A Tennessee contractor with 15 employees fails to maintain workers' compensation coverage. In addition to penalties, what other consequence may occur?
Correct Answer
A) License suspension and criminal charges
Tennessee law provides for both contractor license suspension and potential criminal charges for failure to maintain required workers' compensation coverage.
Why This Is the Correct Answer
Option A is correct. Under Tennessee law (T.C.A. § 50-6-405 and related statutes), a contractor with 5 or more employees who fails to maintain required workers' compensation coverage faces both contractor license suspension by the Tennessee Contractors Licensing Board and potential criminal charges. The dual consequence of license action and criminal exposure makes this one of the most serious compliance failures a Tennessee contractor can commit.
Why the Other Options Are Wrong
Option B: Mandatory business closure
Option B is wrong because Tennessee law does not mandate automatic business closure for workers' compensation non-compliance. While license suspension effectively prevents licensed contracting work, it is not the same as mandatory business closure, and criminal charges — not closure — are the secondary consequence specified in law.
Option C: Fine up to $2,500
Option C is wrong because a $2,500 fine alone dramatically understates the consequences. While monetary penalties exist, the question asks about consequences beyond standard penalties — and the answer is license suspension plus potential criminal charges, not a modest fine.
Option D: License suspension only
Option D is wrong because 'license suspension only' is incomplete. Tennessee law provides for criminal charges in addition to license suspension for willful failure to maintain required coverage, particularly when the contractor has enough employees to trigger the mandatory coverage requirement (which for contractors applies at 5+ employees).
Memory Technique
Tennessee workers' comp violation = double jeopardy: License suspended (civil) + criminal charges possible. Think of it as the 'two-hit rule' in Tennessee — they can hit your license AND hit you criminally. With 15 employees (well above the 5-employee threshold), there is no ambiguity about the coverage requirement.
More Tennessee Questions
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How many hours of continuing education are required for Tennessee contractor license renewal?
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Under Tennessee lien law, what is the maximum time limit to enforce a mechanics lien after it has been filed?
Under Tennessee lien law, which party has priority when multiple liens are filed against the same property?
Under Tennessee building codes, what is the maximum allowable deflection for a residential floor joist with a 16-foot span under live load?
A homeowner in Nashville hires an unlicensed contractor for $8,000 worth of electrical work. The contractor demands payment but the work fails inspection. Under TCA 62-6, what recourse does the unlicensed contractor have?
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A Tennessee contractor has 8 employees working on a residential project. The total weekly payroll is $6,400. If the workers' compensation rate for residential construction is $8.50 per $100 of payroll, what is the weekly workers' compensation premium?
A contractor is installing a septic system for a new home in rural Tennessee. The estimated cost is $8,500. According to TCA 62-6, what licensing requirement applies?
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