New Tennessee Workers’ Compensation Law Delayed

2.12.10    By admin    Tags ,

Independent contractors engaged in the construction industry can ignore-for now-a new law requiring them to carry workers’ compensation on themselves.  On January 22, 2010, the Governor signed into law Public Chapter No. 1, temporarily suspending the new requirement.   The reasons cited by lawmakers for suspending the requirement include its “unintended effects” on small contractors, particularly its financial impact resulting from the downturn in the economy.

Under prior law, independent contractors in the construction business were not required to carry workers’ compensation policies on themselves, which led to mass misclassification of employees as independent contractors.   In response, lawmakers changed the workers’ compensation law to require sole proprietors and partners (i.e., independent contractors) engaged in construction work to obtain coverage on themselves unless working on their own property, for their own use and without compensation, or working directly for a homeowner.   Small business owners complained that the new requirement was cost prohibitive and would put them out of business, while larger contractors argued it leveled the playing field.    Over small business owners’ protests, the law was passed in 2008 and went into effect on December 31, 2009.

However, after being in effect for just over three weeks, both the House and Senate voted unanimously to suspend the new requirement in an effort to provide “immediate relief” to small contractors, from whom they have received an overwhelming number of calls and emails on this issue.   Although the requirement is scheduled to resume in full force on March 28, 2011, there are several bills to permanently amend or repeal it during the upcoming legislative session.

For more information on how the currently-suspended law could affect you after March 28, 2011, see New Law Will Require Construction Companies to Provide Workers’ Compensation to Independent Contractors.


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