Does Tennessee require workers’ compensation insurance?
Five employees for most Tennessee businesses, one for construction. The Tennessee Bureau of Workers' Compensation requires a non-construction employer with five or more employees, counting part-time workers, working family members, and full-time corporate officers, to carry coverage. Construction services providers and coal mining employers must cover every employee from the first hire, and construction owners must cover themselves too unless they are listed on the Bureau's Exemption Registry.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
How many employees before Tennessee requires workers' comp?
Tennessee has two thresholds. A business outside construction must secure coverage once it has five or more employees, and minors, working family members, and part-time employees all count toward the five. A construction services provider, identified by the NCCI class code carrying its highest payroll, must cover every employee from the first one, including office staff, seasonal, part-time, and as-needed workers and the owner's family members. Coal mining employers must also cover all employees regardless of head count.
The Bureau decides who is an employee with a seven-factor test weighted toward who controls the work, under T.C.A. 50-6-102(10). A 1099 does not settle it. Domestic workers, farm laborers, casual workers outside the employer's regular business, and interstate common carrier employees under federal law are outside the requirement.
An out-of-state construction contractor needs a policy listing Tennessee in item 3A from its first day working in the state (T.C.A. 50-6-115(e)(1)). A non-construction employer insured elsewhere may be exempt for a worker in Tennessee no more than 14 consecutive days or 25 days in a calendar year.
Source: Tennessee Bureau of Workers' Compensation, Who Must Carry Insurance, checked .
Which owners, officers, and family members are exempt in Tennessee?
Outside construction, sole proprietors, partners, and LLC members are not covered by their own policy unless they opt in with Form I-4, and they are not counted toward the five-employee threshold. Corporate officers who work full time do count toward the five, but each can exclude himself or herself from the policy by filing Form I-6 with the corporation. In construction, owners must be covered unless they are on the Bureau's Exemption Registry.
Source: Tennessee Bureau of Workers' Compensation, Other Coverage Options, checked .
What happens to a Tennessee employer with no workers' comp?
When the Bureau's Compliance Program finds a violation, such as no coverage or workers misclassified as independent contractors, it assesses a penalty equal to 1.5 times the premium the business avoided. Repeat violations within five years can raise that to three times the avoided premium. The Bureau offers an interest-free payment plan on every assessment, and a disputed assessment can go to a contested case hearing.
The penalties fund the Uninsured Employers Fund, which can pay a worker hurt while working for an illegally uninsured employer up to $40,000 in medical and temporary disability benefits once the worker meets the fund's eligibility rules.
Source: Tennessee Bureau of Workers' Compensation, Compliance, checked .
Who enforces workers' comp in Tennessee?
The Tennessee Bureau of Workers' Compensation, part of the Department of Labor and Workforce Development, enforces the requirement. Its Compliance Program reviews businesses, sends a Request for Information packet when it suspects a violation, and runs the Uninsured Employers Fund and the Employee Misclassification Education and Enforcement Fund.
Source: Tennessee Bureau of Workers' Compensation, Compliance, checked .
Where do Tennessee employers buy coverage?
Tennessee is a private-market state with no state fund. An employer buys a policy through an agent or broker from one of the insurers the Department of Commerce and Insurance licenses, joins an approved group self-insurance pool, or qualifies to self-insure. An employer refused by two or more insurers actively writing in Tennessee can get coverage through the NCCI-administered Assigned Risk Plan.
Source: Tennessee Bureau of Workers' Compensation, How to Obtain Insurance, checked .
Who sets the class codes and rates in Tennessee?
Tennessee is an NCCI state. The Bureau names NCCI as Tennessee's designated rate service organization: NCCI sets the class codes, each with its own rate per $100 of payroll, and every carrier prices from that framework. Carriers report each new or renewed policy to NCCI within 30 days.
Source: Tennessee Bureau of Workers' Compensation, How Rates Are Set, checked .
Is there an exemption or waiver form in Tennessee?
Yes, for construction owners only. Under T.C.A. 50-6-901 et seq., a sole proprietor who owns 100% of the business, a corporate officer, or an LLC member or partner with at least 20% ownership can file an Initial Workers' Compensation Exemption Registration (Form LB-4523) with the Bureau. The fee is $50 with an active license from the Board for Licensing Contractors, or $100 without one. Each entity can exempt up to five people. Outside construction there is no registry: officers file Form I-6, and a business that drops below five employees files Form I-3.
An exemption covers only the owner named on it, never the business's employees, and it must be renewed before it expires. A general contractor checking a sub should look for both a policy in the coverage verification tool and the owner's name on the registry.
Source: Tennessee Bureau of Workers' Compensation, Exemption Registry FAQs, checked .
Sorting out Tennessee workers' comp for your business
Tell Redoubt what the business does, who works in it, and what the Tennessee requirement in front of you says. We will say whether a policy, a waiver, or an exclusion fits.
This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.
Workers’ comp requirements in every state
Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.
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The hub, and the Tennessee pages that go deeper
Tennessee workers’ comp FAQ
Do I need workers' comp in Tennessee with fewer than five employees?+
Not if the business is outside construction and coal mining. Count carefully: part-time workers, working family members, minors, and full-time corporate officers all count toward five. A construction business needs coverage from the first employee, office staff included.
Does a Tennessee contractor with no employees need a policy on themselves?+
Yes, unless the owner is on the Bureau's Workers' Compensation Exemption Registry. Construction owners are required to be covered; eligible sole proprietors, officers, and 20% LLC members or partners can file for the exemption instead.
Does my subcontractor's exemption cover their crew?+
No. A Tennessee exemption covers only the individual listed on it. If the sub has employees, they need a policy. If a sub's workers are really employees under the Bureau's seven-factor test, their payroll can land on your policy and your audit.
Can a corporate officer in Tennessee opt out of workers' comp?+
Outside construction, yes, by filing Form I-6 with the corporation and giving the agent and carrier a copy. The officer still counts toward the five-employee threshold. In construction, an officer uses the Exemption Registry instead.
My business is based in another state. Do I need a Tennessee policy?+
A construction contractor does, with Tennessee listed in item 3A from the first day of work in the state. Other employers may be exempt for short stays of up to 14 consecutive days or 25 days a year if insured elsewhere.