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2020 Tennessee Code
Title 50 - Employer and Employee
Chapter 6 - Workers' Compensation Law
Part 4 - Insurance
§ 50-6-411. Misclassification of Employees by Construction Service Providers

Universal Citation: TN Code § 50-6-411 (2020)
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    1. It is a violation of this section if at any time a construction services provider, as defined in § 50-6-901, misclassifies employees to avoid proper classification for premium calculations by concealing any information pertinent to the computation and application of an experience rating modification factor or by materially understating or concealing:
      1. The amount of the construction services provider's payroll;
      2. The number of the construction services provider's employees; or
      3. Any of the construction services provider's employee's duties.
    2. A construction services provider who violates subdivision (a)(1) shall be subject to a penalty issued by the administrator or administrator's designee of up to the greater of one thousand dollars ($1,000) or one and one-half (1 ½) times the average yearly workers' compensation premium for such construction services provider based on the appropriate assigned risk plan advisory prospective loss cost and multiplier minus the premium dollars paid on the policy that was the object of the understatement or concealment.
  2. This section shall have no effect upon a construction services provider's or carrier's duty to provide benefits under this chapter or upon any of the construction services provider's or carrier's rights and defenses under this chapter, including, but not limited to, § 50-6-108.
  3. In addition to the penalties provided for in subdivision (a)(2), the department shall refer cases involving business operations that are in violation of this section to the Tennessee bureau of investigation or the appropriate district attorney general for any action deemed necessary under any applicable criminal law.
    1. As used in this subsection (d), “successor in interest” means a successor in ownership of any part of a business or enterprise that is carried on and controlled in substantially the same manner as the penalized construction services provider.
    2. A penalty issued under this section must follow any owner of a business, or member of an LLC, that is closed, liquidated, or dissolved, when that owner or member owns or operates any part of a subsequent business that is carried on and controlled in substantially the same manner as the penalized construction services provider.
    3. A successor in interest to a construction service provider is liable for any penalty assessed under this section against that construction services provider.
    4. A penalized owner, or member of an LLC, of a construction services provider, or a successor in interest to the construction services provider, may appeal a penalty assessment by requesting a contested case hearing pursuant to § 50-6-412(e).
    5. The administrator or the administrator's designee may waive a penalty against a penalized owner, or member of an LLC, of a construction services provider, or successor in interest to a construction services provider, for good cause.
  5. The funds collected by the administrator or the administrator's designee for penalties assessed pursuant to this section shall be deposited in the employee misclassification education and enforcement fund established by § 50-6-913 to be administered by the administrator.
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