Workers Compensation and Construction Sites

By Paul Whitt | November 8, 2017

Workers’ Compensation and Construction Sites: Bureau intends to conduct field inspections of construction sites

Contractors, subcontractors and providers of “construction services” in Tennessee face heightened scrutiny for compliance with Tennessee’s workers’ compensation laws, and potential penalties for failure to maintain adequate proof of workers’ compensation insurance at job sites. Under new legislation passed by the Tennessee legislature in the 2017 legislative session, and signed by Governor Haslam in May 2017, an “employer of a construction services provider” must provide “proof of valid workers’ compensation insurance coverage at the employer’s place of business and at job sites where the employer is providing construction services” when requested by an employee of the Tennessee Workers’ Compensation Bureau (“Bureau”). The legislation can be found here: Public Chapter No. 344. Under this new legislation, the relevant part of which is codified at Tenn. Code Ann. § 50‑6‑405, an employer that fails to provide, within one (1) business day of a valid request by the Bureau, proof of such workers’ compensation insurance coverage for its employees that are performing construction services, faces a fine between $50 and $500. However, for subsequent violations, the fine increases to between $50 and $5,000. Employers providing construction services should consider maintaining access to “electronic downloads of policy information to facilitate field inspection of proof of workers’ compensation coverage,” as suggested by the legislation itself.

In line with the passage and signing of this new legislation, the Bureau has announced its intent to increase field inspection of construction sites to ensure compliance with the workers’ compensation insurance mandate for contractors, subcontractors and providers of “construction services” in Tennessee. As noted in the “Official Court Blog of the Tennessee Court of Workers’ Compensation Claims,” the Bureau has hired a new director to oversee compliance efforts, and to “aggressively check construction worksites to verify that the employer has insurance.” This report can be found here: Bureau Redoubles Compliance Efforts. As the report notes, this effort is, at least in part, in response to the surge in construction in Tennessee, including “cities like Nashville.” The report goes on to state:

The Compliance Program will also step up its efforts to ferret out employers who are required to purchase workers’ compensation insurance but fail to do so. Generally, any employer with five or more employees must purchase insurance, but construction service providers must have coverage even if they employ only one person.

The Compliance Program will additionally continue to crack down on employers who misclassify employees as self-employed or independent contractors or who misrepresent to insurance companies the nature of the employees’ duties in an attempt to lower premiums.

As of September 22, 2017 – less than 3 months into the 2017 fiscal year – the Bureau’s “Compliance Program” had already collected “$358,600 in penalties.”

So, Tennessee contractors, subcontractors and “construction services” providers need to be aware of this new enforcement campaign by the Bureau, and ensure that they are in compliance with the requirements of the new legislation concerning proof of workers’ compensation insurance coverage. This is also to ensure that they capable of providing compensation to any employee who will suffer a work related injury. Otherwise, the employers may be facing costly fines as a result of unannounced field inspections by the Bureau.

There are attorneys that practice in the areas of construction or workers compensation that can help with counseling employers regarding the requirements of this new legislation or responding to penalties assessed by the Bureau.

Photo: Max and Dee Bernt

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