Tennessee Workers Compensation: Employer Rules
Tennessee requires workers compensation at five employees, and at one in construction and coal mining. Coverage, exclusions, deadlines, penalties.
Tennessee Workers Compensation
Five employees turns the mandate on outside construction, one employee turns it on inside construction, and the panel of three physicians has to reach the injured worker within three business days
A shop owner near Knoxville once walked me through his payroll and counted four employees. Then he mentioned the nephew who came in on Saturdays and the bookkeeper who worked two afternoons a week. He was at six, and he had no policy.
Tennessee is a five employee state on paper, which sounds forgiving until you read who the Bureau counts. Minors count. Working family members count. Part-time staff count. And if you touch construction at all, the number is not five, it is one.
The general mechanics of how this insurance works anywhere in the country live in our guide to workers compensation insurance. This page is Tennessee only, and it sits beside the broader Tennessee HR compliance guide.
Who Has to Carry Coverage
Coverage becomes mandatory at five employees outside construction. The Bureau of Workers' Compensation states it directly on its non-construction coverage page: employers working in Tennessee that are not in the construction industry with five or more employees must secure coverage for their employees.
Construction runs on the opposite rule. All employers in the construction industry, which the Bureau calls construction services providers, with one or more employees must obtain coverage for those employees, including seasonal staff, part-time staff, family members of the owner and people who work on an as needed basis. Coal mining employers face the same one employee rule, and administrative staff at a construction company are covered too, because the requirement follows the nature of the business rather than the job title.
Two edge cases catch employers who cross state lines. A non-construction worker only temporarily in Tennessee, meaning no more than 14 consecutive days or 25 total days in a calendar year, may fall outside the Tennessee law if the employer carries coverage in another state. Construction services providers based elsewhere get no such grace: the Bureau requires a Tennessee policy with Tennessee listed in item 3A from the first day of operation in the state, citing T.C.A. section 50-6-115(e)(1).
Counting to Five
Minors, working family members and part-time employees all count. The Bureau says so on both of its coverage pages and points to the statutory definitions of employee and contractor at T.C.A. section 50-6-102(10)(A) through (E). There is no full-time filter on the count and no waiting period before a new hire is covered.
Ownership is where the arithmetic gets subtle. In a sole proprietorship, partnership or LLC, the Bureau excludes the owners from the count that decides whether the business is covered. Corporate officers are different: an officer who works full time for the business is included in the count, and while officers may exclude themselves from the policy, the Bureau states that officers who reject coverage do not reduce the number of employees when determining whether the entity is subject to the law.
Who Is Excluded and Who Elects In
Tennessee excludes a defined list of employers and workers, and lets several of them buy in voluntarily. The Bureau lists employers with fewer than five employees outside construction, interstate common carriers, casual employment, domestic servants, farm and agricultural laborers, government entities and volunteer ski patrol as exceptions to the coverage requirement.
| Worker or role | Tennessee treatment | What the employer does |
|---|---|---|
| Sole proprietor, partner or LLC member, non-construction | Excluded from the count of five and not covered by the policy | Elect in by filing Form I-4 with the insurer. Form I-5 withdraws the election later |
| Sole proprietor, partner or LLC member, construction | Required to be covered by the policy | The only exit is the Bureau’s Exemption Registry, which covers the named individual and never the business or its employees |
| Corporate officer, non-construction | Counted toward five when paid, and covered unless excluded | Exclude on Form I-6 filed with the corporation, with an affidavit that the employer did not advise or encourage the waiver. The exclusion does not lower the count |
| Working family members and minors | Counted as employees | Include them in the headcount and on the policy like anyone else |
| Part-time and seasonal staff | Counted as employees | Part-time employees are included when determining the total number of employees for the business |
| Domestic servants | Excepted from the coverage requirement | No policy required for household staff. An excluded employer that wants coverage anyway elects in on Form I-8 |
| Farm and agricultural laborers | Excepted from the coverage requirement | Same voluntary election on Form I-8, with Form I-9 to withdraw from it later |
| Casual employment | Outside the definition of employee | Work performed outside the employer’s regular trade, business, profession or occupation is excluded |
| Interstate common carriers | Excepted where federal law already covers the worker | Employees not covered by the federal law stay inside the Tennessee Act. Leased operators and owner-operators under contract may elect onto the carrier’s policy by written agreement |
| Government entities | The State of Tennessee, counties and municipal corporations are excepted | They may elect coverage, filing Form I-8 separately for each department or division |
| Volunteer ski patrol | Excepted when paid only in meals, lodging or ski lift access | No policy required for that arrangement |
| Independent contractors | Not employees when genuinely independent | The Bureau runs a seven-factor test weighted toward control of the work. A tax form is not evidence of classification |
The contractor line is where small Tennessee employers get hurt, and the Bureau built a whole enforcement fund around it. Misclassify an employee and you have an uninsured worker on the job with no policy behind them. Our explainer on what an independent contractor is walks through the control questions that decide it.
