Tennessee Independent Contractors laws & HR compliance analysis

Tennessee Independent Contractors: What you need to know

Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law, particularly in areas such as unemployment tax liability, workers' compensation, and state wage and hour requirements.
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Tennessee law imposes specific penalties for construction industry employers that fail to properly classify their workers. Employers in this industry may not misrepresent their payroll, number of employees, or their employees’ duties. For a violation of the law, a construction services provider may be fined up to $1,000 or 1.5 times the average yearly workers’ compensation premium for the provider, whichever is greater (TN Code Sec. 50-6-411).
When determining whether an individual is an employee or an independent contractor for purposes of workers' compensation coverage, the following factors are to be considered:
• The right to control the conduct of the work;
• The right of termination;
• The method of payment;
• The freedom to select and hire helpers;
• The furnishings of tools and equipment;
• Self-scheduling of working hours; and
• The freedom to offer services to other entities (TN Code Sec. 50-6-102).
Service performed by an individual is presumed to be covered by the unemployment compensation law whether or not the individual performing the services satisfies the common law definition of an employee unless and until it is proven that:
• The individual has been and will ...

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