A general contractor's employee is injured on a job site. The contractor has no workers' compensation insurance. What is the potential penalty under Tennessee law?
Correct Answer
D) Stop work order and fines up to $2,500 per employee
Tennessee law imposes stop work orders and fines up to $2,500 per employee for contractors operating without required workers' compensation insurance.
Why This Is the Correct Answer
Under Tennessee Code Annotated (TCA) § 50-6-405 and related provisions, the Tennessee Department of Labor and Workforce Development has authority to issue a stop work order and impose fines of up to $2,500 per employee for contractors who fail to carry required workers' compensation coverage. This is one of the most significant compliance penalties contractors face and is tested on the TN-specific exam.
Why the Other Options Are Wrong
Option A: Fine up to $1,000 per employee
A fine of up to $1,000 per employee understates the actual penalty. Tennessee law sets the ceiling at $2,500 per employee, which is a more severe penalty reflecting the state's strong interest in ensuring injured workers have access to compensation.
Option B: License suspension only
License suspension alone is not the primary statutory penalty for workers' comp non-compliance at the time of injury. While licensing consequences can follow, the immediate enforcement tool is the stop work order combined with financial penalties — not just a license action.
Option C: Warning letter for first offense
A warning letter for the first offense is incorrect. Tennessee law does not provide a 'warning only' option when an employee is actually injured without coverage in place. The injury triggers immediate enforcement action, not a graduated warning system.
Memory Technique
Associate Tennessee workers' comp penalties with '2,500 reasons to get insurance.' The stop work order is the immediate hammer — work stops, money flows out. Think: 'No comp = STOP + $2,500.' The number 2,500 also appears in Tennessee contractor licensing fines, so it's worth anchoring as the key penalty number for TN contractor law.
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A Tennessee residential contractor has 8 employees with a total weekly payroll of $6,400. If the workers' compensation rate is $2.85 per $100 of payroll, what is the weekly workers' compensation premium?