Workers’ comp may be required for small businesses
NASHVILLE (AP) — Tennessee is one of four states that does not require small businesses with fewer than five employees to provide workers’ compensation insurance, but lawmakers may change that.
Treasurer Dale Sims told members of the Legislature’s Joint Oversight Committee on Workers’ Compensation on Monday that he has asked the National Council on Compensation Insurance to provide an estimate on whether abolishing that exemption would “drive costs down or up.” He hopes to have it within a few days.
The committee, which is trying to formulate reforms to Tennessee’s workers’ compensation system, has heard testimony that abolishing the exemption would have a beneficial impact for employers and workers, and asked Sims to elaborate.
“The theory is that … it would spread the risk more broadly” among employers and reduce the average cost of claims, Sims said.
Rep. Rob Briley, D-Nashville, suggested it would be “spreading the butter more evenly across the toast.”
Currently, about 91,500 employees — or about 3.5 percent of Tennessee workers — have no workers’ compensation coverage because of the exemption.
Workers hurt on the job at such businesses can receive compensation but must go through the courts and prove the employer was at fault for the injury, Sims said.
Alabama, Mississippi and Missouri have exemptions similar to Tennessee’s. However, Tennessee construction firms must provide coverage no matter how many employees they have, Sims said.
Ten other states don’t require private companies with fewer than three or four employees to provide workers’ compensation insurance.
Tennessee also is among 16 states that do not require agricultural employers to provide the coverage, which affects another 3,800 workers.
Sen. Bill Clabough, R-Maryville, said abolishing the exemption for small businesses is worth considering because “sometimes we give too many to the small guys, but we have to look at how it would affect everything.”
He was more interested in testimony from an official with Nissan, a Japanese automaker that has extensive operations in Tennessee and is expressing concerns about the high cost of workers’ compensation.
Awards for injured workers who return to the job, which accounts for the majority of the company’s workers’ compensation claims, are the highest in the Southeast and lower Midwest, said Nissan’s Gregory Kelly.
A 39-year-old employee with a 5 percent injury rating to his arm would get more than $16,000 in workers’ compensation benefits in Tennessee, compared to less than $6,500 in Mississippi, Kelly said.
Such an employee with a 12 percent injury rating for a back injury would get more than $63,000 in Tennessee and only $11,000 in Mississippi.
Kelly told the committee that unless the state makes changes, the company may look elsewhere for future expansions and shift work to other facilities. Nissan now employs about 7,800 workers at its Tennessee assembly and engine plants.
Kelly’s testimony echoed similar comments from company officials across Tennessee. Gov. Phil Bredesen says he is convinced that workers’ compensation costs are driving businesses out of the state.
He said that if lawmakers cannot reach consensus on some reforms he will propose them, and hopes to sign a bill into law before the session ends this spring.
———
On the Net:
Tennessee General Assembly: http://www.legislature.state.tn.us/
State government: http://www.Tennessee.gov