Where to Buy the Policy
A Tennessee employer buys from a private carrier, and there is no state fund to buy from instead. The Bureau's page on obtaining coverage lists four routes, and none of them is a state fund. Most small employers use the first one: an agent or broker authorized to write workers compensation in Tennessee.
The Department of Commerce and Insurance has licensed more than 300 insurance companies to sell insurance in the state. If two or more of them that are licensed and actively writing turn you down, you qualify for the Assigned Risk Plan, where the Bureau counts around 10 companies writing policies. Self-insurance is the far end of the ladder and runs through the Department of Commerce and Insurance rather than the Bureau.
| Route | Who it fits | What it takes |
|---|---|---|
| Private carrier, voluntary market | Nearly every small employer | A policy placed through an agent or broker from one of the more than 300 insurance companies the Department of Commerce and Insurance has licensed to sell insurance in Tennessee |
| Assigned Risk Plan | Employers turned down in the voluntary market | You qualify after being refused by two or more insurance companies licensed and actively writing in Tennessee. Around 10 companies write policies in the plan |
| Group self-insurance pool, trust, fund or association | Members of a qualifying group | Approval by the Department of Commerce and Insurance |
| Single self-insurance | Employers large enough to fund their own claims | An application approved by the Department of Commerce and Insurance, with supporting documents and fees submitted through the CORE system. The department then notifies the Bureau of the approved status |
| Coverage under a general contractor’s policy | Subcontractors, with the contractor’s agreement | Form I-15, which lets the contractor withhold premium from the subcontractor’s payroll. Form I-17 terminates the arrangement |
| State fund | Nobody | Tennessee does not operate one. The Bureau’s four listed routes to coverage do not include a state fund |
One Tennessee-specific way to cut the premium is worth knowing. An employer certified under the state Drug-Free Workplace Program is entitled to a 5 percent premium credit on its workers compensation policy, plus a shift in the burden of proof when an injured employee later fails a post-accident drug or alcohol test. The Bureau says it is free to join. Our drug-free workplace policy template covers what the written program has to contain before you apply.
What You Post and What You Hand Over
Tennessee handles employee notice through a posting, not a new-hire handout. Every employer subject to the Workers' Compensation Law must display the Tennessee Workers' Compensation Insurance Posting Notice, conspicuously in the place of business for easy viewing by all employees, and a separate notice goes up at each location if you run more than one.
The notice is not a generic poster. The Bureau requires it to carry your business name, telephone number and the physical address of the employer representative who can confirm that you are subject to the law and name your carrier, plus the printed name, title, telephone number and address of the representative to notify when someone is hurt. There is a field for an alternative representative, and blank fields are how a posting fails an inspection.
| Requirement | Where it lives | What it has to contain |
|---|---|---|
| Tennessee Workers’ Compensation Insurance Posting Notice | Conspicuously in the place of business, for easy viewing by all employees | Business name, telephone number and physical address of the employer representative who can confirm the employer is subject to the law and identify the carrier |
| Injury contact block on the same notice | Same posting | Printed name and title, telephone number and physical address of the representative to notify when an injury happens, plus an alternative representative |
| A notice at every site | Each location, not only the main office | A separate posting notice per location |
| Language versions | Same posting | The Bureau publishes English, Spanish and Korean versions free of charge |
| Certificate of insurance, construction only | The place of business and every job site | Proof of the policy, produced within one business day of a Bureau request under T.C.A. section 50-6-405(j). General contractors also keep copies for every subcontractor |
| Beginner’s Guide to Tennessee Workers’ Compensation | Handed to the employee when an injury is reported | The Bureau’s plain-language explanation of the claim. It is step two of the Bureau’s eight-step injury list, not a hiring document |
Injury Reporting Deadlines
Two clocks run at once, and yours is far shorter than the employee's. Employees have 15 days to report an injury. Employers covered by the law must submit all known or reported injuries to their insurance carrier within one working day of knowledge, per the Bureau's claim reporting standards.
