Special Joint Committee on Workers' Comp.

Committee working works toward lifting the burden on sub-contractors while protecting small business


A special committee for Workers’ Compensation met on Thursday afternoon to discuss the affects of Public Chapter 1041. Rep. Susan Lynn was appointed to serve on the committee by Chairman Judd Matheny. The goal of the committee is to lift the burden on sub-contractors while protecting small business from lawsuits.

PC 1041 was passed in 2008 and will go into affect on December 31, 2009. It requires sole proprietors, partners, and members of limited liability companies in the construction industry to be covered for workers compensation. There is an exception for construction owners with no employees who get paid exclusively from homeowners.

Implementation of the bill was already delayed once due to the concerns of small sub-contractors; those making less than $30,000 a year who may have to pay as much as $3000 to $6000 for premium on themselves.

The meeting had a number of speakers including Susan Ritter, Vice President of the Home Builders Association of TN. Ritter stated that according to the University of Tennessee, construction employment in Tennessee has fallen by 29,000 jobs; overall Tennessee has experienced an 80% drop in housing starts, and workers’ compensation premiums have fallen from a total of $12 million in 2008 to $6.4 million which shows that payrolls have dropped almost 50% this year.

Rep. Debra Maggart of Hendersonville stated that most legislators thought the bill would help small business owners because subs often elect not to be covered by workers’ comp due to the expense but after they suffer an injury they sue the small business owner and his or her workers’ comp must pay; this has been court president for since 1933. Insurance company representatives stated that this situation has been a concern for the insurance industry too because they must pay claims for people who have never paid premiums into the system.

Bob Pitts from the Workers’ Com. Advisory Council stated that workers’ compensation is a no fault insurance program to protect those who are injured. “This issue has been debated for about 33 years” and that “the legislation that the General Assembly passed in 2008 was debated for three years…there is no easy solution to this problem.”

The committee came up with a number of solutions; short term, to delay implementation; long term, to establish a minimum and maximum payroll for the construction industry where workers’ comp is concerned; project cost limitations such as for jobs under $30,000; reduce the loss cost multiplier; a deductable for the assigned risk plan; and, to do away with the need to be doubly insured - if one has health insurance with occupational coverage there would be no need to also have workers’ comp.

Labor and Workforce Development Commissioner, James Neeley, stated that he would take the liberty of giving 60 days on any fines or penalties in order to allow time for the General Assembly to act on legislation in January - thus voiding all fines and penalties should the General Assembly take action.

Chairman Matheny concluded the committee by thanking all who came to speak and stating that the Governor’s office has been very cooperative in helping to solve this issue.

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