Posted on May 19, 2014
Many Tennessee business owners now have the ability to opt out of workers compensation insurance coverage. In October 2011, the Tennessee General Assembly passed Senate Bill 1550, which provides exemptions for certain businesses to workers comp legal requirements.
This expanded exemption eligibility affects the construction industry in particular with contractors now able to exclude themselves from coverage if they meet ownership eligibility requirements. The new law also changes the exemption status for partnerships, corporations and LLCS. Prior to changes, only three owners of these entities could qualify for exemptions but the eligibility is now five.
In order to qualify for ownership exemption, the partner or corporate officer must own 20 percent of the business, and family owned companies also qualify. For sole proprietors, as long as they own 100 percent of assets, they may also claim exemption from the workers compensation insurance coverage.
Individuals that have ownership in more than one business need only claim exemption for one of the businesses and then register their exemption status with the state for $20. As long as ownership requirements are met, business owners can register for unlimited exemptions.
Contractors must register their exemption status with the State Board for Licensing Contractors. Those with active contractor licenses pay a fee of $100 and those who have not yet received a license pay a fee of $200.
To apply for the workers compensation insurance exemption, businesses can apply in person or directly online at http://tnbear.tn.gov/wc. Online applications receive exempt confirmation instantly while in person or by mail applications are processed within 10 business days.
With the tough economic issues being experienced by many Tennessee businesses today, this change to workers compensation law will help companies balance their high expenses with low income. Cutting this commercial insurance cost will allow employers to remain competitive and continue to operate.