If you own, or are thinking of starting a business in Tennessee, it’s important that you understand how workers’ compensation works. It’s your responsibility to protect your business and your employees, as well as follow all state laws. Never assume that you don’t have to have to get workers comp in Tennessee for your staff, and never assume that you are paying the right amount. You should know who needs workers’ compensation insurance in Tennessee to make sure that you have the right coverage for you and your employees.
What is Workers Compensation?
Workers’ compensation in Tennessee works the same as it does in any other state. It provides protection for businesses and their employees in case of a worker getting injured or ill while at, or because of, work. This can happen in any number of scenarios, such as slips and falls, equipment or machinery accidents, or coming into contact with hazardous materials.
It provides the affected employee with compensation for certain costs related to the injury. This can include medical bills, rehabilitation and physical therapy costs, and lost wages. It won’t cover their full amount of wages, but it will help them pay bills and put food on the table while they are recovering and unable to work. That way, the employee can focus on healing without the burden and stress of financial issues hanging over their head.
The business is protected because it prevents employees from bringing lawsuits against it. Instead of trying to get compensation for the business, the employees will get it from the insurance coverage. Many businesses would be in deep financial trouble if they had to cover all of those costs for an injured employee, especially when they can go on in perpetuity, depending on the injury.
Workers’ comp in Tennessee can cover permanent disability, or temporary disability. It can also provide support for the business and the employee if they can no longer do their old job due to injury and are transitioning to a new, more appropriate position. For any employee to get compensation, they must be able to demonstrate that their injury or illness is directly related to their work.
What Businesses Need Workers’ Comp in Tennessee?
In Tennessee, the vast majority of registered businesses are required by law to have workers’ compensation insurance. There is a strict mandate for businesses that employ 5 workers or more. This seems straightforward, but it can be confusing about who qualifies as an employee and who is an indepent contractor. Contractors do not have to be provided with workers’ compensation, although they may choose to get it for themselves.
There are certain types of businesses that must have workers’ compensation even if they have fewer than 5 employees. These businesses tend to carry more risk to workers than others. Construction-related businesses must have workers’ comp if they have 1 or more employees, for example. That said, even with a construction business, if there is an employee who is also a partner or corporate officer, then that person may apply to be exempt from getting workers’ compensation. This is also the case with coal mining businesses. Family members still count towards your employee count, as long as they meet the definition of an employee as laid out by Tennessee law.
Businesses that have fewer than 5 employees can still purchase coverage if they want. But if they do, they have to file paperwork acknowledging that they have chosen to do so rather than be exempt. If they decide to forgo having workers’ compensation, then they must notify the state of this as well.
Who Qualifies as an Employee?
It can be hard to figure out who is an employee according to the law. When you have a small business, you may have several different types of workers that you are paying, from staff to contractors and subcontractors. However when it comes to workers’ compensation, you need to understand who qualifies and who doesn’t so that you can have the right coverage and so that you aren’t paying for someone for whom it doesn’t apply.
By law, the easiest definition is that an employee is defined as any person that you pay wages to do a job, and that you control the way in which they perform that job. For any employee, you need to handle income taxes and pay into social security and medicare through taxes. All of this must be documented according to federal and Tennessee laws.
In most cases, employees meet certain criteria, such as having a regular schedule, are hired indefinitely, are directly supervised by someone at the business, and often receive benefits.
This is in contrast to contract workers. These include any freelancers, independent contractors, and any other workers who you schedule on a gig-by-gig basis. These types of workers tend to be self-employed. You do not control how they do their work, and you do not set their schedule.
These types of workers handle their own taxes, insurance, and benefits. You do not have to provide it for them. Your only responsibility is keeping to your side of a contract or agreement which means paying them for their work.
The criteria for a contract worker is almost the direct opposite of employees. They do not have a schedule set by the business, they use their own equipment, and they are hired for a certain period of time or per project. You would not tell them how to do their job, but you would expect them to complete it on time and as per your requirements.
Workers’ compensation is one of the most important insurance protections you can get for your business. Your employees are your more valuable asset, and if they get hurt while on the job, they deserve as much support as they can get. However, while you do need to cover your employees, you want to make sure that you are not paying for workers’ comp for people who do not qualify. Check out this guide and make sure that your employees are protected properly.