A new Tennessee workers' compensation law recently took effect that potentially concerns many business owners operating within the state. Tennessee SB 1550, passed this May, has expanded the eligibility for certain business owners within the construction industry to forego purchasing workers' compensation benefits for themselves. Essentially, more business owners in the construction trade will now be able to apply for an exemption to buying the insurance and listed as so on the Workers' Compensation Exemption Registry.
Previous Tennessee Workers' Compensation Business Owner Exemption
Previously, Tennessee business owners could opt-out of purchasing workers' compensation coverage for themselves if:
- They were part owner of a family-owned business, corporation, limited liability company or partnership in the construction services industry, and
- They are listed on the registry as being exempt, and
- The entity had no more than three owners claiming the exemption
New Tennessee Workers' Compensation Business Owner Exemption
Effective Oct 1st, the new law states that Tennessee business owners can opt-out of purchasing workers' compensation coverage for themselves if:
- They are part owner of a family-owned business, corporation, limited liability company or partnership in the construction services industry, and
- They owns at least 20 percent of the entity (95 percent for applicants together with family members in family-owned businesses), and
- They are listed on the registry as being exempt, and
- The entity has no more than five owners of the entity claiming the exemption
Additionally, business owners of sole proprietorships can also apply for the exemption as long as they own 100 percent of the company.
Further, business owners under the new law are not just limited to one exemption. They can apply for an exemption for each business they own as long as they meet the required qualifications.
Impact on Tennessee Businesses
For many businesses operating within the state, the new law comes at a good time. Tennessee businesses owners and others all across the country today-particularly in the construction industry-are struggling more than ever to compete in a recessed economy. According to the June 2001 Bureau of Labor Statistics, employers in the private sector spent over 29 percent of their labor costs on workers' compensation benefits.
When overhead costs-chiefly labor-are high, it's hard for companies to stay afloat. The Bureau of Labor Statistics estimates that an average company spends approximately $28 per hour per employee for pay and benefits. In order to stay competitive and keep their doors open, companies need to find more and more ways to cut costs. By increasing the type of eligible business owners, Tennessee legislatives hope the new workers' comp law will help.
Impact on Tennessee Employees
Fortunately, the provisions of the new law will have no effect on Tennessee employees. Construction employees, and most any other workers for that matter, can still obtain workers' compensation benefits if they are injured during the course of their job duties.
In exchange for relinquishing the right to sue their employer, Tennessee employees will be able to receive benefits that include but are not limited to:
- Medical benefits: Injured employees in Tennessee are provided free medical treatment for their work illness or injury including doctor and hospital visits.
- disability benefits: Injured employees in Tennessee are paid weekly compensation (a portion of their normal weekly wage) if a doctor determines they are unfit to work due to their work illness or injury.
- Permanent Impairment benefits: Injured employees in Tennessee who are unable to fully recover from their work ailment may be entitled to a permanent disability award. A physician will assign a permanent impairment rating which will be used in tandem with other factors to determine a final settlement.
- Death benefits: In the event of the employee's death, benefits-including burial expenses-are paid to employees' surviving dependents.
Workers involved in any accident on the job in Tennessee should report the incident as soon as possible to their employer, even if they are unsure whether an injury has occurred. (The law stipulates injuries be reported within a certain time frame.) The employer will then file a workers' compensation claim with the company's insurance carrier on behalf of the employee. Employees should then seek prompt medical attention. Their physician will be able to access if an injury or illness has occurred.
