Tennessee DOL Collects a Record $1 Million-Plus in Worker's Comp Penalties

James Neeley, commissioner of the Tennessee Department of Labor and Workforce Development, announced a record penalty collection of $1,012,161 assessed against employers for non-compliance with the insurance requirements of the Workers' Compensation Law during fiscal year 2006-2007. The Uninsured Employers Fund (UEF) is a program created in 2000 to reduce the problem of injured employees not being covered by worker's compensation insurance.

State law mandates that the Division of Workers' Compensation's UEF ensure that companies properly qualify as a self-insured employer or have worker's compensation coverage in compliance with the insurance requirements of the Workers' Compensation Law. A significant increase in penalties occurred after the 2004 Workers' Compensation Reform Act, which allowed the department to hire more staff and thereby increase the investigations and the ability to accomplish the UEF mission.

During an investigation, the employer is required to show proof of compliance with the insurance requirements of the Workers' Compensation Law or provide documentation as to why they are not required to carry worker's compensation coverage. If worker's compensation coverage is obtained, a penalty for the period of noncompliance is assessed at a rate of one and one half times the average yearly worker's compensation premium. If worker's compensation coverage is not obtained, a penalty for the period of noncompliance is assessed at a rate of two and one half times the average yearly worker's compensation premium. Investigations are largely complaint driven, according the Tennessee DOL.

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