| Step | Who acts | Deadline | Form |
|---|---|---|---|
| Report the injury to the employer | Employee | 15 days, and the Bureau tells employers to encourage faster reporting | No form. Notice to the employer or supervisor |
| Notify the insurance carrier | Employer | Within one working day of knowledge of the injury, shortened to 24 hours in the Bureau’s employer materials | C-20, First Report of Work Injury |
| Give the worker a panel of physicians | Employer | Within three business days of notice of the injury | C-42, Employee’s Choice of Physician. Alternative versions of the form are not allowed |
| Send the wage statement to the adjuster | Employer | With the claim, so the weekly rate can be set | C-41, Wage Statement, 52 weeks of gross wages including overtime and bonuses |
| Send a Notice of a Reported Injury | Adjusting entity | Within two business days of receiving notice from the employer | Bureau claims handling standards, Rule 0800-02-14-.04 |
| Decide compensability | Adjusting entity | Within 15 calendar days of verbal or written notice, with the claimant and employer notified within 15 days of the decision | C-22 for acceptance, C-23 for denial |
| File the First Report with the Bureau | Adjusting entity | No later than 14 calendar days after the employer’s report, for a death or an injury keeping the employee off work more than seven calendar days | C-20 through electronic data interchange |
| File minor injuries with the Bureau | Adjusting entity | Injuries causing seven calendar days of disability or fewer, on or before the 15th of the month following the month of injury | C-20 through electronic data interchange |
| First temporary disability payment | Insurer | Received by the employee no later than 15 calendar days after notice of injury | No form. Late or unpaid benefits carry a 25 percent penalty |
| Report a fatality or hospitalization to TOSHA | Employer | 8 hours for a fatality, 24 hours for an in-patient hospitalization, amputation or loss of an eye | TOSHA reporting, separate from the workers compensation claim |
| File proof of coverage | Insurance carrier | Within 30 days of procurement or renewal of the policy | I-1 Certificate of Insurer, I-2 for cancellation, reinstatement or endorsement |
The TOSHA row is the one employers most often fold into the rest. Tennessee runs its own occupational safety plan, on its own clock, with its own forms, and filing a C-20 does nothing to satisfy it. The federal reporting and recordkeeping framework it mirrors sits in our guide to OSHA requirements for employers.
Penalties for Going Without
The headline number is a multiple of what you saved. The Bureau's Compliance Program assesses a penalty equal to 1.5 times the avoided premium, and states that the penalty can rise to three times the avoided premium for multiple violations over a five year period.
The claim does not disappear either. The Uninsured Employers Fund pays eligible workers injured while working for an illegally uninsured employer, up to $40,000 in total, split between medical benefits and temporary disability benefits of up to $20,000 each, then pursues the business. Compliance specialists review businesses across the state and send a Request for Information packet when they find a possible violation.
| Violation | Exposure |
|---|---|
| Failing to carry required coverage | A penalty equal to 1.5 times the premium you avoided, assessed by the Bureau’s Compliance Program |
| Repeat coverage violations within five years | The assessment can rise to three times the avoided premium |
| An injury while illegally uninsured | The Uninsured Employers Fund may pay the worker up to $40,000, then look to the business. The Bureau also refers matters to the District Attorney |
| No proof of coverage on a construction site within one business day of a Bureau request | $50 to $500 for an initial violation and $50 to $5,000 per violation afterward, under T.C.A. section 50-6-405(j) |
| Failing to notify the carrier within one day of knowledge of an injury | $50 to $5,000 per violation under the Bureau’s penalty schedule, Rule 0800-02-01-.05 |
| Failing to provide a proper panel of physicians on Form C-42 in time | $50 to $5,000 per violation |
| Failing to pay or timely pay temporary disability benefits | A 25 percent penalty, payable to the injured employee |
| Ignoring a Bureau subpoena during an investigation | A civil penalty of $50 per day, up to $5,000 |
| Deducting any part of the premium from an employee’s pay | A civil penalty equal to the amount unlawfully deducted, assessed by the misclassification program |
| Using an uninsured subcontractor | The injured worker can go up the ladder to the next contractor with valid coverage, under T.C.A. section 50-6-113 |
One honest gap: the Bureau's employer-facing pages describe civil penalties, and its fraud page directs reports to your District Attorney, but we could not confirm the current criminal grade for failing to insure on any official Bureau page. Treat the civil exposure above as the floor rather than the ceiling, and ask the Bureau before assuming criminal risk is off the table. Anyone can check a Tennessee business against the coverage verification service, which is how general contractors and employees find out.
