Workers' compensation insurance is required in most states, but each state sets its own laws. If you own a business in one state but are thinking of relocating or expanding into another, you must familiarize yourself with the workers' comp laws in that state to avoid penalties for violating the law. Tennessee's laws differ depending on the type of industry you are in.
Five or More Employees
Regardless of the type of business you run in Tennessee, if you have five or more employees, either full-time or part-time, you must carry a valid workers' compensation insurance policy to protect them from workplace injuries and illnesses. This means that if you consistently operate with four or fewer workers, you are not required by state law to carry workers' comp.
Construction and Mining Operations
Tennessee law has stricter regulations for companies in the construction and mining industries. Because of the statistical risk involved with these jobs, the state requires all construction and mining businesses to carry workers' compensation insurance if they have even one employee. Additionally, every business that is required to carry coverage must display the state's workers' compensation certificate (see References) in a conspicuous location for its employees to see and read.
Optional Coverage
Workers' compensation insurance is available to businesses even when they are not mandated by law to carry it. Because this coverage provides immediate, no-fault medical benefits without stated policy limit and protects businesses against employee lawsuits arising over injuries and illnesses, workers' compensation can be a valuable tool for any business, no matter how small. If you are a sole proprietorship or partnership with no employees, you may still obtain coverage for yourself and your partners if you desire.
Rating
Workers' compensation premiums are determined, in part, by calculating a percentage of a worker's annual income. The more statistically dangerous a job is, the higher the annual percentage will be. Each type of worker is given a different classification depending on the type of work he does. This means that businesses must count employees toward the workers' compensation legal threshold even if the employee is not engaged in the business' principle field. For example, an auto repair company that employs five administrators would still need coverage, even if the administration team is not involved in auto repair.
