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Workers’ Compensation Insurance Requirements in Tennessee
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Workers’ Compensation Insurance Requirements in Tennessee
Tennessee draws a hard line for construction employers that most other industries never hit: while a typical business can wait until it has five employees, a roofing, electrical, or plumbing contractor is required to carry workers’ compensation insurance on day one. That makes understanding the construction-industry exception essential for any Tennessee contractor trying to stay compliant, bid on jobs, or avoid a stop-work order.
Tennessee Workers’ Compensation Legal Requirements
General industry employers in Tennessee must carry workers’ compensation once they have five or more full- or part-time employees, but the construction industry follows a stricter rule: coverage is required regardless of headcount, so even a one-person crew with a single employee must be insured.
- General industry: mandatory once an employer has 5 or more full- or part-time employees (T.C.A. Title 50, Chapter 6)
- Construction industry: mandatory for principal contractors, intermediate contractors, and subcontractors regardless of employee count — even a single employee triggers the requirement
- Sole proprietors, partners, and LLC members are excluded from the headcount used to determine coverage thresholds, but construction sole proprietors/partners still generally need coverage unless registered on the Secretary of State’s exemption registry (and even then must cover any subcontractor or worker not otherwise insured)
- Noncompliant employers can be ordered to obtain coverage, face monetary penalties, and be enjoined from operating; if a worker is injured or killed while the business is uninsured, exposure escalates to a Class A misdemeanor
How Tennessee’s Workers’ Comp System Works
System type: Private Carrier Market
Tennessee has no state-run workers’ compensation fund — coverage is written entirely through private insurance carriers, with the Tennessee Workers’ Compensation Insurance Plan (assigned risk) available as a backstop for employers who can’t find coverage in the voluntary market. Rate-wise, Tennessee is a relatively affordable state for employers: the Oregon DCBS 2024 Workers’ Compensation Premium Rate Ranking Study placed Tennessee 39th of 51 states and DC, with an index rate of 0.80 — about 73% of the national median premium level.
How Tennessee’s Rates Compare by Trade
| Trade (NCCI Class Code) | National Rank (of 51) | Rate per $100 of Payroll |
|---|---|---|
| Roofing (Class 5551) | 27th of 51 | $9.63 |
| Electrical Wiring (Class 5190) | 36th of 51 | $2.00 |
| Plumbing NOC (Class 5183) | 43rd of 51 | $1.67 |
Source: Oregon Dept. of Consumer and Business Services, 2024 Workers’ Compensation Premium Rate Ranking Study (published June 2025) — the only study benchmarking all 50 states plus DC on a common industry mix.
Filing a Workers’ Comp Claim in Tennessee
When a covered worker is injured on the job, the employer must report the injury to its insurance carrier, and the carrier (not the state) administers the claim, medical treatment, and wage-replacement benefits. If a dispute arises over benefits or coverage, either party can request mediation or a hearing through the Tennessee Bureau of Workers’ Compensation’s Court of Workers’ Compensation Claims rather than the regular court system.
Penalties for Non-Compliance
Under T.C.A. 50-6-412, an employer found operating without required coverage can be ordered to secure insurance within five days and hit with a penalty of one and one-half times its average yearly premium, with a second penalty (the greater of $1,000 or the average yearly premium) assessed if it still fails to comply; the state can also seek an injunction in Davidson County Chancery Court to shut the business down, and if a worker is hurt or killed while the employer is uninsured, it becomes a Class A misdemeanor punishable by fines up to $2,500 and possible jail time.
Resources: Tennessee Bureau of Workers’ Compensation, Who Must Carry Insurance / Exemptions, TN Dept. of Labor & Workforce Development – Compliance Penalty Program
How Much Does Workers’ Comp Insurance Cost in Tennessee?
Workers’ comp costs in Tennessee vary significantly by trade because riskier work carries a higher rate per $100 of payroll. Here’s how three common contractor trades compare based on the Oregon DCBS 2024 rate study.
| Trade | Estimated Cost per $100 Payroll | What Drives It |
|---|---|---|
| Roofing | $9.63 (per the Oregon study’s Class 5551 rate) | Fall risk, height work, and severity of injuries push this rate well above other trades |
| Electrical | $2.00 (per the Oregon study’s Class 5190 rate) | Moderate risk from shock, burns, and falls, offset by more controlled work environments |
| Plumbing | $1.67 (per the Oregon study’s Class 5183 rate) | Lower-severity injury profile compared to roofing or high-voltage electrical work |
What Moves the Price Up or Down
- Trade/classification code — roofing and other elevated or heavy-labor work carries much higher base rates than plumbing or electrical
- Experience modification factor — a contractor’s claims history directly raises or lowers premium relative to the base rate
- Total payroll — premium is calculated per $100 of payroll, so larger crews and higher wages increase the total cost even at the same rate
- Claims history and safety record — fewer prior claims and documented safety programs can qualify a contractor for credits and lower effective rates
Rates cited above come from the Oregon DCBS 2024 Workers’ Compensation Premium Rate Ranking Study (effective March 1, 2023) and represent state-average benchmarks, not a quote. Your actual premium depends on your experience modification factor, claims history, and payroll — get a personalized quote from Trade Safe to see your real cost.
Frequently Asked Questions
Do I need workers’ comp insurance in Tennessee if I only have one employee?
If you’re in the construction industry, yes — Tennessee requires workers’ compensation coverage for construction employers regardless of how many employees they have. Outside construction, the general threshold is five or more employees.
Are sole proprietors and LLC members required to carry workers’ comp on themselves in Tennessee?
Sole proprietors, partners, and LLC members are excluded from the employee count used to determine whether coverage is required, but in construction they typically still need coverage on themselves unless they’re listed on the Secretary of State’s exemption registry.
What happens if a Tennessee contractor operates without required workers’ comp coverage?
The Bureau of Workers’ Compensation can order the employer to obtain coverage within five days, assess penalties of up to 1.5 times the average yearly premium (with additional penalties for continued noncompliance), and seek a court injunction to stop the business from operating. If a worker is injured or killed while uninsured, it becomes a Class A misdemeanor.
Is Tennessee a monopolistic workers’ comp state?
No. Tennessee is a private-carrier competitive state with no state-run fund; employers who can’t find coverage in the standard market can access the Tennessee Workers’ Compensation Insurance Plan, an assigned-risk pool.
Workers’ compensation requirements and penalties can change; verify current rules with the Tennessee Bureau of Workers’ Compensation before making coverage decisions.
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