What to Do When Someone Gets Hurt
The order is set out by the Bureau in eight steps, and the first one is not paperwork. You accept the report even if you doubt it, because deciding whether the injury is compensable is the adjuster's job, not yours.
The practical failure mode I see is not bad faith, it is memory. Nobody writes down who was told, on what date, or which panel was offered. FirstHR keeps the incident record, the acknowledgement and the employee file in one place, so the dates that decide a Tennessee claim are not sitting in a supervisor's text messages.
What the Policy Pays
Tennessee resets its benefit rates every July 1, tied to the state average weekly wage. For injuries between July 1, 2026 and June 30, 2027, the Bureau publishes a state average weekly wage of $1,353, a maximum temporary weekly benefit of $1,488.30 at 110 percent of that wage, and a minimum of $202.95.
| Benefit | Amount | Notes |
|---|---|---|
| Temporary total disability | 66.67 percent of the average weekly wage, maximum $1,488.30 per week, minimum $202.95 | Rates for injuries from July 1, 2026 through June 30, 2027, built on a state average weekly wage of $1,353 |
| Waiting period | No benefit for the first seven calendar days of disability | Back-paid to the first day once the disability period reaches 14 calendar days |
| Temporary partial disability | 66.67 percent of the difference between light duty gross wages and the average weekly wage | Same weekly maximum and minimum as temporary total disability |
| Permanent benefits | Maximum $1,353.00 per week, at 100 percent of the state average weekly wage | The body as a whole schedule runs 450 weeks |
| Maximum total benefit | $608,850 | The cap paired with the 450 week schedule for injuries in the 2026 to 2027 rate year |
| Medical benefits | Unlimited | Travel is reimbursed once treatment requires more than 15 miles of travel one way |
| Burial expenses | $10,000 | Death benefits are paid to eligible dependents on top of burial expenses |
Those figures are what the premium buys, and premium itself is calculated on payroll and class codes rather than headcount, which is why the year-end audit can move the number after the fact. If that process is new to you, our guide to the workers compensation audit explains what the carrier checks. Payroll totals feed it, and Tennessee pay rules sit in our Tennessee minimum wage page.
Frequently Asked Questions
How many employees before Tennessee requires workers compensation?
Five, outside construction and coal mining. The Bureau requires non-construction employers with five or more employees to secure coverage. Construction services providers and coal mining employers must cover everyone from the first employee. If your headcount later drops below five outside construction, you can drop the policy only after the Bureau accepts Form I-3.
Do part-time workers and family members count toward the five?
Yes. Minors, working family members and part-time employees are all included when the Bureau determines the total number of employees. Owners of a sole proprietorship, partnership or LLC are not counted. Corporate officers who work full time are counted, and excluding an officer from the policy does not lower the count.
Can a Tennessee business owner opt out of coverage?
Outside construction, yes by default: sole proprietors, partners and LLC members are not on the policy unless they elect in on Form I-4, and corporate officers exclude themselves on Form I-6 with a supporting affidavit. Inside construction, owners must be covered unless they register on the Bureau's Exemption Registry, which allows up to five individuals per entity and lasts two years.
Does Tennessee have a state workers compensation fund?
No. The Bureau lists four routes to coverage and a state fund is not one of them: a licensed private carrier through an agent or broker, the Assigned Risk Plan after two declinations, a group self-insurance pool approved by the Department of Commerce and Insurance, or single self-insurance approved by that same department through the CORE system.
What are the penalties for not carrying coverage?
A penalty equal to 1.5 times the premium you avoided, rising to three times for multiple violations over five years. Separate penalties run from $50 to $5,000 per violation for late carrier notice, a defective panel, or missing proof of coverage on a construction site. The Uninsured Employers Fund can pay an injured worker up to $40,000 and then pursue the business.
How fast does a work injury have to be reported?
The employee has 15 days to tell you. You have one working day from knowledge to file Form C-20 with your carrier, and three business days to give the worker a panel of physicians on Form C-42. The adjuster decides compensability within 15 calendar days, and the first temporary disability payment is due within 15 calendar days of notice.
What has to be posted at a Tennessee workplace?
The Tennessee Workers' Compensation Insurance Posting Notice, conspicuously displayed at every location, carrying your business name, telephone number, address and the named representative to notify when someone is injured. The Bureau provides it free in English, Spanish and Korean. Construction employers also keep a certificate of insurance at the business and on every job site.
Injury paperwork is one piece of a bigger state picture that includes E-Verify, new hire reporting and final paycheck timing. When you are done here, the rest sits in the Tennessee compliance hub.