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Tennessee Takes a Bite out of Worker Misclassification

A new law in Tennessee gives the state’s Department of Labor (DOL) sharper teeth with which to take a bigger bite out of workers’ compensation fraud in the construction industry.  As of July 1, 2013, the Tennessee DOL not only has the ability to fine a contractor for not having a workers’ compensation policy, but now can assess administrative penalties for the fraud as well as refer cases where the fraud is discovered to the Tennessee Bureau of Investigation or to the local district attorney for further prosecution.  The Society for Human Resource Management published an article written by Susan R. Heylman (subscription required) this week explaining the new authority this law gives the Tennessee DOL:

“If the department finds that a construction company improperly classified workers as independent contractors rather than as employees, it may impose on the company fines of up to $1,000 or 1.5 times the average yearly workers’ compensation premium that the company should have paid for the workers.”

Penalty money collected is deposited into an Employee Misclassification Education and Enforcement Fund which can then be used to purchase a data system for identifying potential violators and for hiring additional investigators.

The law was a result of an interagency task force, and was sponsored by Democratic Representative Charles Curtiss (HB 551) and Republican Senator Bill Ketron (SB 833).  Both the Tennessee House and Senate passed the bill on April 18, and Governor Bill Haslam signed it into law on May 16 of this year.

If you suspect a company of workers’ compensation fraud, you can report information to the Tennessee Department of Labor and Workforce Development Consumer Affairs at 888-243-7283.

Photo courtesy of Wikimedia


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