Short answer: Most Tennessee employers must carry workers' compensation once they have five or more employees, full- or part-time. Construction employers must cover employees starting with one employee. Eligible construction business owners can exempt themselves through the state's exemption registry, but they must still cover every employee. The Department of Labor and Workforce Development enforces the law.
Two thresholds
Tennessee's Bureau of Workers' Compensation, part of the Department of Labor and Workforce Development, sets out two different rules:
| Type of employer | When coverage is required |
|---|---|
| Most non-construction employers | Five or more employees, full- or part-time |
| Construction employers | One or more employees |
Coal mining employers are also required to carry coverage regardless of headcount.
Counting employees
For the five-employee rule, full-time and part-time workers both count. The Tennessee Department of Labor support center answers this common question directly. Officers of a corporation and members of an LLC may count depending on their elections, so check how your ownership structure is treated.
Construction: one employee is enough
The construction rules are stricter because the work is riskier. A construction business with one employee must cover that employee. General contractors can also be responsible for the injured employees of uninsured subcontractors.
The construction exemption registry
Sole proprietors, partners and certain corporate officers or LLC members in construction can apply to the state's Workers' Compensation Exemption Registry to exempt themselves from coverage. The exemption covers only the owner. It doesn't cover employees, and it generally has to be renewed. General contractors often check the registry before hiring a subcontractor.
Penalties
The Bureau's compliance unit investigates employers that should have coverage but don't. Penalties can be substantial, and employers can be ordered to obtain coverage immediately. An injured employee of an uninsured employer may pursue the employer directly, and the state's Uninsured Employers Fund may pay limited benefits in some cases.
Buying coverage
Tennessee has a private market. Employers that can't find coverage voluntarily can apply to the state's assigned risk plan. Large employers can self-insure with approval. Workers' comp is often bundled with other policies for small businesses. See our business owners policy (BOP) guide.
What a policy covers
Workers' comp pays medical care, partial wage replacement, permanent disability benefits and death benefits for job-related injuries and illnesses. Employer's liability coverage (Part Two) responds to certain lawsuits related to workplace injuries. Learn more on our workers' compensation insurance page.
Posting and injury reporting
Covered employers must post the state's workers' compensation notice, including the insurer's information, where employees can see it. When an injury happens, report it to your insurer promptly so the claim can be filed with the Bureau on time. Late reporting can complicate claims and lead to penalties.
Common scenarios
You run a restaurant with four part-time servers and hire a fifth. That's five employees. You need coverage.
You're a solo roofer who hires one helper. Construction rules apply. You need coverage for the helper, and you can register an exemption for yourself if eligible.
Your subcontractor's exemption covers only the owner, but the subcontractor brings two workers. Those workers need coverage, and you could be responsible if they don't have it.
You have three employees in an office business. Coverage isn't required yet, but you can buy it voluntarily.
Key terms
- Construction employer: a business in the construction industry, required to cover employees from the first hire.
- Exemption registry: Tennessee's registration for construction owners who exempt themselves.
- Uninsured Employers Fund: a state fund that may pay limited benefits when an employer is uninsured.
- Assigned risk plan: coverage of last resort.
Questions to ask your broker
- Am I classified as construction or non-construction?
- Should I register for an exemption, or cover myself?
- How do I verify subcontractor coverage and exemptions?
- Are my classification codes correct?
Bottom line
In Tennessee, five employees triggers the requirement for most businesses, but construction employers need coverage from the first employee. Owner exemptions never cover employees.
Contact Alishahi Insurance or call (877) 711-4545. See insurance in Tennessee.
Frequently asked questions
Is workers' comp required in Tennessee?
Yes, for most employers with five or more employees, and for construction employers with one or more.
Do part-time employees count in Tennessee?
Yes. Full-time and part-time employees both count toward five.
What is the Tennessee construction exemption?
A registry that lets eligible construction owners exempt themselves. It doesn't cover employees.
Do general contractors need to check subcontractor coverage?
Yes. General contractors can be responsible for uninsured subcontractors' employees.
Can I buy workers' comp with fewer than five employees?
Yes. Coverage can be purchased voluntarily.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.