In nearly every U.S. state, employers are required by law to carry workers’ compensation insurance. Since laws surrounding coverage are written at the state level, each state has different rules and requirements. Workers’ compensation is one of many small business insurance types all Tennessee entrepreneurs should consider.

In this article, we’ll explain workers’ compensation laws in Tennessee—who you need to cover, who is exempt, and possible penalties for non-compliance.


How does workers’ compensation insurance in Tennessee work?


In Tennessee, all employers must carry workers’ compensation insurance if they have five or more employees. If the employer is in the construction or coal mining business, they must carry insurance as soon as they have one employee.

Most employers purchase coverage via the private insurance market. High-risk businesses that are unable to purchase private insurance can get coverage through the National Council on Compensation Insurance (NCCI), Tennessee’s insurer of last resort. Companies that qualify can also apply to become self-insured.


Who needs workers’ compensation insurance in Tennessee?


As mentioned, almost all employers in Tennessee must provide workers’ compensation coverage as soon as they have five or more employees. Family members, corporate officers and part-time employees count toward this amount if the work they perform qualifies them as employees.

There are some types of employees not covered by Tennessee’s workers’ compensation requirements. These types of employment are:

  • Domestic workers
  • Farm or agricultural laborers
  • Casual workers who don’t engage in a company’s typical day-to-day operations
  • Volunteer ski patrollers
  • Federal employees

As a business owner or sole proprietor, you don’t have to purchase workers’ compensation insurance for yourself. That doesn’t mean you shouldn’t get coverage. Sustaining an injury or illness while performing your work can lead to sizable hospital bills, medical costs and a lengthy recovery period. Investing in workers’ comp for yourself could save you from a brutal financial setback.


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


Tennessee has a vast schedule of potential fines for employers who fail to comply with workers’ compensation laws. Failure to provide proof of coverage can lead to a fine of $50-$5000. If an employee sustains a work-related injury and you don’t have coverage, they can sue you for damages in excess of what workers’ comp would provide.


How much does workers’ comp insurance in Tennessee cost?


On average, employers in Tennessee pay $0.81 annually per $100 in covered wages.


What does workers’ comp cover?

Medical costs

If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.

For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.

Lost Wages

Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.

If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.

Ongoing Care

Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who might receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.

Death Benefits

If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.