Tennessee Workers Comp Exemption Registry

Tennessee classifies all construction employers as Construction Services Providers, which means workers' compensation coverage is mandatory from the very first employee. There is no minimum headcount threshold — hire one laborer, and you need a policy. But owner-operators who meet specific ownership requirements can exempt themselves from coverage on their own person through the Workers' Compensation Exemption Registry.

Who Qualifies for the Exemption

The exemption is available to:

• Corporate officers of a corporation
• LLC members with at least a 20% ownership stake
• Partners with at least a 20% ownership stake
• Family-owned businesses where family members collectively hold at least 95% ownership

Sole proprietors are limited to one exemption (themselves). Corporations, LLCs, and partnerships can exempt up to five qualifying individuals.

The exemption covers only the individual owners or officers who register — it does not exempt the business from carrying workers' compensation on its employees. If you have a three-person LLC where two members hold 20% each and one holds 60%, all three can register for the exemption individually. But any W-2 employee must still be covered.

Filing Fees

• $50 if you hold an active state contractor license at the time of filing
• $100 if you do not hold an active state contractor license

Since the filing fee is cheaper with a license, contractors going through the licensing process often time their exemption registration to occur after the Board issues their license number.

How to Register

The exemption registration is filed through the Bureau of Workers' Compensation under the Tennessee Department of Labor and Workforce Development. The application form is LB-4523.

You need:

• Your business entity information (name, EIN, Secretary of State registration number)
• The names and ownership percentages of each person claiming the exemption
• Payment of the filing fee

The Bureau processes applications and issues confirmation of the exemption. Keep this documentation on file — the Board for Licensing Contractors may request proof of workers' compensation coverage or exemption as part of your license application or renewal.

The Contractor License Connection

The Board requires proof of workers' compensation coverage (or exemption) as part of both the initial contractor license application and every biennial renewal. If you are an owner-operator with no employees, the exemption filing satisfies this requirement.

If your business structure changes — say you add a partner who drops below 20% ownership, or you hire your first employee — the exemption may no longer fully cover your obligations. At that point, you need a workers' compensation insurance policy for the non-exempt individuals.

Insurance Certificates on the Job Site

Regardless of exemption status, Tennessee law requires contractors to keep a Certificate of Insurance on file at their primary office and at every active job site. General contractors must also maintain physical copies of the Certificates of Insurance for all active subcontractors on site.

The Tennessee General Contractor License Guide includes an insurance requirements tracker that maps the workers' compensation and general liability requirements to your specific classification and monetary limit, so you can get the right coverage without over-insuring.

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