Tennessee legislators introduce workers’ comp alternative

Nashville, TN – Newly proposed legislation would allow Tennessee employers to opt out of the state-mandated workers’ compensation program in exchange for setting up their own benefit plans.

Known as the Tennessee Option, the plan borrows aspects from the Texas and Oklahoma workers’ comp systems, both of which allow private employers to opt out of the state insurance program. Proponents of the Tennessee legislation call the option a “free-market alternative” to traditional workers’ comp insurance, and assert it will save employers money while maintaining protections for workers.

“The Tennessee Option will allow employers to more directly deliver occupational injury benefits to injured workers, which reduces costs for employers and the government, improves outcomes, and increases employee satisfaction,” the Austin, TX-based Association for Responsible Alternatives to Workers’ Compensation said in a statement.

Tennessee employers who choose the option and set up their own plans would have to meet minimum benefit mandates, financial security reviews and other employee protections. Under the legislation, injured employees would have the option to sue their employer for damages.

Construction and coal mining employers would be barred from using the Tennessee Option due to their “unique industry requirements,” ARAWC said.

The legislation was introduced in the Tennessee Senate on Feb. 11 and the House on Feb. 12.