A Tennessee contractor's workers' compensation policy lapses during a project. An employee is injured 3 days after the lapse. What is the contractor's potential penalty under Tennessee law?
Correct Answer
D) $250 per day plus stop work order
Tennessee law imposes a penalty of $250 per day for operating without workers' compensation coverage, plus potential stop work orders.
Why This Is the Correct Answer
Tennessee law imposes a civil penalty of $250 per day for each day a contractor operates without required workers' compensation coverage. A stop work order may also be issued. The injury occurring during the uninsured period compounds the contractor's exposure to direct liability for the employee's medical costs and lost wages.
Why the Other Options Are Wrong
Option A: $50 per day plus stop work order
$50 per day is far below the statutory penalty. This figure does not appear in Tennessee workers' compensation enforcement provisions.
Option B: $500 per day plus stop work order
$500 per day overstates the per-day statutory penalty. While Tennessee takes uninsured operation seriously, the codified daily civil penalty is $250, not $500.
Option C: $100 per day plus stop work order
$100 per day is also below the statutory penalty and does not reflect the amount set in Tennessee law for operating without workers' compensation coverage.
Memory Technique
Think '250 for no coverage' — a quarter ($0.25) times 1,000 = $250. Tennessee gives contractors a 'quarter penalty' every day they go uninsured.
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