Legislative Update: Workers Compensation Law for Construction Industry Amended

A law requiring every worker on a construction site to have workers’ compensation insurance on themselves has been permanently amended. Under the prior law, sole proprietors and partners were not required to obtain coverage. By classifying employees as sole proprietors, some employers (mostly in the construction industry) were able to take advantage of this loophole. To thwart these misclassifications, legislation was passed requiring that all construction workers on a construction site, with a few minor exceptions, be covered under a workers’ compensation policy. After small contractors across the state complained about the cost of the requirement, legislators passed a bill temporarily suspending the law until March 2011. Now lawmakers have made good on their promise to resolve the issue before then, recently passing a law that amends the requirement permanently. See Chapter 1149 of the Public Acts of 2010 (Senate Bill No. 3591). 

The amendment adds an entirely new section to the workers compensation statute dealing exclusively with the construction industry. The law still provides that every worker on a construction project is subject to the self-coverage requirement. However, sole proprietors, partners, officers of a corporation, members of an LLC, and owners of family businesses are eligible to apply for an exemption from the requirement. The exemptions are not unlimited, though. For example, no more than 3 workers on a commercial construction project may be exempt, and the exemptions work on a first-come, first-served basis. This is one of the many features of the amendment designed to reduce the amount of misclassifications occurring in the construction industry. Before this amendment, it was possible to have dozens of uninsured laborers working on a single construction project — all cleverly classified as “sole proprietors.” The new law aims to curb that kind of abuse while still allowing bona fide sole proprietors some breathing room.

Related content

  1. Legislative Update: Tennessee Workers Compensation Law
  2. New Tennessee Workers’ Compensation Law Delayed

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Cheyanne MahoneyJoe KellyDan LinsGriffin DunhamBob MendesWill Helou