Do I Need to Provide Workers’ Compensation for Subcontractors

Workers’ compensation insurance can be an essential financial safety net for your company and those with whom it conducts business. However, many businesses may be unclear on how laws apply to subcontractors you’ve enlisted to assist on a job.

In Tennessee, whether your business must provide workers’ compensation insurance for subcontractors depends largely on your industry and the nature of your working relationship with those subcontractors.

Construction Requirements

For businesses in the construction industry, Tennessee law requires workers’ compensation insurance. If you’re a general contractor, this includes coverage mandates for subcontractors unless they are properly classified as independent contractors and have their own insurance. If a subcontractor lacks coverage and is injured on the job, the general contractor may be held liable under the “up-the-ladder” rule. This law allows employees of uninsured subcontractors who have been injured on the job to potentially hold the general contractor financially responsible.

To financially protect your business, it’s essential to request a Certificate of Insurance from every subcontractor you hire. This document proves that the subcontractor has active workers’ compensation coverage. Failing to verify this can result in significant penalties and fines.

Tennessee also offers an option for general contractors to voluntarily cover subcontractors under their own policy using the I-15 Form, which must be agreed upon by both parties.

Other Considerations

Workers’ compensation is generally required for nonconstruction businesses if you have five or more employees, including part-time workers. Subcontractors may not count toward your total employee count if they meet the legal definition of an independent contractor—meaning they are not under your direct control, operate independently and typically carry their own insurance. However, misclassifying workers can lead to legal and financial consequences.

We’re Here to Help

Consulting with a qualified insurance professional, such as those at YSolano Insurance Services, can make all the difference. Contact us today to learn more about applicable workers’ compensation laws and secure appropriate coverage.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.