupational disease while on the job, coverage is likely to provide partial wage replacement, some medical benefits, and partial disability benefits (either temporary or total) should they need to miss work.
In addition, employers that have a workers’ compensation policy generally shield themselves from potential legal liability should an employee experience a work-related injury or occupational illness while on the job.
Now that we better understand how coverage can benefit both companies and their workers, let’s find out who should carry workers’ compensation in Tennessee.
Employers who must have workers’ compensation insurance
Every employer in the state of Tennessee that has five (5) or more full- or part-time employees must secure workers’ compensation insurance coverage for their employees. This rule includes family members who are employees, part-time employees, and also corporate officers — even if those corporate officers decline coverage.
Note: Generally, an employee is someone who receives instructions on the tasks they need to complete, is provided equipment to complete work, and does not have a number of clients. Learn more in our guide to employee classification.
There are times when employers that have less than five employers must carry a policy.
- All employers in the construction industry (construction service providers) must have a workers’ compensation policy.
- Employers in the coal mining industry that have one (1) or more employees are required to have workers’ compensation coverage, unless they are specifically exempted.
We should point out: If an employer, that is not in the construction or the coal mining industry, experiences a staff reduction and their employee count drops below below five, the employer may elect to drop its workers’ compensation coverage. To drop the coverage, the employer must file a Notice of Withdrawal from Coverage of the Tennessee Workers’ Compensation Law (Form I-3) with the Tennessee Bureau of Workers’ Compensation.
The employer will be exempt from the coverage requirements and will not be required to provide workers’ compensation coverage while its workforce remains below five employees only after the form has been accepted by the Bureau.
Are there any workers’ compensation exemptions in Tennessee?
There can be some exceptions to those who have to have workers’ comp coverage.
- State and local governments and those employing farm laborers or domestic help are exempt from the coverage requirements but may elect to purchase workers’ compensation coverage anyway.
- Sole Proprietors, Partners, and Members of LLC’s are excluded from the count of employees that determines whether or not an employer is covered by the Tennessee Workers’ Compensation Act.
- Corporate officers are able to exempt themselves from a workers’ compensation policy, but are NOT excluded from the count of employees unless they are being compensated.
If an employer isn’t required to have worker’s compensation insurance and an employee gets hurt at work, the injured worker is not entitled workers’ compensation benefits, they are not prohibited from filing a lawsuit against the employer.
How can Tennessee employers buy workers’ compensation coverage?
Purchasing a workers’ comp policy is a step employers can take by working with private insurance carriers that are licensed to sell coverage in the state. There are about 400 insurance companies that have been licensed by the Department of Commerce and Insurance to sell insurance in Tennessee.
High-risk businesses that can’t find insurance through a private carrier may be able to obtain coverage from the NCCI, which administers Tennessee’s Workers’ Compensation Insurance Plan. NCCI can be reached via its customer service center at 800-NCCI-123 (800-622-4123).
What penalties are there if an employer fails to carry coverage?
Failure to carry the proper workers’ compensation insurance could result in fines of $10,000 or more. Noncompliant businesses may also face a 25% penalty for failing to pay paying the state’s mandated temporary disability benefits when a worker is injured.
Additionally, if an employee experiences a work-related injury and you’re without an insurance policy, they could potentially bring litigation and sue you for damages in excess of what workers’ compensation would provide.
The Bureau of Workers’ Compensation lists all the different potential penalties on its website.
Display a poster
In addition, employers in the state of Tennessee must display a poster sharing the insurance company that has their policy in a location that all employees in the workplace can see.
What happens if an incident occurs in the workplace?
Employees should do their best to immediately notify their employer if any workplace injury or occupational illness occurs. Additionally, the employee is required by law to communicate the incident to their employer within 15 calendar days of the date of injury or when a physician first tells the employee that his/her injury is work-related.
Employers who are covered by the Tennessee Workers’ Compensation Act must report all known or reported injuries or illnesses to their insurer on the Tennessee Employer’s First Report of Work Injury or Illness (Form C-20) within one (1) working day of learning about the injury or illness. This reporting requirement includes injuries that cause an employee to seek medical treatment outside the workplace, injuries that lead to death, and injuries that lead to missing work or permanent impairment of any type.
More resources for Tennessee employers
Below is a summary of information and online resources that companies can use to find more information about the state’s workers’ compensation requirements. In addition, if you would like to contact the Department of Labor and Workforce Development to obtain information, there are various ways to get in touch.
- Representatives can be reached by phone at either 615-532-4812 or 800-332-2667.
- It is also possible to email questions to: firstname.lastname@example.org.
Links and additional information
Workers’ compensation is a step Tennessee employers should take
Having a workers’ compensation policy helps your business stay compliant. It is also the type of coverage that can make a big difference for you and your team. Workers can rest easy knowing that they will be taken care of in the event of work-related injuries or illnesses. And in the vast majority of cases, business owners are protected from litigation due to on-the-job accidents involving employee illness or injury. If you have any questions or need assistance setting up a workers’ compensation policy for your company, we’re here to help.
Please note all material in this article is for educational purposes only and does not constitute tax, benefits or legal advice. You should always contact a qualified tax, legal or financial professional, in your area for comprehensive tax or legal advice.